393. Deputy Ann Graves asked the Minister for Finance to consider entering discussions with the childcare provider groups and for the issue of VAT and rates to be looked at with regard to be VAT neutral as opposed to being VAT negative (details supplied). [62040/25]

I am advised by Revenue that the VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law is obliged to comply. In general, the VAT Directive provides that all goods and services are liable to VAT at the standard rate, unless they are either specifically exempt from VAT or they fall within the categories listed in Annex III of the Directive, to which Member States may apply lower VAT rates subject to certain rules.

In compliance with the Directive Ireland applies a VAT exemption to the provision of childcare services. This means that childcare providers do not register for VAT, do not charge VAT on the supply of the supply of their services and, consequently, have no VAT recovery entitlement on their input costs.

This VAT exemption ensures that childcare providers are not required to add VAT onto the price they charge their customers. There is no discretion under the Directive to disapply the VAT exemption from the supply of childcare services. There is also no discretion under the Directive to introduce a new tax provision to relieve childcare providers of VAT that they incur in the course of their business.