VAT Rates in Ireland 2026: What Changed From 1 July

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Charging the correct VAT rate is one of the most critical steps to stay compliant and protect your business’s cash flow. Ireland operates multiple VAT rates concurrently, and as many members will be aware, navigating these changing categories can be challenging.

Budget 2026 introduced significant shifts to the 9% second reduced rate, particularly for those in the hospitality and personal care sectors. From 1 July 2026, the goods and services covered by this rate will change.

This guide outlines what qualifies for the 9% rate in 2026, common pitfalls to avoid, and practical steps to ensure your business applies the correct rates with confidence.

What Qualifies for the 9% VAT Rate in 2026?

The 9% second reduced rate applies to a defined, though shifting, list of goods and services. Currently, this includes:

• Gas and electricity (extended to 31 December 2030)
• Electric vehicle charging (extended to 31 December 2030)
• The supply and installation of heat pumps
• Access to sporting facilities, such as green fees and gym subscriptions
• The sale of completed apartments (from 8 October 2025 to 31 December 2030)

The Headline Change for July 2026:

From 1 July 2026, the 9% rate will permanently expand to include two new categories:

1. Food and hot drinks sold as part of a restaurant, catering, or hot takeaway service.
2. Hairdressing services.

If you run a café, restaurant, takeaway, or salon, the rate you charge on these services will drop from 13.5% to 9% on this date.

What Does Not Qualify

Many items appear as though they should qualify for the 9% rate but do not. Members should pay close attention to the following exclusions to avoid Revenue penalties:

• Accommodation: Stays at 13.5%. Hotels, guesthouses, and short-term lets do not move to 9% - only the food and catering elements do.
• Cold Drinks and Alcohol: Alcohol, soft drinks, and bottled water remain at the standard 23% rate, even when served alongside a 9% meal.
• Publications: Newspapers, e-newspapers (0% since 1 January 2023), e-books, and audiobooks (0% since 1 January 2024) are zero-rated. They are no longer 9%.
• Services: General construction and cleaning services stay at 13.5%.

Overview of Irish VAT Rates for 2026

(Note: Ireland also has a 4.8% livestock rate for live cattle, sheep, and pigs, which applies to specific agricultural transactions.)

Advice for Members: What This Means for Your Business

If you run a café or restaurant

Update your till and accounting software so food and hot beverages (like tea and coffee) move to 9% from 1 July 2026, while keeping alcohol, bottled water, and soft drinks at 23%. You will also need to decide commercially whether to pass this VAT saving on to your customers or hold your prices to support your margins.

If you run a salon

Hairdressing moves to 9% on 1 July 2026. Review your pricing and point-of-sale settings now so the new rate applies cleanly from day one.

If you run a hotel or guesthouse

You must split your supplies carefully. Restaurant meals move to 9%, but the room rate stays at 13.5%. Where you sell a package, such as Bed and Breakfast, Revenue expects you to apportion the package price accurately between the accommodation and the meal.

Next Steps

1. Identify the supply: Be precise about what you are selling. The VAT rate follows the exact good or service.
2. Consult Revenue Guidance: Use the official VAT rates database on the Revenue website to match your supplies, as categories can be highly specific.
3. Confirm the date: Ensure you apply the hospitality and hairdressing changes exactly on 1 July 2026.

If you have any questions please contact SFA Director, David Broderick at David.Broderick@sfa.ie.