Reduced VAT rate to remain for tourism and hospitality sectors

The decision was announced by Ministers today.

The Minister for Finance has announced the special 9% VAT rate is to be extended for the tourism and hospitality sectors.

The proposal was approved by Government at the Cabinet meeting held earlier today. The 9% VAT rate will remain in place for these sectors until February 28, 2023.

Minister Pascal Donohoe says the decision is expected to cost in the region of €250m and will cover the same goods and services as the original measure, restaurant supplies, tourist accommodation, cinemas, theatres, museums, historic houses, open farms, amusement parks, and hairdressing, as well as certain printed matter such as brochures, leaflets, programmes and catalogues.

Speaking following the announcement, Minister Donohoe noted that: “The tourism and hospitality sector was one of those most impacted by the public health restrictions put in place throughout the pandemic. Through no fault of their own, bars, hotels and restaurants had to close on multiple occasions to help the country make its way through the worst of the public health crisis."

There had been calls for the VAT rate to be extended following the impact of the Covid-19 pandemic on the sectors, particularly due to the prolonged closures during lockdowns.

"The 9% VAT rate was introduced in response to the challenges posed by Covid-19 to support the hospitality sector", said Minister Donohoe.

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

“I am delighted that the Minister for Finance, Paschal Donohoe, and my colleagues in Government have agreed to extend the reduced VAT rate until end-February 2023. The Hospitality and Tourism Forum, which I co-chair with the Tánaiste, has repeatedly raised the importance of extending the lower VAT rate for the entirety of 2022. I have pressed on this issue for several months now and I know that this extension will give the sector time to rebuild and consolidate after a harrowing two years under Covid-19. The extension will promote business survival and support employment in the industry.”