Roderic O'Gorman (Dublin West, Green Party)
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181. To ask the Minister for Finance further to Parliamentary Question No. 430 of 11 September 2023, if any work has been carried out by his Department on the potential of reducing the VAT rate applied to non-alcoholic beverages in hospitality sector from standard 23% to 13.5% to bring it in line with rate of other non-alcoholic beverages; and if not, if he will commit to further investigating the potential of this measure, particularly given Belgium's recent budgetary proposal to reduce non-alcoholic beverages to a lower VAT rate; and if he will make a statement on the matter. [68144/25]

Simon Harris (Wicklow, Fine Gael)
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As the Deputy may be aware, the VAT rating of goods and services is subject to the requirements of the EU VAT Directive with which Irish VAT law must comply. In accordance with the Value-Added Consolidation Act, 2010, the supply of non-alcoholic drinks is generally liable to tax at the standard rate, currently 23 per cent.

The VAT Directive obliges each Member State to have a standard rate of VAT and also allows that a Member State may choose to have up to two reduced rates of VAT which may be applied to certain goods and services i.e. any of those listed in Annex III of the VAT Directive, which includes non-alcoholic beverages. Ireland currently operates two lower rates of VAT, 13.5 per cent and 9 per cent. At present, Ireland applies the 13.5 per cent VAT rate to certain non-alcoholic beverages such as tea, coffee and fruit juices where they are supplied in the course of catering. From 1 July 2026, these non-alcoholic beverages will be reduced to 9 per cent where they are supplied in the course of catering. However, supplies of other non-alcoholic beverages such as bottled waters, soft drinks and sports drinks will remain at the standard VAT rate even when provided in the course of catering.

Any suggestion for extending the application of a reduced

VAT rate to all non-alcoholic beverages would need to be considered carefully having regard to a range of factors including the impact on Exchequer revenues, and the practical concerns that it would be difficult to administer and would be likely to provide considerable scope for manipulation of the VAT system and opportunities for tax avoidance. I will of course keep these matters under review.