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Finance Bill 2025: Extension of 9% VAT Rate for Apartments
Concerning the 9% VAT rate for apartments, welcome changes have been made at the Report and Committee Stages to clarify some of the questions that the industry had, when the 9% rate change was first announced as part of Budget 2026. The key amendments clarify that the 9% rate will apply to both the supply of immovable property and construction services which, when completed, will be apartments for sale.
These changes have been made following industry feedback which highlighted that limiting the 9% rate to completed apartment sales appeared to exclude common apartment sales and forward funding transaction arrangements, involving site sales and construction services.
The 9% rate is to specifically apply to the above supplies, as part of a social policy, for apartments or apartment blocks used or to be used for residential purposes. In respect of student accommodation, the Minister for Finance has stated in the Dail that the 9% rate change will apply to purpose-built student accommodation albeit this is not specifically reflected in the Finance Bill.
As the Bill has now passed through Dail Eireann, it will move to the Seanad before signature by the President this month. We expect guidance will be provided by Irish Revenue to clarify some continued areas of ambiguity in the application of the above rules.
What next?
Developers should ensure that when the above change is effective, that it is correctly applied, including apportioning fees between 9% (e.g. apartment supplies) and 13.5% (e.g. house or commercial unit supplies). Developers should also consider the practical impact of this change on their pricing and invoicing including VAT inclusive pricing arrangements with social housing bodies who would be generally liable to self-account for VAT on a reverse charge basis on construction services as an RCT principal contractor.
If you are involved in the development or sale of apartments or sale of land to be used for apartments and would like to discuss how these changes may impact your VAT position on current and future projects and applicable timings, please reach out to any of the following for a discussion: