Finian McGrath (Dublin North Central, Independent)
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Question 62: To ask the Minister for Finance if he will clarify the situation regarding the reduction in VAT (details supplied) at hotels. [19264/11]

Michael Noonan (Limerick City, Fine Gael)
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The Finance (No. 2) Act 2011 provided for a second reduced VAT rate, of 9%, on a temporary basis in respect of certain services and goods mainly related to tourism for the period 1 July 2011 to end 2013. The services subject to the 9% rate include restaurant and catering services (excluding alcohol and soft drinks), lettings of rooms and accommodation provided by a hotel. Hotels must account for VAT at the 9% rate on these services provided by them on or after 1 July 2011.

In general, any advance payment, including a deposit, received by a hotel before 1 July 2011 is subject to VAT at 13.5%, and any balance paid on or after 1 July for services provided on or after 1 July is subject to VAT at 9%, the second reduced rate. Where a (VAT inclusive) price has been agreed between the hotel and a customer on the basis that a 13.5% VAT rate would be applicable to the services provided, the customer should pursue with the hotel the question of whether that price should be reduced to reflect the Finance (No. 2) Act 2011 changes.