[Global IDT Insights] Ireland Issues VAT Guidance On Apartments At 9% Rate

Editorial Team, [2026] 182 Taxmann.com 651 (Article)

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Ireland issues guidance on VAT treatment of apartments and apartment blocks that qualify for the second reduced rate (9%)

Ireland has issued a Tax and Duty Manual outlining the VAT treatment applicable to the supply and construction of qualifying apartments and qualifying apartment blocks. The guidance explains the application of the second reduced rate of VAT, being the 9% rate, to qualifying supplies made during a defined period, in accordance with legislative changes introduced as part of Budget 2026.

The document focuses exclusively on when and how the second reduced rate applies to supplies of apartments, apartment blocks, qualifying sites, and construction services.

Key aspects of this guidance include:

(a) Charge to VAT on property and construction services

A property falls within the charge to VAT where it has been developed and supplied for consideration in the course of a business and is regarded as new for VAT purposes. Supplies of property are taxable while the property remains new. Construction services not subject to Relevant Contracts Tax (RCT) are taxable under normal VAT rules, while construction services subject to RCT are taxed under the reverse charge mechanism.

(b) Scope and qualifying period of the second reduced rate

The second reduced rate applied to the supply of qualifying apartments for a limited earlier period and was subsequently extended. From 26-11-2025, the scope of the second reduced rate includes qualifying apartments, qualifying apartment blocks, qualifying student accommodation, qualifying sites, and qualifying construction services. The extended application of the second reduced rate applies up to 31-12-2030.

(c) Conditions for applying the second reduced rate

For supplies of immovable goods to qualify for the second reduced rate, specific conditions must be satisfied. In the case of apartments, the supply must relate to a qualifying apartment located within a qualifying apartment block and must be used, or intended to be used, for residential purposes. In the case of apartment blocks, the supply must relate to a qualifying apartment block that is used, or intended to be used, for residential purposes, with certain qualifying sites and construction services also falling within scope.

(d) Meaning of qualifying apartments

A qualifying apartment includes studios, basement apartments, penthouse apartments, duplex apartments, and student accommodation. An apartment is defined as a self-contained dwelling unit within a larger building. Supplies of such apartments may qualify for the second reduced rate where all other statutory conditions are satisfied.

(e) Definition of a qualifying apartment block

A qualifying apartment block is a multi-storey residential building comprising, or intended to comprise, not less than three apartments with grouped or common access. This includes apartment blocks liable to commercial rates, including student accommodation apartment blocks. Any part of the apartment block not used, or not intended to be used, for residential purposes is excluded from the second reduced rate and is taxable at its appropriate VAT rate.

(f) Meaning of a multi-storey residential building

A multi-storey residential building is a residential building with a minimum of two floors and not less than three apartments. A single apartment under a duplex arrangement, or an apartment located above a shop or townhouse, does not meet this definition and is liable to the reduced rate where taxable. The presence of multiple floors and a sufficient number of apartments is essential for qualification.

(g) Requirement for grouped or common access

To qualify, at least three apartments within the building must share grouped or common access, such as a main entrance or shared external stairwell. The existence of a separate door for an individual apartment does not, in itself, prevent qualification. The decisive factor is whether the grouped or common access condition is met alongside the other statutory criteria.

(h) Residential use requirement and qualifying areas

Apartments and apartment blocks must be used, or intended to be used, for residential purposes to qualify for the second reduced rate. Internal common areas, external common areas, and car parking spaces designated exclusively for residents are treated as part of the qualifying residential use. Amenities such as gyms, work hubs, or swimming pools do not qualify, and apartments in aparthotels are regarded as non-residential for these purposes.

(i) Treatment of mixed-use buildings and shared areas

In mixed buildings containing both qualifying residential apartments and commercial units, shared areas used by both must be apportioned between the second reduced rate and the reduced rate. Apportionment may be carried out on the basis of floor area. Shared areas used exclusively by qualifying residential apartments, such as residential corridors or lifts serving only apartments, are taxable at the second reduced rate.

Source – VAT Rates- Ireland, Official Tax and Duty Manual

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