Warm Welcome for ‘Hospitality Budget’
The hospitality sector has given a warm welcome to the Budget provision that will see the VAT rate on food service reduced from 13.5 to 9 per cent from July 2026.
Organisations representing publicans have, however, expressed disappointment that excise duties on alcohol were not also reduced, while the Restaurants Association of Ireland, a major lobbyist for the change, said that delaying the implementation to next July will result in further restaurant closures.
The Minister for Enterprise, Tourism and Employment, Peter Burke, said the decision was taken "to inject viability" into hospitality businesses and was evidence-based.
He said there was a 4.2% drop in full-time employment in the hospitality sector in the last quarter, which he said was "about 1.9% behind the national growth in our economy, and that really points to it being under significant pressure". He said many of the businesses in hospitality "are not making money" and "many are on the brink".
Welcoming the VAT reduction, the Restaurants Association of Ireland issued a warning that many hospitality businesses will struggle to survive the first half of 2026 unless action is taken to offset rising labour costs ahead of the VAT reduction in July.
Adrian Cummins, CEO, said:
"The return of the 9% VAT rate is a welcome and long-fought victory for our industry. It will play a key role in safeguarding jobs, supporting SMEs and maintaining tourism. This could be the difference between some businesses continuing to offer employment."
HF President Michael Magner said:
"The lower 9% VAT rate is a crucial intervention for struggling food service businesses the length and breadth of the country at a time of enormous challenges and unsustainable increases in operating costs.
"This measure goes a long way toward putting Irish tourism on a more stable footing, aligning Ireland’s VAT rate for hospitality food services with the majority of our European competitors."
The Licensed Vintners Association and the Vintners Federation of Ireland, while welcoming the VAT rate cut, have both hit out at the decision not to reduce excise duty on alcohol, which the representative groups say is among the highest in Europe.
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