Reduced VAT rate for hospitality to be extended for six months, Donohoe confirms

The hospitality sector has a VAT rate of 9 per cent, which was due to expire in August.
Reduced VAT rate for hospitality to be extended for six months, Donohoe confirms

By Gráinne Ní Aodha, PA

Updated at 1.20pm

The Minister for Finance has announced that the Government will extend the lower VAT rate for the hospitality sector.

Paschal Donohoe announced that the 9 per cent VAT rate will be extended for a further six months.

Mr Donohoe said that it was important to ensure that the tourism sector could rebound from the pandemic, amid concerns about rising inflation hitting businesses.

He said the extension of the reduced rate of VAT was “another significant economic measure”.

The rate was reduced from 13.5 per cent on November 1st 2020, with the aim of helping businesses under financial pressure due to pandemic-related restrictions.

It was extended during this year’s budget to the end of August, despite businesses asking for it to be extended further to help them recover from lockdown losses.

The reduced rate will now remain in place until February 28th next year and will cost approximately €250 million.

“This is to provide support to the sector, obviously across the busy August period, but critically as they approach November and December, and we know how important it is that they have a good December trading period,” Mr Donohoe said.

He said that the measure “lays the foundations for a really good recovery within a very important part of our economy”.

The move was welcomed by the Restaurants Association of Ireland (RAI) CEO Adrian Cummins.

"Since the budget last October the Restaurants Association of Ireland has called for this extension as tourism and hospitality businesses, some of the worst impacted by Covid trading restrictions, continue to recover," Mr Cummins said.

"This decision to extend the rate is welcome at a time when hospitality businesses face rising input costs and inflation."

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