John Clendennen (Offaly, Fine Gael)
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179. To ask the Minister for Finance the reasoning for the decision in Budget 2026 to retain the 9 per cent VAT rate for domestic gas and electricity but not to apply a corresponding reduced VAT rate to home heating oil, especially for households that do not have access to the gas network; and if he will make a statement on the matter. [68128/25]

John Clendennen (Offaly, Fine Gael)
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180. To ask the Minister for Finance his plans to offset the higher VAT rate on home heating oil for households that do not have access to the gas network; and if he will make a statement on the matter. [68129/25]

Simon Harris (Wicklow, Fine Gael)
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I propose to take Questions Nos. 179 and 180 together.

Under the terms of the EU VAT Directive, which Irish VAT law is obliged to comply, it is generally held that all goods and services are liable for VAT at the standard rate as determined by Member States, where Ireland applies a standard rate of 23%. In addition Member States may set up to two reduced rates. Ireland currently has two reduced VAT rates of 9% and 13.5%.

Goods and services of a kind specified under Annex III of the Directive may see a reduced rate of VAT applied. The supply of gas and electricity has historically been charged at the reduced rate of 13.5% by availing of a provision within the Directive that allowed Member States to maintain historic VAT treatment of specified goods and services. Ireland previously availed of this historical derogation for the supply of gas and electricity and the use of home heating products including home heating oil. A key condition of availing of this derogation is that a VAT rate must be parked at a rate of no lower than 12%.

Following four years of negotiation, in 2022 Annex III was expanded to include the supply of gas and electricity whereby Ireland can now apply the second reduced rate of 9%. This measure has continued to be extended with the latest extension announced in Budget 2026 to be applied until the end of 2030. Home heating oil is not included in this list and there is no scope to extend a VAT rate of 9% to its supply.

It is also not possible to provide for a VAT refund or rebate for users of home heating oil.