Ireland risks VAT charge on water

Consumers in Ireland look likely to face a VAT charge on their domestic water supplies from 2015.

Currently water is charged VAT free on the basis that it is a publically-provided service.  However, it is now provided by a private company, Irish Water, so can no longer benefit from the exemption.  Irish Water will be required to charge the reduced Irish VAT rate of 13.5%.

The current exemption is based on the agreement Ireland struck on entering the European Union, and harmonisation of Irish VAT with the EU VAT Directive.

There will be a similar charge on businesses; however, since they are VAT registered they will be able to offset the VAT against their output VAT.