Pearse Doherty (Donegal, Sinn Fein)
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298. To ask the Minister for Finance the rationale for applying the VAT reduction on new apartments from Budget 2026 given the fact it will only mean savings and higher profitability for apartments which were already viable; and if he will make a statement on the matter. [56810/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Government has committed to the delivery of over 300,000 homes by the end of 2030 as per the agreed upon Programme for Government. In line with this, the revised National Planning Framework outlines that increased density, compact growth, and greater social cohesion through the building of more apartments, especially in urban centers, as a key policy objective.

Analysis from both the Department of Finance and the Department of Housing has found that a viability gap has emerged in the delivery of apartments, with the number of completions seeing a decrease in 2024. To address this, the reduction in VAT applied to sale of newly completed apartments is to further incentivise the construction of compact developments and achieve the policy goals outlined in the revised NPF.

It should be noted that VAT is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale. If legislation was introduced that sought to apply different rates of VAT to the sale of identical goods at the same point in time based on the circumstances or timing of when work on those goods began it could breach the principle of fiscal neutrality. This is the principle that supplies of goods or services which are identical or sufficiently similar from the perspective of a consumer should be taxed in the same way.