Pearse Doherty (Donegal, Sinn Fein)
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161. To ask the Minister for Finance the estimated cost of extending the reduced VAT rate of 9% applied to electricity and gas to also cover home heating oil; and if he will make a statement on the matter. [67318/25]

Simon Harris (Wicklow, Fine Gael)
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The VAT rating of goods and services is subject to the requirements of EU VAT law, with which Irish VAT law must comply. In general, the EU VAT Directive provides that all goods and services are liable to VAT at the standard rate unless they fall within the categories of goods and services specified in Annex III of the VAT Directive, in respect of which Member States may apply a lower rate of VAT. While supplies of gas and electricity are included in Annex III, home heating oil is not, and therefore it would fall to be taxed by Member States at their standard rate of VAT.

However, the Directive also allows that a Member State may retain certain long-standing VAT arrangements that they had in place, subject to strict conditions including that the terms of the historic arrangement cannot be extended. On this basis, Ireland is also permitted to retain some historic VAT arrangements, under strict conditions. As one of the historic VAT arrangements, Ireland is permitted to retain its long-standing application of its reduced VAT rate – which is currently 13.5% – to the supply of fuel and oil for domestic and commercial use. In accordance with the Directive this arrangement is treated as a ‘parked’ rate, which means that it cannot be reduced below 12%. If Ireland were to cease the application of parked rate to these supplies, then under the terms of the Directive home heating oil would have to be subject to the standard rate of VAT, which in Ireland is currently 23%.

Shane Moynihan (Dublin Mid West, Fianna Fail)
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162. To ask the Minister for Finance whether consideration will be given to reform of the deemed disposal rule and exit tax on investment funds. [67324/25]

Simon Harris (Wicklow, Fine Gael)
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The Deputy has asked about reform of exit tax on investment funds and deemed disposal.

Deemed disposal is an anti-avoidance measure that applies to investments in Irish domiciled investment funds and life assurance products, as well as equivalent offshore funds and certain foreign life assurance products. Under the deemed disposal rule, tax is levied eight years after an investment is made, and every subsequent eight years, regardless of whether or not a disposal has in fact occurred. The tax is levied on any gain in the value of the investment from the date of acquisition to the date of the deemed disposal. On the ultimate disposal of the investment, any tax paid is allowed as a credit against the final tax liability. The purpose of deemed disposal is to prevent the indefinite roll-up of income and gains and the associated loss of tax to the Exchequer.

The Deputy maybe aware that Finance Bill 2025 provides for a reduction in the taxation rate that applies to Irish and equivalent offshore funds, and Irish and certain foreign life assurance products, from 41% to 38%, intended as an important first step in supporting retail investment in Ireland.

However, I am conscious of the need for further adaptation of the existing complex system which applies to the taxation of investments, and I hope that further progress can be made across coming budgets to address some of the existing obstacles to greater retail investment. Work is continuing on the roadmap for retail investment announced in Budget 2026. This roadmap will be published in early 2026 and will set out an approach to simplify and adapt the tax framework to further support retail investment. This roadmap will facilitate due consideration of the Funds Sector 2030 Report, which made recommendations in relation to deemed disposal. It will also take into account the European Commission’s recommendation on Savings and Investment Accounts.