John Lahart (Dublin South West, Fianna Fail)
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323. To ask the Minister for Finance if he is aware and if it was an unintended consequence that, of every €100 granted in budgets in recent years to ease the cost of energy for consumers, energy companies took €9 in VAT from the sum allocated to consumers by the Government, thereby denying consumers an additional 9% subvention in the process; and if he will make a statement on the matter. [51376/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that the VAT treatment of goods and services is subject to EU VAT law, with which Irish VAT law is required to comply.

In general, the Directive provides that all goods and services are liable to VAT at the standard rate, which in Ireland is currently 23%, unless they come within provisions that permit the application of a lower rate. On this basis, Ireland has long applied its reduced VAT rate, currently 13.5%, to the supply of electricity. In 2022, as one of a number of measures adopted in response to the cost of living impact of high fuel prices, the Government decided to temporarily reduce VAT on electricity by applying the second reduced rate, which is 9%, to electricity supplies for a fixed period; this application has been extended a number of times since then and is currently due to run until 31 October 2025.

The Directive also requires that VAT be charged on the consideration that a taxable person is entitled to receive for the goods and services that they supply. For VAT purposes, what constitutes consideration for a supply of goods or services is defined in EU VAT legislation, is applicable in all Member States, and consists of everything which the supplier obtains, whether from the customer or from a third party, in return for goods or services supplied.

Various cost of living packages introduced by the Government over the last few years included providing credits for electricity consumers against their bills. In line with EU legislation, such measures constitute part of the ‘consideration’ to the supplier and, so, are liable to VAT. There is no provision in the VAT Directive that would allow non-application of VAT on such credits.