Ireland in court over horse sales VAT

IRELAND is being brought to the European Court for refusing to increase the VAT rate on the sale of horses and greyhounds, and for stud services.

The Government, which subsidised the horse and hound industry to the tune of €59 million this year, insists it is within its rights to levy VAT at 4.8% on sales of the animals. But under EU law a reduced rate of 5% can only be applied to services and goods “for clearly defined social reasons” and to benefit the final consumer.

Ireland’s rate for horses and greyhounds, which is less than a quarter of the standard rate charged for almost all goods, does not qualify, the European Commission says.

“There is no clearly defined social reason for allowing such a reduced rate, nor does the final consumer seem to be benefiting from the measure.

“Therefore, Ireland’s application of a reduced VAT rate for horses and greyhounds is not in compliance with EU law,” said Commission spokesperson Emer Traynor.

They warned the Government in June that the next step was court unless they increased the VAT rate. Then the Department of Finance said it would fight the case in the courts.

They maintain they are not breaching the law on VAT rates, adding that it was a complex issue. They were unable to say how much VAT was collected from the industry annually.

The Government says the sport horse industry plays an important role in Irish rural life and combined with racing events they say it’s worth about €400 million annually and supports about 27,000 jobs.

This year’s grant was down 13% on last year’s because of the economic crisis and Bord na gCon, representing the greyhound industry, says their share is money well spent and that much goes back to the state coffers in VAT, tax, PRSI and the betting levy.