This petition is intended to help generate public awareness and support for a reduction to the VAT rate applied to dog grooming in Ireland.

Other similar industries enjoy reduced VAT rates as well as Government funded subsidies and financial support, including hairdressers (9% VAT) and child daycare (0% VAT plus other subsidies), but hairdressing for dogs and dog daycare receives no subsidies or support and at the same time is subject to a 23% VAT rate. The consequences are dire and can have a detrimental impact on the wellbeing of dogs in Ireland and the feasibility of running a dog grooming or dog daycare business in Ireland.

Dogs are family members too, it's time for change!

Below is a letter that was sent to the Minister for Finance, Paschal Donoghue. Please sign this petition to show your support for the need to urgently reform the VAT rate for dog grooming in Ireland.

 

Minister Donoghue
Department of Finance
Government Buildings
Upper Merrion Street
Dublin 2, D02 R583

By post and email

paschal.donohoe@oireachtas.ie and minister@finance.gov.ie

21st October 2022

Reform of VAT rate for Dog Grooming services

Dear Mr Donoghue,

I am Paul Abbott of Grooming.dog. I am writing to you on behalf of myself, dog welfare in Ireland, and the dog grooming industry in Ireland. I have run businesses and contributed to the small business economy in multiple industries around the world for almost two decades. Together with my wife Laura we have over 20 years’ combined experience in the dog welfare and dog grooming industry, having established multiple successful dog grooming salons and dog care businesses in the United States, as well as my wife’s volunteer work with John Sharpe at the DSPCA in Ireland.

I am writing to you to request your consideration for the re-evaluation and reform of the VAT treatment of dog grooming services. As you are aware in accordance with section 25 of the VAT Consolidation Act, dog grooming is defined as a service and currently attracts a VAT rate of 23%.

The current categorisation of the VAT rate for dog grooming is outrageously unfair and disproportionate in comparison to similar services, namely veterinary (13.5% VAT rate) and hair salons (9% VAT rate).

However, I believe the recent EU amendment to the 2006 Directive 2006/112/EC “the Directive” provides a clear opportunity for VAT reform and permits Member States to recategorize dog grooming as an exemption from the standard rate of VAT treatment of 23% to a reduced rate of at least 13.5%. Please see below.

Current Position

Presently, as a business owner (and from my understanding of the current market via my colleagues and fellow dog groomers working in the sector) the higher treatment of VAT for dog grooming services is causing unquantifiable harm and damage to the industry on a national scale. As a direct consequence of enhanced costs, the viability of legally run professionally qualified dog grooming salons is very challenging and as a result, is driving trained and professional dog groomers (and a growing number of untrained “groomers”) underground, where they operate a “cash-in-hand” only service.

Due to the pandemic, with many people working from home, there has been a significant increase in the demand for dogs in recent years, as a result these “black-market” practices are becoming more mainstream. It is, therefore, an impossible situation for the legitimate tax paying dog grooming businesses.

In addition, the quandary of higher costs associated with dog grooming services per se (for both professionals and dog owners), this matter is now also an animal welfare issue due to the recent offences which can be levied against dog owners as a result of the Animal Welfare Act 2013 as amended (“the Act”). Regular and adequate dog grooming is essential to dog care and maintenance.

The Act is welcomed in many respects as it bestows a range of substantial obligations upon animal owners and carers. However, naturally these additional obligations are costly as access to maintenance and welfare services are expensive and can cause infrequent visits to the dog groomer, which is very concerning. Importantly and significantly, it is now a criminal offence for dog owners not to take adequate care of their pet in terms of health, maintenance, and welfare. Section 36a Animal and Welfare Act 2013 (as revised 2022) provides for summary conviction & imprisonment of 6 months and €5000.00 monetary fine.

Previous Lobbying for VAT Reform

As you are aware this issue has been before both the Department of Finance and Revenue for consideration on numerous occasions previously. Each time any petition for revision of the VAT rate for dog grooming services has been declined based on the apparent immovable principal that under the Directive:

“there is no provision to allow the reduced rate to be applied to the supply of dog grooming services”.

You will recall the most recent socialisation and consideration of this request was before you, from Ms. Maureen O‘Sullivan TD at a Dail debate on the 28th of February 2018 to which you stated:

“The supply of dog grooming services is liable to VAT at the standard rate, currently 23%. The VAT rating of goods and services is subject to the requirements of EU VAT law with which Irish VAT law must comply and under the VAT Directive there is no provision to allow the reduced rate to be applied to the supply of dog grooming services.

An exception to this rating is grooming that is required during a medical or surgical treatment of animals by a veterinary surgeon. Such grooming will form part of a veterinary procedure liable to VAT at the reduced rate of 13.5%” (as posted on www.Kildarestreet.ie

In more recent times I have raised this matter with Revenue (via the office of Jim O’Callaghan TD). Revenue reconfirmed the above stated position in August 2022. I further challenged Revenue’s unhelpful position by way of appeal to the Ombudsman in September 2022 who sadly concurred with Revenue’s opinion that there was currently no legal basis for revision of the VAT rate, citing the impermissibility of discretion to reduce the rate due to the current rigid EU legislative VAT framework. (See correspondence attached).

New Legal Basis for VAT Reform:

However, in April 2022 there was in fact a recent amendment to the Directive by the EU. This amendment provides discretion to Member States to:

“be able to apply reduced rates not lower than 12% on supplies of goods and services not listed in Annex III to Directive 2006/112/EC, and reduced rates lower than 5% and exemptions with the right to deduct input VAT on supplies of goods and services covered in any points of Annex III to Directive 2006/112/EC other than points (1) to (6) and (10c), as long as they respect the structure of VAT rates provided for in this Directive and the corresponding conditions applied by the Member States with reduced rates or exemptions with the right to deduct input VAT in place on 1 January 2021.”

Those other Member States should include Member States that currently apply reduced rates and exemptions with the right to deduct input VAT and would like to apply reduced rates not lower than 12% on supplies of goods and services not listed in Annex III to Directive 2006/112/EC, reduced rates lower than 5% or exemptions with the right to deduct input VAT on other supplies of goods and services than the ones they currently apply”. (Please see https://www.vatupdate.com/wp-content/uploads/2022/04/2022-04-13-Annex-III.pdf and L_2022107EN.01000101.xml (europa.eu))

Therefore, as I understand it, having checked the preconditions as aforementioned, this recent amendment to the Directive is applicable to dog grooming services as it clearly provides discretion and permission to the Department of Finance to revise the current VAT rate down from the top rate of 23% to a lower rate or a “reduced rate”. I am asking you please to utilize this discretion.

A VAT rate revision is urgently required, and it is very much needed in the industry from both a commercial and animal welfare perspective.

Other Considerations

I have set out below additional supporting factors which are crucial aspects for consideration to the amendment of the VAT rate to the reduced rate of at least 13.5%, these are as follows:

• Dog ownership in Ireland has increased significantly. It is estimated that 50% of people over 50 years of age own at least one dog.
• Dogs are distinct and unique from other domestic pets i.e. cats, hamsters, goldfish. Together with working dogs i.e. farm dogs, police dogs and blind dogs, it is universally accepted that dogs can assist vulnerable people in the areas of autism, assisted living, and emotional distress. These multifunctional uses and reliance upon dogs continue(s) to grow exponentially and therefore naturally dog ownership in turn increases.
• The national VAT regime has made an exemption for Greyhounds (sale of greyhounds attracts a rate of 4.8%).
• The national VAT regime has recognised (albeit in a narrow scope) the importance of professional dog grooming as an important service when carried out by a vet, which attracts a rate of 13.5%.
• Provisions as contained within the Animal Welfare Act, place increased obligations, accountability and legislative responsibility on dog owners and carers, however the onerous burden of the current VAT regime creates a nonsensical and unhelpful obstacle for easy customer access to dog grooming services.
• Other jurisdictions do not apply such a high rate of VAT for dog grooming services. By way of example in the United States there is no associated tax on dog grooming services. In Australia the tax applied is under 10%.
• Comparatively speaking, Ireland has the highest categorisation of VAT for dog grooming services in Europe. France and Spain for example boast rates of less than 20%. Additionally, these countries also provide for other tax-free allowances to the industry, where Ireland does not.

Conclusion

Simply put a reduced VAT rate for the dog grooming industry will result in a significant number of benefits for both dog groomers, dog owners and the Exchequer. If grooming services become more affordable and accessible, this will lead to:

1. Increase in VAT registered dog grooming businesses.
2. Increase in reliance upon respective dog grooming services; and
3. Increased VAT revenue for the State.

As recognised and acknowledged in the recently published report from the Joint Committee of Agriculture, Food and Marine “Issues Impacting Dog Welfare in Ireland” (13th October 2022) the Committee noted that review of current national legislation relating to dog welfare, ownership and care is necessary and overdue due to the “increase of dog ownership, public awareness of dog welfare issues and knowledge of the responsibilities of owning a dog as a pet needs be highlighted to ensure that dogs are born into and live in healthy, happy environments.” Establishment and access to dog grooming services is integral to this objective.

In conclusion I on behalf of my family, my team at Grooming.dog, my colleagues, and not least the dog owning citizens of Ireland, implore you to reconsider this matter for the reasons as stated above, and revise and reform the VAT treatment for dog grooming services to a reduced rate of at least 13.5% in the interests of animal welfare, easy access key services for dog owners and public interest.

Yours sincerely,

Paul Abbott

Cc Minister for Agriculture, Food and Marine
animalwelfare@agriculture.gov.ie