Regan Brown
As of October 2024, Ireland has the highest level of fuel taxation in the EU, with over 55% of the cost of fuel going directly to the government. This has resulted in a public outcry and calls for an urgent review of fuel taxes. The tax on petrol and diesel in Ireland has fixed and variable components, which can alter the prices seen at the pumps. The fixed component is the Mineral Oil Tax, which is made up of Carbon Tax and Excise or Duty. Excise Duty is charged on the sale of specific goods within the country, including alcohol, tobacco, and fuel, and is a significant source of revenue for the government. Value-Added Tax (VAT) also makes up about 19% of the total price of a litre of fuel.
| Characteristics | Values |
|---|---|
| Percentage of fuel cost that is tax | 55% |
| Percentage of fuel cost that goes to the government | 55% |
| Excise Duty on Petrol per litre | €0.6367 |
| Excise Duty on Diesel per litre | €0.37 |
| Carbon Tax on Petrol per litre | €0.15 |
| Carbon Tax on Diesel per litre | €0.21 |
| VAT on fuel per litre | €0.32 |
| NORA Levy per litre | €0.02 |
| Better Energy Charge per litre | €0.02 |
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What You'll Learn
Excise Duty
In October 2024, the CEO of Fuels for Ireland stated that Ireland has the highest level of fuel taxation in the EU, with over 55% of the cost of fuel going to the government. About 55% of the price of a litre of unleaded petrol is taxed, and about 50.5% of a litre of diesel. In response, Fuels for Ireland called for an urgent review of fuel taxes and the creation of an expert group to bring together government departments, the Revenue Commissioners, economists, environmental specialists, and fuels industry representatives to develop a balanced fiscal strategy.
It is important to note that Excise Duty is not charged on home heating oil (kerosene).
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Carbon Tax
Ireland's carbon tax regime is a carbon pricing mechanism that directly links the taxation of fossil fuels to carbon dioxide emissions. The carbon tax is based on the amount of carbon dioxide emitted when the fuel is used. The tax is paid by the supplier of the fuel.
The carbon tax was introduced in Ireland in 2009, initially applying only to petrol and auto-diesel. It was extended to other liquid fuels and natural gas in 2010 and to solid fuels in 2013. The Finance Act 2020 provided for annual carbon tax rate increases up to 2030, with the aim of reaching €100 per tonne of carbon dioxide by the final year. The carbon tax rate has been increasing annually, with the current rate as of May 1, 2025, set at €63.50 per tonne of carbon dioxide emitted. This rate applies to petrol and diesel, and it will be extended to all other fuels from May 1, 2025.
The carbon tax is included as a component of the Mineral Oil Tax (MOT) rate, which is charged on mineral oils such as petrol, diesel, kerosene, and heavy fuel oil. The MOT is composed of a non-carbon component and a carbon component, which is based on the carbon dioxide emissions of each fuel type. The MOT is an excise duty, and it makes up a large part of the price of petrol and diesel in Ireland. For example, 63.67 cents of mineral oil tax is charged for every litre of petrol.
The Irish government has intervened to mitigate the impact of rising fuel prices on businesses and consumers. In response to the pandemic, the war in Ukraine, and associated sanctions on Russia, the government published the National Energy Security Framework in April 2022. This framework focuses on managing the impact on consumers, ensuring the security of the energy supply, and reducing dependency on imported fossil fuels. As part of these efforts, the government announced a temporary cut in excise duty on fuel from March 10, 2022, until the end of May 2023.
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Mineral Oil Tax
The Mineral Oil Tax replaced the older excise duties on oils, which had originated in the 1930s when customs duties were imposed on imported oil and domestically produced products. These were replaced by import excise duties, and a common rate structure was established in 1975. Over time, liquid petroleum gas and some other fuels were included. Reliefs were introduced for horticultural producers and sea fishing.
The tax is charged on products produced in or imported into the state, including imports from the EU and non-EU countries. It covers light oils (mainly petrol), heavy oils, diesel, kerosene, fuels, LPG, and substitute fuels, including biofuels. The rates vary according to the category, with higher rates for fuel used as propellants in motor vehicles and lower rates for industrial and domestic heating oil.
The 2012 Finance Act introduced a marked fuel trader's licence, which is required for anyone producing, selling, dealing in, keeping, or selling fuel for delivery or propulsion. This includes petrol, diesel, and aviation gas fuel. The licences are annual.
The carbon component of the Mineral Oil Tax has been subject to ten annual increases, with the rate increasing by €7.50 per tonne of carbon dioxide emissions each year for nine years and €6.50 per tonne in the tenth year. From 1 May 2030, the mineral oil tax rate will be €100 per tonne of carbon dioxide emissions.
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VAT
Value-Added Tax, or VAT, is a tax on the sale of goods and services, including fuel. In Ireland, VAT currently makes up about 19% of the total price of a litre of fuel. For example, in April 2024, VAT added €0.32 to the price of a litre of petrol or diesel.
The high cost of fuel in Ireland has led to public outcry and calls for a review of fuel taxes. As of October 2024, Ireland has the highest level of fuel taxation in the EU, with over 55% of the cost of fuel going directly to the government. This includes various taxes such as Excise Duty, Carbon Tax, the Better Energy Charge, and the National Oil Reserves Agency (NORA) levy.
Excise Duty is a tax applied to the sale of specific goods within Ireland, including alcohol, tobacco, and fuel. It is charged on the manufacture and import of these goods and is a significant source of government revenue. In 2022, Excise Duty represented 20% of the taxes on products category, with 35% coming from alcohol and tobacco products and 21% from hydrocarbon products (petrol and diesel).
The Carbon Tax is based on the amount of carbon dioxide emitted by the fuel when used. The rate of carbon tax for petrol and diesel has increased over time, with a further increase announced in October 2024, adding an additional 2.1c per litre of petrol and 2.5c per litre of diesel.
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NORA Levy
The National Oil Reserves Agency (NORA) Levy in Ireland is a charge applied to oil products to fund the acquisition and storage of strategic oil stocks. The NORA Levy is used to fund the maintenance of Ireland's strategic oil reserves. The aim is to hold at least 90 days' worth of fuel in case of emergencies. The NORA Levy is charged at a rate of 2 cents per litre on oil products such as petrol, auto-diesel and kerosene. It does not apply to fuel used for international aviation or maritime transport.
The NORA Levy is just one of the taxes that are applied to road transport fuels in Ireland. Others include Excise Duty, Carbon Tax, and Value-Added Tax (VAT). Excise Duty is a tax applied to the sale of specific goods within the country, including alcohol, tobacco, and fuel. It is charged on the manufacture and import of these goods and is a significant source of revenue for the government. Carbon Tax, on the other hand, is a tax on fossil fuels based on their carbon content. The tax charged per tonne of carbon dioxide emitted will continue to rise. VAT, meanwhile, is a tax on the sale of goods and services, including fuel, and currently makes up about 19% of the total price of a litre.
In April 2024, petrol and diesel were priced at around €1.74 per litre in Ireland. The price of a litre of gasoline before tax was €0.78. Excise Duty and Carbon Tax added another €0.61, and VAT added €0.32. This, along with the small Better Energy Charge and NORA Levy (€0.02), increased the price by 55% to €1.74. For diesel, although the price before tax is more expensive at €0.86, there is less Excise Duty (€0.37) but more Carbon Tax (€0.15). The Better Energy Charge, NORA Levy (€0.02), and VAT (€0.32) bring the litre of diesel to €1.74.
The NORA Levy is also included in the calculation of the average effective carbon rate for fuel. The average effective carbon rate is defined as the total energy taxes paid divided by the total amount of carbon dioxide emitted through the combustion of the fuel. Other taxes included in the calculation are Excise Duty, Carbon Tax, Electricity Tax, the Public Service Obligation (PSO) Levy, and emission permit purchases under the EU Emissions Trading Scheme.
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Frequently asked questions
As of 2024, Ireland has the highest level of fuel taxation in the EU, with over 55% of the cost of fuel going to the government. This is made up of Excise Duty, Carbon Tax, VAT, and other smaller charges.
Excise Duty (also known as Mineral Oil Tax) and VAT make up the largest portions of fuel tax in Ireland. Excise Duty is a fixed component, while VAT is variable, currently making up around 19% of the total price per litre.
About 55% of the price of a litre of unleaded petrol is taxed, while for diesel, this figure is about 50%. In October 2024, a carbon tax increase added an extra 2.1 cents per litre of petrol and 2.5 cents per litre of diesel.
Fuel taxes in Ireland are high due to a combination of factors, including the global events in Ukraine and the Carbon Tax, which is based on the amount of carbon dioxide emitted by the fuel. There have been recent calls for the government to address these rising fuel costs and their impact on motorists.
