Minister for Finance statement on extending the 0% VAT Rate to include Injectable Medicines on Private Prescriptions

The Minister states:

The EU VAT Directive, which Irish VAT law must comply, generally holds that all goods and services are liable for VAT at the standard rate. If a good or service is included in a list under Annex III of the Directive an exemption or reduced rate of VAT may be applied.

Under Annex III of the VAT Directive, Member States may apply a reduced rate or zero rate of VAT to the supply of pharmaceutical products used for medical purposes.

On this basis, Ireland applies the zero rate of VAT to the supply of oral medicine for humans and certain non-oral replacement therapies such as hormone and nicotine replacements. In addition, the supply of non-oral contraceptive products is liable to VAT at the reduced rate, currently 13.5%.

In reducing VAT rates on the supply of a good or services, a consideration must be made of the impact on the overall Budgetary framework as they represent a cost to the Exchequer by narrowing the tax base. Any possible VAT changes will considered as part of the normal Budget process.

I am also advised by Revenue that traders are not required to identify the VAT yield generated from the supply of specific goods and services on their VAT returns. Therefore, it is not possible to provide a costing for a proposal to zero-rate injectable medicines on private prescriptions using information from tax returns.