Darren O'Rourke (Meath East, Sinn Fein)
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143. To ask the Minister for Finance to outline plans to reduce the VAT rate in the hospitality sector; the specific proposals being considered presently; and if he will make a statement on the matter. [38947/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy will be aware, it is a longstanding practice that the Minister for Finance does not comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.

Between 1 November 2020 and 31 August 2023, the VAT rate applied in the hospitality sector was temporarily reduced to 9% from 13.5%. The rationale for this was to support the industry which had been adversely affected by the COVID-19 pandemic and facing staff shortages. This measure came at a considerable cost to the Exchequer at over €1.3 billion of foregone VAT revenue.

The measure was not extended after it expired on 31 August 2023 as employment had recovered in the sector and had even exceeded levels recorded pre-Pandemic. In the context of an expanding economy, the Government at the time opted not to extend the 9% applied to the sector.

Apart from VAT measures, recent budgets contained several measures to support businesses facing increased costs, including the Increased Cost of Business grant in Budget 2024 and the Power Up Grant of €4,000 in Budget 2025.

In addition, it should be noted that the most recent income tax package increased consumer purchasing power, which should help boost spending in the food-based hospitality sector.

In the Programme for Government 2025 it was pledged to support SMEs, particularly those in the retail and hospitality sectors, by examining changes to VAT, PRSI and other measures. Any changes to tax rates must be done by balancing their impact against their cost on the overall budgetary framework. This will be done in the context of the upcoming budget.

Pádraig O'Sullivan (Cork North-Central, Fianna Fail)
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144. To ask the Minister for Finance if any consideration or investigation is underway ahead of Budget 2026 to assess the appropriateness of a VAT reduction to stimulate the construction sector; and if he will make a statement on the matter. [38578/25]

Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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159. To ask the Minister for Finance if his Department has considered the reduction of VAT on the construction of new apartments; the cost of such a measure; and if he will make a statement on the matter. [39367/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 144 and 159 together.

As the Deputies will be aware, it is a longstanding practice that the Minister for Finance does not comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.

However, I am advised that the VAT rating of goods and services is subject to the EU VAT Directive, with which Irish VAT Law must comply. In general, the Directive provides that all goods and services are liable to VAT at the standard rate unless they fall within those listed in Annex III, in respect of which Member States may apply a lower rate. The Directive also permits individual Member States to retain historic treatment of VAT on specific goods and services on the condition that the rate is parked and does not fall below 12%. Ireland applies a rate of 13.5% to all construction services, including of new apartments.

The Deputy should note that for any VAT rate reductions, a company can increase the base price so that the final consumer does not benefit from the VAT reduction.

Finally, I am advised by Revenue that it is not possible to provide a breakdown of construction sector costs to separate out the VAT cost of new apartments as the underlying data does not distinguish between houses and apartments.

Any changes to VAT rates within the construction sector will be considered as part of the normal Budget process.