{"id":525680,"date":"2026-06-30T11:09:09","date_gmt":"2026-06-30T11:09:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/525680\/"},"modified":"2026-06-30T11:09:09","modified_gmt":"2026-06-30T11:09:09","slug":"vat-rate-to-be-cut-to-9-from-13-5-from-midnight","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/525680\/","title":{"rendered":"VAT rate to be cut to 9% from 13.5% from midnight"},"content":{"rendered":"

The VAT charged in cafes, restaurants, catering services and hairdressers will be cut from 13.5% to 9% from midnight tonight.<\/p>\n

The measure will cost the taxpayer \u20ac232m in 2026 and \u20ac681m next year.<\/p>\n

The development will benefit the food services elements of a broad range of enterprises including hotels, museums and visitor attractions and follows a campaign by the Irish Restaurants Association and the Irish Hairdressers Association.<\/p>\n

The rate of VAT has been changed on a number of occasions over recent decades.<\/p>\n

Most recently, during the Covid pandemic the 13.5% rate was reduced to 9% in November 2020, but the Government increased it again to 13.5% in September 2023.<\/p>\n

The Budget announced in October last year included a commitment to cut the VAT rate from July 1, 2026.<\/p>\n

The Government has argued that the measure supports employment in the labour intensive sectors of hospitality and hairdressing.<\/p>\n

There has been criticism of the fact it benefits large multinationals such as McDonald’s and Starbucks as well as small family-owned firms.<\/p>\n

Labour Party’s finance spokesman Ged Nash told the D\u00e1il last week it was “not the best way to allocate finite public resources” and it should be concentrated on “the small microenterprises that keep our towns and villages across the country going.”<\/p>\n

The development comes in the same week as the International Monetary Fund<\/a> told the Government it should increase the revenue from taxes such as VAT to reduce dependence on corporation tax from multinationals.<\/p>\n

The Irish Fiscal Advisory Council also said last week that multinationals in three sectors – manufacturing, tech and financial services – contributed over \u20ac13 billion in payroll taxes and VAT.<\/p>\n

It said \u20ac3 in every \u20ac10 collected by the State in tax and PRSI is from these companies.<\/p>\n

Bank of Ireland chief economist Conall MacCoille said that employment in the restaurants sector has been “broadly flat over the past six years while the rest of the economy has powered on.”<\/p>\n

He added that “profit margins have been under pressure”.<\/p>\n

He said the measures are designed to help the sector, but he would not expect it to result in lower prices. He said the VAT rate of 9% was not out of kilter with Europe.<\/p>\n

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But he said there was concern that Ireland was becoming too reliant on money from multinationals and the country\u2019s tax base was becoming unstable if Ireland was hit by an economic shock.<\/p>\n

Speaking on Morning Ireland, he also noted that issues around the concentration of the tax base, reliance on the multinational sector and the erosion of VAT intake due to exemptions and reduced rates, are things that are attracting the attention of international bodies.<\/p>\n

“It’s not just multinationals, our tax base overall is just very, very narrow and potentially unstable if we get hit by an unexpected economic shock,” he explained.<\/p>\n

The IMF’s report also said “private consumption is expected to slow down due to weaker employment and real income growth.”<\/p>\n

This could mean less spending on certain items and services, including eating out especially if cuts are not passed on to the consumer.<\/p>\n

Mr Mac Coille said the rate cute will help the sector to lift profits.<\/p>\n

“I think the sector has genuinely been under pressure and it’s been supported, but there is a limited pool of resources and again you would suggest that the wind should be in the other direction, it should be about raising the amount of revenue we get from VAT and aggregate, so difficult choices have to be made,” he said.<\/p>\n

Taoiseach Miche\u00e1l Martin has said the reduction of the VAT rate to 9% for food businesses and hairdressers aims to provide alleviation to the hospitality sector.<\/p>\n

Speaking on his way into Cabinet, he said: “It’s an industry that is under, in certain parts of the country, significant pressure, maybe not as much in the cities”.<\/p>\n

“Margins have been very, very tight in that industry, so it’s a support to the domestic services industry, which I think it important also and I wouldn’t dismiss the importance of it in terms of giving alleviation to many restaurants and hospitality outlets across the country.”<\/p>\n","protected":false},"excerpt":{"rendered":"The VAT charged in cafes, restaurants, catering services and hairdressers will be cut from 13.5% to 9% from…\n","protected":false},"author":2,"featured_media":525681,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[72,61,60],"class_list":["post-525680","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-ie","tag-ireland"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/525680","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=525680"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/525680\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/525681"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=525680"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=525680"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=525680"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}