Budget 2026 restored the 9pc VAT rate for food-related hospitality services from July 2026. The cut applies to cafes, restaurants, delis, and fast-food outlets.
Tourism Ireland gains increased funding for overseas marketing, including new direct flights and international office reopenings, with an estimated €25 economic return per €1 invested.
Fáilte Ireland receives extra resources for sustainable tourism, Halloween campaigns, and business events strategy to support regional development.
The Irish Hotels Federation welcomes the VAT cut, which supports 270,000 jobs, 70pc outside Dublin, though labour costs rise by €1.4bn across tourism and hospitality payrolls by 2026 due to employer PRSI increases.
The budget fell short of the sector’s €90m request for tourism spending to reach €340m annually, amid Dublin Airport capacity boosts from a 2025 court ruling but ongoing infrastructure delays.
Increased funding for Fáilte Ireland and Tourism Ireland aims to diversify markets, reducing reliance on North American visitors, amid rising business costs and mixed demand.
Tourism lobby groups welcomed that they described as Minister Peter Burke’s pro-business approach, with expectations for a robust national tourism policy to be revealed soon.
Legislative progress to lift the Dublin Airport passenger cap is also addressing a key industry concern, supporting tourism growth.
The VAT cut was opposed by Department officials who controversially estimate it will cost the exchequer €232m in the first year. A managed media strategy suggested the overall cost could be €1.2bn and was preventing cuts in other areas. The Irish Congress of Trade Unions (ICTU) called the move “economic vandalism” and arguing that the sector is growing and the benefits are not reaching low-paid workers.
The tourism industry supports 270,000 livelihoods, with 70pc of jobs outside Dublin, contributing €10bn in annual revenue and €2.9bn in taxes.
Eoghan O’Mara Walsh of the Irish Tourism Industry Confederation shared, “The 9pc VAT rate is a clear acknowledgement of the challenging trading environment faced by hospitality businesses. The change is recognition of the trading environment faced by hospitality businesses, which contribute €9.4bn in package spending.”
Alice Mansergh shared “the allocation sustains efforts to attract visitors across seasons.”
Michael Magner President of the Irish Hotels Federation shared, “This measure goes a long way toward putting Irish tourism on a more stable footing, aligning our VAT rate with most European competitors. it positions Irish tourism on a more stable footing and aligns rates with European competitors.”
Minister Jack Chambers shared: We will continue: the roll-out of the DART+ and BusConnects programmes in Dublin and our regional cities, including the construction of two core bus corridors in Dublin; the Cork area commuter rail phase 1 and the Enterprise fleet replacement projects; several major national road projects, including the Adare bypass, the N5 Ballaghaderreen to Scramogue and the M28 Cork to Ringaskiddy; and a number of major greenway and active travel projects will be funded and developed in 2026. We will also continue to invest in aviation and maritime connectivity and to provide of a world-class search and rescue service, through the Irish Coast Guard
The Departmenr shared: “Additional funding for Fáilte Ireland and Tourism Ireland will help us compete in an exceptionally competitive global environment.”
