As the Taoiseach is aware, coach operators are not at present eligible to register for VAT. That would enable them to claim back the VAT paid on fuel, tyres and other running costs. I understand some EU requirement does not allow for such registration. The Taoiseach has been advocating at EU level for some flexibility on VAT issues. In that context, this is an area that needs urgent consideration.
Coach operators are under particular pressure at present. One small-scale operator in my county operates a cross-Border service established in 2012. The same fares are being charged today as back in 2012. That is not viable in the long run and the coach operators need some particular assistance in that regard, especially with costs to try to reduce them. They cannot pass any more costs onto the consumer. In that context there are particular difficulties in the Border region because in the neighbouring jurisdiction, such businesses are eligible for VAT registration.
I thank the Deputy for raising the issue. The Department of Finance is advised by Revenue the VAT rating of goods and services is subject to EU VAT law. In general, the VAT directive provides all goods and services are liable for VAT at the standard rate, currently 23% in Ireland, unless they fall within categories of goods and services specified in the directive. The directive also allows for historic VAT treatment to be maintained under certain conditions.
Ireland has retained the application of VAT exemption to the transport of passengers and their accompanying baggage. This means the supplier does not register for VAT, does not charge VAT on the supply of their services and has no VAT-recovery entitlement on costs where such costs are used for the exempted supply of passenger transport. Ireland may continue to apply the VAT exemption on the supply of domestic passenger transport as governed by Article 371 of the VAT directive. However, it cannot change the conditions under which the exemption was granted. In accordance with the directive a reduced rate of VAT could be introduced to the supply of passenger transport in place of the exemption that currently applies. While this would give the transport operator deductibility in relation to VAT on their business inputs it would involve charging passengers VAT on their fares
We will have to look at other ways. We will work with the Deputy and engage further on this to see what we can do.
5/04/2022