Uncertainty over EU green light for VAT cut on fuel could last until end of April

Taoiseach says European Commission likely to have ‘hard proposals on energy’ by end of April

It could be another month before it is known if the European Union will give the green light to cut VAT on fuel as part of efforts to help with the cost of living crisis.

Taoiseach Micheál Martin has said the European Commission is likely to have "hard proposals on energy" by the end of April.

It came as he briefed Fianna Fáil's parliamentary party on the humanitarian response to the war in Ukraine as well as the expected impact on the economy here.

In the Dáil on Tuesday, Mr Martin said Irish had sought a derogation from EU rules so that VAT can be lowered on fuels.


Ireland already has a special derogation which allows it to operate at a lower rate of VAT at 13.5 per cent.

However, unless the EU changes the current rules, a temporary reduction in VAT in response to recent inflation would see the State revert to the standard rate of 23 per cent.

Mr Martin told TDs and Senators that the Government has allocated almost €2 billion in measures to help households with the cost of living.

He said there is a focus on security of energy supply before next winter and Ireland is engaging at an EU level on “flexibility on the energy directive”.

The European Commission’s proposals on energy are due by the end of April, he said.

More broadly Mr Martin said that a “fundamental objective” is to reduce Ireland’s dependency on fossil fuels and the country needs to “double-down” on reneables in the medium term. He told the meeting that wind energy proposals are being progressed to accelerate this transition.

Mr Martin said that the Irish people want the government to continue with “a strong humanitarian approach in our collective response to Ukraine.”

He paid tribute to public servants who have “gone above the call of duty” in our airports and in responding to emergency accommodation and social protection needs of refugees.

He said the sanctions against Russia will hit Ireland economically including in the areas of energy, food and commodities, that it will slow growth at an EU level and with trading partners.

Cormac McQuinn

Cormac McQuinn

Cormac McQuinn is a Political Correspondent at The Irish Times