From 1 July 2026, businesses in the hospitality, catering and hairdressing sectors will see a significant VAT change that could ease ongoing cost pressures and support long‑term resilience.
Irish Revenue has confirmed that the VAT rate on a range of goods and services will reduce from 13.5% to 9%. The move is designed to support SMEs navigating rising energy, wage and insurance costs, while also helping households manage the broader cost‑of‑living environment.
What will qualify for the reduced 9% VAT rate?
- Restaurant and café catering services – excluding alcohol, soft drinks and bottled water
- Takeaway food
- Hairdressing services
These sectors have been under sustained financial pressure, so the reduction offers an opportunity to stabilise margins and strengthen competitiveness.
What should businesses do now?
To ensure a smooth transition on 1 July 2026, businesses should;
- Review your product and service VAT mapping to confirm which items will move to the 9% rate.
- Update point of sale, invoicing and accounting systems to ensure all platforms reflect the new rate from day one.
- Assess pricing strategy and decide whether to pass on savings, maintain prices or adopt a blended approach.
- Revisit cash‑flow forecasts as lower VAT collection may influence working capital and payment timing.
- Train staff to ensure teams understand the new rate and any related pricing updates.
What remains unchanged?
- The 9% VAT rate on electricity and gas will continue until 2030.
- The 9% VAT rate on qualifying new-build apartments remains in place until 31 December 2030.
With the implementation date fast approaching, businesses should take steps now to ensure a smooth transition and avoid compliance issues.
If you would like to discuss how these VAT changes may affect your business, our tax specialists are here to help. Contact us at info@dains.ie.