What Revenue puts at 13.5%
Revenue’s construction services page opens with the rule: “Generally, the reduced rate of Value-Added Tax (VAT) applies to construction services.” It then lists what construction services on immovable goods include: construction, extension, alteration and demolition services, and “building, electrical, plumbing, plastering, heating, painting, roofing, flooring and other construction related services”. The reduced rate page confirms the category as “certain building services” alongside repair services and cleaning and maintenance.
| Supply | Rate | Revenue source |
|---|---|---|
| Construction, extension, alteration, demolition of a building | 13.5% | Construction services page |
| Electrical, plumbing, plastering, heating, painting, roofing, flooring work on a property | 13.5% | Construction services page |
| Repair and maintenance of a building | 13.5% | Reduced rate page: repair services; cleaning and maintenance |
| Building materials bought without installation (timber, blocks, tiles, fittings) | 23% | Standard rate: most goods |
| A job where materials exceed two-thirds of the VAT-exclusive price | 23% on the whole job | Two-thirds rule page |
| Construction, until completed, of qualifying apartments | 9% | Construction services page; second reduced rate page: 26 November 2025 to 31 December 2030 |
| Supply and installation of a heat pump heating system | 9% | Heat pump page: from 1 January 2025 |
| Supply and installation of solar panels on a private dwelling or recognised school | 0% | Zero rate page; solar panels page |
| Solar panels supplied without installation | 23% | Solar panels page: standard rate |
The two-thirds rule
Most building jobs are labour plus materials, and Revenue taxes the whole job at one rate. Its two-thirds rule page sets the test, with every figure VAT-exclusive: if the cost of the goods used in the work exceeds two-thirds of the total price, the rate that applies to the goods applies to the entire transaction; if it does not, the rate for the service applies to the entire transaction.
Put numbers on it. A builder quotes €12,000 net for an attic conversion, of which €5,000 is materials. €5,000 is well under two-thirds of €12,000 (€8,000), so the whole job is at 13.5%: VAT €1,620, total €13,620. A different job: €12,000 net to supply and fit a kitchen, where the units cost the fitter €9,000. €9,000 is more than €8,000, so the whole €12,000 is at 23%: VAT €2,760, total €14,760. Same quote, €1,140 apart, decided by the materials share. Ask for the split on the quote before you accept it.
Revenue lists two construction cases where the rule does not apply: construction services where the principal contractor accounts for the VAT on services received from subcontractors, and construction services between connected parties. (The third exception, motor vehicle repairs, is on the VAT on cars page.)
Subcontractors and the reverse charge
Revenue’s construction services page says there are “special rules for principal contractors and subcontractors providing construction services and how they account for VAT”. The mechanism is a reverse charge: the principal contractor, not the subcontractor, accounts for the VAT on the subcontractor’s services in its own return. That is why a subcontractor’s invoice to a principal shows no VAT amount: the subcontractor does not collect VAT from the principal, the principal accounts for it. A homeowner hiring a builder for their own house is not in the construction business, so the builder’s invoice to the homeowner carries VAT in the normal way at 13.5%.
Apartments at 9%
A time-limited measure. Revenue’s construction services page: “With effect from 26 November 2025, the second reduced rate of VAT applies to services relating to the construction, until completed, of qualifying apartments.” The second reduced rate page dates it from 26 November 2025 to 31 December 2030, and notes that for the earlier window from 8 October 2025 to 25 November 2025 the supply of certain qualifying apartments was also at 9%. It is a developer-level rule about apartment blocks; a house extension or a one-off house stays at 13.5%. The 9% calculator lists everything else at the second reduced rate.
Solar panels and heat pumps
Two green-energy exceptions sit inside construction. Revenue’s zero rate page lists the “supply and installation of solar panels on private dwellings and recognised schools” at 0%, while its solar panels page says panels supplied on their own are at the standard rate, 23%: the installation contract is what earns the zero rate. For heat pumps, Revenue’s page says that from 1 January 2025 the supply and installation of a heat pump heating system is at the 9% second reduced rate; before that it was 13.5% subject to the two-thirds rule. A heating installer therefore charges 9% on a heat pump job and 13.5% on a conventional boiler job.
Checking a builder’s bill
A compliant invoice for a €20,000 extension at 13.5% shows €20,000 net, €2,700 VAT and €22,700 total, with the builder’s VAT number. If the total is all you have, divide by 1.135: a €22,700 bill is €20,000 net. Do not take 13.5% off the gross, which would give €19,635.50 and overstate the VAT. The 13.5% VAT calculator is preset for this, and the reverse VAT calculator explains the arithmetic. For a VAT-registered business the 13.5% on a premises refurbishment is reclaimable through the VAT3 return, subject to the usual rules on business use.
Building work is the biggest 13.5% category by value, but not the only one. The VAT on services page covers the other trades and professions, and every Irish rate is on the VAT rates page.