Minister O'Brien welcomes further 6-month extension of 9% VAT on gas and electricity

Minister Darragh O'Brien has welcomed the government decision to extend the 9% VAT rate currently applied to gas and electricity by a further 6 months – to 31 October. The 9% VAT rate had been due to revert to 13.5% from 1 May.

Minister O'Brien recently wrote to Minister Donohoe, expressing support for the continuation of the current reduced rate of VAT on electricity and gas for households. The Programme for Government acknowledges the increased energy cost pressures on households and businesses, and commits to bringing forward taxation measures to help contain energy costs, including with regard to VAT.

Officials from Minister O'Brien's department are establishing a cross-government Energy Affordability Taskforce to identify, assess and implement measures that will enhance energy affordability for households and businesses. This will entail both short term measures in preparation for Budget 2026, in addition to more medium and longer-term measures. The estimated savings for households from this extension (€26.60 for electricity, €20.28 for gas) are welcome and will provide much needed support for customers due to the continued high cost of energy. The Minister fully supports this Financial Resolution.

ENDS

The temporary VAT reduction to 9% for gas and electricity was one of the government responses to the energy crisis and its impact on the cost of living. A reduced rate was first applied from 1 May 2022. It was possible to make this reduction because of an amendment to Annex III of the VAT Directive in 2022 which brought gas and electricity within the scope of the reduced rates category.

The Programme for Government acknowledges the increased energy cost pressures on households and businesses, and has committed to bring forward taxation measures to help contain energy costs, including with regard to VAT.

Consequently, the government has decided to introduce a Financial Resolution on Wednesday, 2 April 2025 to extend the 9% VAT rate for gas and electricity for 6 months from 1 May 2025 to 31 October 2025. The estimated cost of this extension is €85 million with the net benefit to households from 1 May to 31 October being approximately €26.60 with respect to electricity and €20.28 with respect to gas.