Séamus McGrath (Cork South-Central, Fianna Fail)
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235. To ask the Minister for Finance if he will confirm the estimated year one and full-year cost of reducing the 13.5 percent rate of VAT for the tourism and hospitality sector; if he will also confirm the corresponding cost of reducing the rate to 9 percent for food services only; if he will confirm whether Revenue are now satisfied that splitting the Vat rate between food and accommodation is possible; and if he will make a statement on the matter. [51052/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue that traders are not required to identify the VAT yield generated from the supply of specific goods and services on their VAT returns. Therefore, it is not possible to provide estimates of VAT reductions on the hospitality sector based on tax returns alone.

However, using third-party, a tentative estimate of the cost to the Exchequer of the first and full year costs of reducing the VAT on these sectors in 2026 , assuming a 1 January to 31 December timeframe, is presented in the table below:

Revenue have advised that it is possible within the terms of the Directive to apply different rates of VAT to the supply of accommodation within the hospitality sector and the supply of food within the hospitality sector. In accordance with the principle of fiscal neutrality the VAT rate applicable to accommodation within the sector would apply to all holiday accommodation providers such as hotels, guest houses, bed and breakfasts, serviced apartments, web-based guest and holiday accommodation and holiday accommodation. The VAT rate on food services supplied within the sector would apply to all restaurants, catering businesses and establishments providing hot takeaway food.

Imposing separate VAT rates for food and accommodation will present additional administrative challenges for businesses providing both – i.e. package rates, all-inclusive tours, bed and breakfast, etc., in relation to record keeping, invoicing, and associated compliance costs.