The Government has, as widely expected, confirmed the permanent lowering of the VAT rate for the hospitality sector.
The return to 9% VAT for hospitality businesses – down from the current 13.5% – has been called for by the industry for some time and has been promised by Government for months.
In his Budget 2026 address, Finance Minister Paschal Donohoe confirmed the VAT rate reduction for hospitality (those focusing on food and catering) from July 1, 2026.
Minister Donohoe said the move will cost €232m next year and €681m in a full year.
“It reflects the Government’s commitment to support businesses in the services sector who are facing increased cost pressures,” he said, while going on to claim the move will support more than 150,000 jobs in these sectors (the move also includes hairdressers) “right across the country”.
The Irish Tourism Industry Confederation (ITIC) recently said the promised reduction to 9% must be extended to include attractions, adventure holiday operators and caravan parks – a call which seems to have fallen on deaf ears.
Nevertheless, the measure has been welcomed.
John O’Beirne, CEO and Executive Director of payments company Square, said: “The VAT reduction is a real boost for hospitality businesses across Ireland. For restaurants, cafés and pubs already managing tight margins, this cut will provide welcome breathing space. At Square, we see how important these measures are for helping small businesses reinvest, retain staff, and deliver great experiences to their customers.”
