Hospitality and tourism operators across Ireland are being reminded to update systems ahead of the return of the 9% VAT rate on 1 July 2026. The reduced rate will apply to hotels, guesthouses, restaurants, cafes, tourism attractions, cultural admissions and guided tours.
The change was introduced in the Finance Act 2025, and urged businesses to review pricing, menus, point of sale systems and treatment of advance bookings to ensure smooth implementation. The move is expected to provide relief for many operators in the sector.
To avoid penalties, surprise tax liabilities, or negative consumer sentiment, business owners have been advised to implement a four-step technical and strategic action plan:
- Reconfigure POS and Accounting Systems: Update point-of-sale (POS), billing, and online ordering software before midnight on June 30th. Ensure that single receipts can split items across 9%, 13.5%, and 23% VAT categories simultaneously.
- Mathematically Apportion Mixed Packages: If you sell combined bundles (like a bed and breakfast hotel rate), you must mathematically separate the components. The overnight stay must be billed at 13.5%, while the breakfast food portion must be calculated at 9% on a fair market value basis.
- Establish a Pricing Strategy: Decide whether you will pass the 4.5% tax savings directly to consumers via lower menu prices to drive foot traffic, or maintain gross prices to absorb the extra margin and cover rising minimum wage and energy expenses. Transparently update menus, physical signage, and websites to reflect your choice.
- Audit Advance Bookings and Deposits: According to Irish Revenue rules, the VAT rate applied generally depends on when the service takes place rather than when the deposit is received. Review deposits held for events or catering bookings scheduled for July 1st onwards to guarantee correct invoice formatting.
