Holy smoke! Church candle row extinguished

A BID by the Church to stave off VAT being imposed on devotional candles has had mixed success.

The items had previously escaped the levy if they were of a certain shape and generally used for religious reasons.

But a diktat in the Finance Bill 2020 ruled that all of the products – regardless of their use and design – would incur the 21% tax.

Church figures argued against the move, with the Irish Catholic newspaper noting it was the equivalent of a tax on prayer.

Finance Minister Paschal Donohoe has met the religious figures half way and has now agreed not to roll out the VAT on all candles until January 2022.

The current candle row flared up after an unidentified company appealed a VAT bill of €400,000 over the shape of the candles it supplies to churches.

Revenue claimed the VAT Consolidation Act 2010 states that candles and night-lights are only zero-rated for VAT purposes if they are white and cylindrical.

However, a firm of chandlers gave evidence that it always applied zero VAT to church candles sold within Ireland even though their candles were, for safety reasons, ‘frustoconical and part-cylindrical in shape’.

Mr Donohoe said that when it came to religious candles, he had been advised by Revenue that the VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law must comply.

But the Finance Minister said that in light of representations: ‘I decided on a later date for implementing this change.’

This, he said, was based on the need to ‘allow the parties involved to amend pricing and contracts’.

The decision has secured scant support amongst the ranks of the clergy, with one source saying: ‘We are in a curious space when Paschal is taxing the few pennies in the purses of old dears looking to light a church candle.’