Eoin Ó Broin (Dublin Mid West, Sinn Fein)
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190. To ask the Minister for Finance in relation to the reduction in VAT on apartment sales announced as part of Budget 2026, if these reductions will be passed on to approved housing bodies purchasing completed apartments through turnkey and forward purchase arrangements. [56062/25]

Eoin Ó Broin (Dublin Mid West, Sinn Fein)
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191. To ask the Minister for Finance in relation to the VAT reductions on apartment sales announced in Budget 2026, when apartments are delivered through forward funding and direct construction contracts for approved housing bodies, the way in which the benefit of any corporation tax changes on construction expenses will be passed on under such arrangements. [56063/25]

Eoin Ó Broin (Dublin Mid West, Sinn Fein)
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192. To ask the Minister for Finance in relation to the VAT reduction on apartment sales, the way in which this reduction with interact with the sale price and stamp duty calculations. [56064/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 190, 191 and 192 together.

As part of Budget 2026, I announced a number of tax changes that are being introduced to incentivise the provision of new residential units.

The VAT rate on the sale of apartments as part of a social policy, has been reduced from 13.5% to 9%. Following a Financial Resolution passed by the Dáil on Budget Day, this measure applies from 8 October 2025 until 31 December 2030, and this will be confirmed in the Finance Bill. The policy aim of the rate reduction is to stimulate the supply of apartments by helping to address the viability gap and accordingly supporting the policy for more and higher density housing.

VAT operates across the EU in accordance with a common framework set by EU VAT law, with which Irish VAT law is required to comply. Generally, VAT on a supply depends on the VAT rate and the selling price the supplier business charges its customer. In most economic sectors, businesses are free to decide on the price level that they charge their customers and on changes to that level. VAT law does not regulate the selling price, nor does it require businesses to alter prices when VAT rates are raised or lowered.

As regards the application of the 9% VAT rate, including for approved housing bodies, as each development will have its own nuances, parties involved, different obligations etc., the facts and circumstances of each development and its contractual arrangements would need to be examined to determine the correct treatment for VAT purposes.

Stamp Duty on the sale of housing is calculated on the VAT-exclusive price. If the supplier of an apartment increases the VAT-exclusive price, it increases the base on which the stamp duty is calculated.

In a further Budget 2026 measure to incentivise the provision of new residential units, I also announced an enhanced corporation tax deduction for certain costs incurred on the construction of apartment blocks, and for the conversion of non-residential buildings into apartment blocks, to improve the viability of such developments. The measure will be legislated for in the Finance Bill and will be available for projects for which a first Commencement Notice is submitted between 8 October 2025 and 31 December 2030. The enhanced deduction is designed to address the viability gap that currently exists between the cost of developing apartments and viable market prices, by reducing corporation tax payable on profits.

The enhanced deduction is available to companies carrying out a property development trade which consists wholly or mainly of the construction or refurbishment of buildings or structures with a view to their sale. The measure allows a 125% deduction for expenditure that is deductible in computing profits from a property development trade for corporation tax purposes, subject to certain conditions and to a maximum enhanced deduction of €50,000 per apartment in a qualifying apartment block.

The enhanced deduction is available to the beneficial owner at the time of completion. As each development will have its own nuances, parties involved, different obligations etc., the facts and circumstances of each development and its contractual arrangements would need to be examined to determine the application of the enhanced deduction.

Full details of these measures will be set out in the Finance Bill as published this week.

Where an AHB purchases a completed apartment block development from a developer company that is entitled to the enhanced deduction in respect of eligible expenditure it incurred in relation to the development, it may be possible that the AHB will benefit from the enhanced deduction, depending on the pricing arrangements between the parties. Where an AHB enters into a construction contract for the development of apartments, in respect of which the AHB, rather than the developer company, will be the beneficial owner on the date that the certificate of compliance on completion is lodged with the relevant local authority, the developer company will be unable to avail of the enhanced deduction. Where an AHB is not itself carrying out a relevant property development trade the profits from which are chargeable to corporation tax, then it will not be in a position to claim the enhanced deduction.

As each development will have its own nuances, parties involved, different obligations etc., the facts and circumstances of each development and its contractual arrangements would need to be examined to determine the application of the enhanced deduction.