Government approves further 6 month extension of 9% VAT on gas and electricity
- Foilsithe: 1 Aibreán 2025
- An t-eolas is déanaí: 12 Aibreán 2025
Today the government agreed that the 9% VAT rate currently applied to gas and electricity will be extended by a further six months to 31 October. The 9% VAT rate had been due to revert to 13.5% from 1 May.
A Financial Resolution will be brought to the Dáil tomorrow, 2 April, to provide the necessary legal basis for this extension. The reduced rate of 9% was first applied from 1 May 2022, the first VAT period after it became possible to apply such a reduced rate.
No decision has been made on any further extension which will be considered as part of the normal budget process.
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.
Minister Donohoe said:
"The Programme for Government acknowledges the increased energy cost pressures on households and businesses, and this extension of the reduced 9% rate is in line with the commitments made in our Programme to mitigate these pressures in whatever way we can. In addition, I am conscious of the fact that energy prices are beginning to increase again and believe in this context that it is appropriate to extend the existing support."
Notes
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.