Dáil Éireann - Volume 661 - 24 September, 2008
Written Answers. - Tax Code.
Deputy Michael Ring Deputy Michael Ring
Deputy Michael Ring asked the Minister for Finance if he will reduce the VAT level on products which help homeowners change their energy profile (details supplied) in view of the fact that this would encourage more people to reduce their annual energy costs. [31236/08]
Deputy Brian Lenihan Deputy Brian Lenihan
Deputy Brian Lenihan: Any proposed changes in VAT must be considered in the context of EU law. There is no provision in European VAT law that would allow the application of a reduced VAT rate on supplies of goods or services based on their environmental impact per se. While Member States can retain the zero rating provisions which they had in existence on 1 January 1991, they cannot introduce any new ones. Therefore, it is not possible for Ireland to apply a zero rate to the supply of insulation materials.
The supply of certain environmental products, such as insulation materials, wind turbine equipment, wood pellet boilers and solar panels, are chargeable at the standard VAT rate which in Ireland is 21%. However, the reduced VAT rate of 13.5% may be applied to such products where they are provided under a single supply and install contract where the VAT exclusive cost of the goods does not exceed two-thirds of the total VAT exclusive charge to the customer.
The Programme for Government contains a commitment to examine the current VAT classifications with a view to reducing the rate of VAT applied to certain environmental goods and services from the standard VAT rate of 21 per cent to the reduced VAT rate of 13.5 per cent. In this regard the Finance Act 2008 provided for the VAT rate applicable on the supply of miscanthus rhizomes, seeds, bulbs, roots and similar goods used for the agricultural production of bio-fuels being reduced from 21% to 13.5%. This and other measures under the Programme for Government clearly demonstrate the Government’s commitment to addressing the environmental challenges which we face.
The Deputy may wish to be aware that the EU Commission are undertaking a study of the possibility of using reduced VAT rates as a tool to support the climate change agenda. Ireland has expressed support for such a study.
Dáil Éireann 661 Written Answers. Tax Code.