Michael Cahill (Kerry, Fianna Fail)
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293. To ask the Minister for Finance to clarify an issue regarding the 9% VAT rate for the hospitality sector (details supplied); and if he will make a statement on the matter. [56748/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by Revenue, that the VAT rating of goods and services is subject to the requirements of EU VAT law, with which Irish VAT law is required to comply. In general, the EU VAT Directive provides that all goods and services are liable to VAT at the standard rate, unless they fall within categories of goods and services specified in Annex III of the VAT Directive, in respect of which Member States may apply a lower rate of VAT. On this basis, Ireland applies a reduced rate of VAT on the supply of accommodation in hotels and similar establishments, and on restaurant and catering services excluding the supply of alcoholic and certain other drinks as part of that service.

As announced in Budget 2026, with effect from 1 July 2026, restaurant and catering facilities which are currently subject to the 13.5% reduced VAT rate will move to the second reduced VAT rate of 9%. This includes meals served in hotels, guesthouses, B&Bs and other similar establishments. This VAT rate change will be legislated for in the forthcoming Finance Bill. Supplies of alcohol, bottled waters, soft drinks, sports drinks and vegetable juices (excluding fruit juice) are not included in the change and will remain liable to VAT at the standard rate even when provided as part of a restaurant or catering service.

The 13.5% VAT rate continues to apply to the supply of accommodation in hotels, guesthouses, and similar establishments, including in the B&B sector.

In practical terms, this means that, where a single charge is made for a package comprising both meals and accommodation, the charge must be apportioned for VAT purposes between the elements taxable at 9% and at 13.5%, in addition to any elements that are chargeable at the standard rate. So, where a B&B charges a single price covering both the overnight stay and breakfast, that total must be apportioned for VAT purposes, with the breakfast element taxable at 9% and the accommodation element at 13.5%. The apportionment should be made on a fair and reasonable basis, having regard to the selling prices of each component if sold separately.

Revenue publishes guidance on its website to assist businesses in determining the appropriate VAT treatment and apportionment in such cases. Existing guidance is available at , and this will be updated to include examples relevant to the hospitality sector in advance of the introduction of the new changes on 1 July next.