Child Care

Amendment to the First Schedule, VAT Act 1972 relating to Child Care

Section 110 of the Finance Act exempts from VAT all pre-school and child minding services, from 1 May 1997

Pre-school education

Subsection (a) brings the definition of education in the VAT Act more closely into line with the wording of the corresponding provision in the EU Sixth VAT Directive.

Child Care

Subsection (b) introduces exemption for persons whose activities are covered by regulations which are, or may be made under the Child Care Act 1991. This grants exemption for pre-school services as defined by that Act i.e. “pre-school, play group, day nursery, creche, day-care or other similar service which caters for pre-school children”

The effect of this Section is that, in practice, all child minding services are outside the VAT net with effect from 1 May 1997

The profits generated from such services have always been, and will continue to be, liable for Income Tax/Corporation Tax and, of course, PAYE/PRSI must be operated on any salaries, wages, paid to employees. Anyone with difficulties in this area should contact their local Inspector of Taxes.