704. Deputy Eoin Ó Broin asked the Tánaiste and Minister for Finance if VAT is payable by local authorities or approved housing bodies purchasing land for the delivery of social housing. [60146/26]

The VAT treatment of goods and services is subject to EU VAT law, with which Irish VAT law is obliged to comply. In general, the EU VAT Directive provides that all goods and services are liable to VAT at the standard rate, unless they are exempt or fall within certain categories of goods and services to which Member States are permitted to apply lower VAT rates subject to certain rules. The Directive also allows a Member State to maintain historic arrangements subject to certain strict conditions.

In accordance with EU law, the supply of undeveloped land is exempt from VAT. The supply of property that is new for VAT purposes is taxable and subject to the reduced rate of 13.5% for most properties (e.g. residential and commercial), except certain new residential apartments, as part of a social policy, where the 9% rate applies. Undeveloped land is taxable at the relevant rate where the sale of that land is contingent on the purchaser engaging a taxable person to carry out development on that land.

The Deputy is asking whether local authorities or approved housing bodies must pay VAT on the purchase of land for the delivery of social housing. There are no special VAT rules for local authorities and approved housing bodies when purchasing property. Normal VAT on property rules apply. In straightforward land sales, the sale is exempt from VAT and where the sale is taxable the supplier charges and accounts for the VAT to Revenue.

Section 530A(1) Taxes Consolidation Act (TCA) 1997 explicitly defines local authorities and approved housing bodies as a principal contractor to whom Relevant Contract Tax (RCT) applies. As such, where a local authority or approved housing body enters into a contract for the acquisition of a property, certain payments made under that contract may be subject to RCT. There can be multiple scenarios and multiple ways a contract can be structured, and the exact tax treatment will depend on the terms and wording of each individual contract.