Brendan Smith urges VAT relief for coach operators
Brendan Smith raised concerns about coach operators' inability to register for VAT and called for urgent consideration of measures to allow recovery of fuel and running costs. He highlighted cross-border disparities where neighbouring jurisdictions permit VAT registration and said operators cannot continue to absorb rising costs.
Main issue raised
Brendan Smith told the Taoiseach that coach operators are not eligible to register for VAT and therefore cannot reclaim VAT on fuel, tyres and other running costs. He said operators are under particular pressure and gave the example of a small cross-border service from his county that has charged the same fares since 2012, which he called unsustainable.
EU VAT rules explained
The Taoiseach responded that the Department of Finance, advised by Revenue, says VAT treatment is governed by European Union VAT law. The VAT Directive generally treats goods and services as liable to the standard rate unless specifically categorised, and Ireland has retained a historic exemption for passenger transport.
Implications of the exemption
Because Ireland applies the VAT exemption to domestic passenger transport under Article 371 of the VAT Directive, suppliers do not register for VAT, do not charge VAT on fares and have no entitlement to recover VAT on costs used for exempt passenger transport. That means coach operators cannot deduct VAT on business inputs while the exemption remains.
Policy options and consequences
The Taoiseach noted that, under the Directive, Ireland could replace the exemption with a reduced rate of VAT for passenger transport. While a reduced rate would allow operators to reclaim VAT on inputs, it would also require charging passengers VAT on fares, which carries trade-offs for consumers and operators.
Border region impact and next steps
Brendan Smith emphasised particular difficulties for border-region operators who face a different VAT registration environment across the border. The Taoiseach acknowledged the issue and said officials will look at other ways to assist, while noting the legal constraints of EU VAT rules.
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Taoiseach, as you are aware at present coach operators are not eligible to register for VAT which would enable them to claim back the VAT paid on fuel, tyres and other running costs. I understand some EU requirement does not allow at present for such registration. You have been advocating at EU level for some flexibility in relation to VAT issues. In that context this is an area that needs urgent consideration. Coach operators are under particular pressures at present. I know one small scale operator in my own county who operates across border service which was established in 2012 and the same fares are being charged today as they were back in 2012. That is not viable in the long run and the coach operators need some particular assistance in that regard particularly with costs to try to reduce them because they cannot pass on any more costs to the consumer. In that context there are particular difficulties in the border region because in a neighbouring jurisdiction such businesses are eligible for VAT registration. Thank you. I want to thank the Deputy for raising the issue. The Department of Finance is advised by Revenue that the VAT rating of goods and services is subject to European Union VAT law. In general the VAT Directive provides that all goods and services are liable in 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 that the supplier does not register for VAT, does not charge VAT on the supply of their services and there is 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. So we have to look at other ways and see and work with the Deputy. All right, we are out of time. Just see what we can do. Always think about now. You can see what we can do. You can may. Don't worry when you use that, let's just see what we can do. It is absolutely well. Unless you don't lose the量 of the Madam studios. Just John Ng... ...But we don't see the time but… The Divine Fuad has lasted four days since they arrived. Correct duas pundered or 11 seconds already. That is horrible because you could never see what you can do.
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