Ireland Updates VAT Guidance for Accommodation, Restaurant, and Catering Services Effective July 2026

Sources Revenue.ie

• Guest and Holiday Accommodation
• VAT Treatment of Restaurant and Catering Services

Summary

• Restaurant and catering services are services (not goods) where food is supplied together with sufficient facilities or support services for immediate consumption; their VAT treatment differs materially from takeaways and deliveries. [revenue.ie]
• From 1 July 2026, restaurant and catering services are taxable at the second reduced VAT rate (9%), while guest and holiday accommodation remains subject to the reduced rate (13.5%), requiring careful apportionment where supplies are bundled. [revenue.ie], [revenue.ie]
• Accommodation packages including meals constitute multiple supplies, meaning VAT must be apportioned on a fair and reasonable basis between accommodation, food, and any standard‑rated items (e.g. alcohol or soft drinks). [revenue.ie]

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Article

1. Introduction

Irish Revenue has issued detailed guidance on the VAT treatment of restaurant and catering services and guest and holiday accommodation, reflecting EU VAT law, the VAT Consolidation Act 2010, and recent Finance Act amendments. The manuals clarify how to distinguish between services and goods, how VAT rates apply, and how to treat mixed or bundled supplies—issues of particular relevance to hotels, restaurants, catering businesses, and short‑stay accommodation providers. [revenue.ie], [revenue.ie]

2. VAT Treatment of Restaurant and Catering Services

2.1 Definition and scope

Restaurant and catering services are characterised by a bundle of elements in which the supply of food or beverages is accompanied by sufficient support services to allow immediate consumption. These services predominate over the food itself and include facilities such as seating, table service, crockery, and staff assistance.

• Restaurant services are supplied on the premises of the provider.
• Catering services are supplied off‑premises and may include staff meals or event catering, provided sufficient service elements are present. [revenue.ie]

Supplies consisting solely of prepared food delivery, without meaningful service elements, do not qualify as catering services.

2.2 VAT rates

Up to 30 June 2026, restaurant and catering services are taxable at the reduced VAT rate.
From 1 July 2026, these services become taxable at the second reduced rate of 9%.

However, certain items—including alcohol, bottled water, soft drinks, sports drinks, and vegetable juices (excluding fruit juices)—remain taxable at the standard rate, even when supplied as part of a restaurant or catering service. [revenue.ie]

Specific exemptions and zero‑rating apply in limited cases, such as:

• Catering services supplied to patients in hospitals or students in schools (VAT‑exempt).
• Catering services on offshore oil rigs and foreign‑bound ships or aircraft (zero‑rated). [revenue.ie]

3. Distinction Between Restaurant Services and Takeaways

Revenue draws a sharp distinction between restaurant/catering services and takeaway supplies, which are generally treated as supplies of goods rather than services.

Indicators that a supply is not a restaurant service include the absence of table service, seating, crockery, climate‑controlled dining areas, or significant staff involvement.

For takeaways:

• Hot takeaway food is taxable at the reduced rate until 30 June 2026 and at the second reduced rate from 1 July 2026.
• Cold takeaway food (including chilled meals and cold sandwiches) is generally zero‑rated.
• Delivery services are typically taxable at the standard rate and are not considered ancillary to the food supply. [revenue.ie]

4. VAT Treatment of Guest and Holiday Accommodation

4.1 What constitutes guest or holiday accommodation?

Guest or holiday accommodation involves the active exploitation of property, distinguished from passive letting by the presence of additional services such as housekeeping, reception, or dining.

It includes accommodation provided by hotels, guesthouses, B&Bs, serviced apartments, aparthotels, web‑based accommodation platforms, and caravan or glamping sites. The duration of stay is irrelevant for VAT purposes. [revenue.ie]

4.2 Applicable VAT rate

A supply of guest or holiday accommodation is taxable at the reduced VAT rate (13.5%), regardless of the length of stay. This treatment continues after 1 July 2026. [revenue.ie]

5. Mixed Supplies: Accommodation and Meals

Accommodation providers frequently offer packages combining lodging with meals (e.g. bed and breakfast or half‑board). Revenue clarifies that such arrangements constitute multiple supplies, not a single composite supply.

From 1 July 2026:

• Accommodation is taxable at 13.5% (reduced rate).
• Meals supplied as restaurant or catering services are taxable at 9% (second reduced rate).
• Standard‑rated items (e.g. alcohol or soft drinks) must be separately identified. [revenue.ie]

Where a single price is charged, the total consideration must be apportioned on a fair and reasonable basis, typically by reference to the standalone selling prices of each element. Revenue provides practical numerical examples illustrating how discounts and advance payments should be allocated across the different VAT rates. [revenue.ie]

6. Practical Implications for Businesses

Hotels, restaurants, caterers, and accommodation providers must:

• Correctly classify supplies as services or goods.
• Apply the appropriate VAT rates following the 1 July 2026 change.
• Ensure systems can handle VAT apportionment for bundled supplies, discounts, and advance payments.
• Clearly identify standard‑rated items within otherwise reduced‑rated services.

Failure to apply these distinctions correctly may lead to VAT under‑ or over‑accounting and increased audit risk.

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• Irish Revenue Commissioners updated VAT guidance for accommodations, restaurant, and catering services.
• From July 1, expenses for restaurant and catering services, including food, will be subject to a 9% VAT rate.
• Mixed packages of accommodations and food services require VAT apportionment.
• Accommodation services are subject to a 13.5% VAT rate.
• Specified drinks remain subject to existing VAT rules.

Source: news.bloombergtax.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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