Hospitality VAT Cut to 9% Now in Effect
- From 1 July 2026, under the Finance Act 2025, Ireland reduced the VAT rate from 13.5% to 9% for restaurant and catering services, hot takeaway food, and hairdressing services. Unlike previous temporary reductions, this measure is permanent (no sunset clause), though earlier guidance framed it as lasting to 31 December 2030. [crowe.com], [globalvatc…liance.com]
- Beverages generally stay at 23% (alcohol, soft drinks, bottled water), except tea and coffee, which move to 9% in all cases. Cold takeaway food (e.g., cold sandwiches) remains at 0%, while takeaway confectionery is 23%. Combination meals require apportionment between items at their respective rates. [crowe.com]
- Hotel accommodation remains at 13.5%, but food and catering supplied by hotels qualify for 9%. The Department of Finance estimates over 99% of affected businesses are SMEs, ~85% of the benefit accrues to SMEs, and roughly 150,000+ jobs are supported. Businesses must update POS/accounting systems to avoid penalties. [gov.ie], [bdo.ie]
Sources: Crowe Ireland · gov.ie · BDO Ireland
Other articles
- Ireland cut VAT on food/catering services and hairdressing from 13.5% to 9% as of 1 July 2026 — permanently, no sunset clause. [gov.ie]
- Cost: €232m in 2026, €681m in 2027; measure supports ~150,000 jobs, mostly Irish SMEs. [rte.ie]
- Hotel accommodation stays at 13.5%; alcohol, soft drinks and hair‑care products stay at 23%. [kpmg.com]
Extended article
The reduced 9% VAT rate returns for food‑led hospitality (restaurants, cafés, catering, takeaways, food services within hotels) and hairdressing, in line with the Programme for Government. Unlike previous temporary reductions, this cut is permanent. Tánaiste Simon Harris stressed the objective is to sustain employment and SMEs — although he acknowledged large chains like McDonald’s and Starbucks will benefit. Critics (Labour, watchdogs) argue for more targeted support. Businesses face split‑rate complexity: a table ordering meals and pints is taxed at both 9% and 23% on the same bill. In parallel, the UK applies a temporary 5% VAT rate to certain family‑oriented supplies from 25 June to 1 September 2026. [gov.ie], [kpmg.com], [rte.ie]
Sources:
- gov.ie – Government Press Release
- RTÉ News
- KPMG Ireland – IE/UK VAT rate reductions [gov.ie]
- [rte.ie]
- [kpmg.com]
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