The 9% VAT rate is here to stay for another few months, but what does that mean for hospitality?

When the coronavirus pandemic hit in 2020, the hospitality sector suffered the consequences of lockdowns and restrictions considerably. In an attempt to lessen the blow to hospitality, a reduced VAT rate of 9% was introduced for the sector; this rate was set to expire in August 2022. Today Minister for Finance Paschal Donoghue has announced the extension of the reduced VAT rate to February 2023.

According to gov.ie, Donoghue said this of the extension:

“The 9% VAT rate was introduced in response to the challenges posed by Covid-19 to support the hospitality sector and today the Government has decided to extend the period when the 9% rate will apply for a further six months. This will provide further support to the tourism and hospitality sectors over the busy November/December period and into the early New Year.”

VAT was meant to rise to 13.5% from September 2022.

Minister for Tourism, Culture, Arts Gaeltacht, Sport and Media Catherine Martin says:

“The extension will promote business survival and support employment in the industry.”

According to The Journal, Adrian Cummins of the Restaurants Association hoped the reduced rate would extend until the end of 2023. However, according to gov.ie, a further extension is not expected. Therefore the 13.5% VAT rate will return to the hospitality sector from March 2023.

Header image via Luca Bravo on Unsplash

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