On 7 October 2025, Ireland’s Department of Finance released Budget 2026: Taxation Measures, outlining several important updates to VAT that will directly impact the tourism, hospitality, and energy sectors over the coming years.
These measures aim to support key industries that continue to face cost pressures, while maintaining competitiveness and encouraging sustainable energy consumption.
Key VAT changes announced
Extension of 9% VAT rate on Energy
The reduced 9% VAT rate on the supply of gas and electricity—originally introduced as a temporary measure—has been extended until 31 December 2030.
This long-term extension provides clarity and stability for both households and businesses as Ireland continues its energy transition.
Also extended: The 9% VAT rate on electric vehicle (EV) charging will remain in place until 31 December 2030, encouraging continued investment in e-mobility infrastructure.
Reduced 9% VAT rate for Tourism and Hospitality (from 1 July 2026)
From 1 July 2026, a reduced VAT rate of 9% will apply once again to:
- Food and catering services
- Hairdressing services
This marks a return to the 9% rate last seen during previous support measures for the hospitality sector, replacing the standard 13.5% rate currently in effect.
The measure is designed to bolster Ireland’s tourism and hospitality recovery, supporting businesses such as restaurants, cafés and hotels that have faced ongoing inflationary and wage cost challenges.
9% VAT Rate for new apartment sales (from 8 October 2025)
In a move to stimulate housing supply, a reduced 9% VAT rate will apply to sales of new apartments from 8 October 2025 until 31 December 2030.
This change forms part of the government’s broader strategy to address housing affordability and increase construction activity in the urban residential sector.
Practical implications for businesses
These VAT adjustments will require updates to tax systems, reporting processes and compliance strategies, especially for businesses operating across multiple sectors. Businesses in tourism, hospitality and energy should prepare for VAT rate reconfigurations effective 1 July 2026 and ongoing compliance with extended reduced rates through 2030.
- Ensure your accounting, invoicing and ERP systems are updated to reflect the new vat rates for food, catering, hairdressing and energy
- Finance teams should plan for mid-year rate changes in reporting when the 9% VAT rate takes affect from 1 July 2026.
- Extended energy and EV charging rates require long-term compliance monitoring to reduce the risk of errors or audits
- Finance teams should be briefed on effective dates, affected services and reporting implications to prevent errors in filings.
By proactively preparing now, businesses can minimise disruption, remain compliant, and leverage VAT changes strategically—whether it’s in hospitality, energy or property sectors.
Source:
Department of Finance – Budget 2026: Taxation Measures
https://www.gov.ie/en/department-of-finance/publications/budget-2026-taxation-measures/
Final thoughts
The reinstatement and extension of the 9% VAT rate across these key sectors signal a balanced approach to supporting Ireland’s economic recovery while promoting sustainable growth. For compliance teams, now is the time to review VAT setups, ensure readiness for mid-2026 changes, and monitor updates to accepted practices and system configurations.
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Authors
Lisa Dowling
Specialising in International VAT Compliance solutions, Lisa brings a wealth of knowledge and insight in her dealings with a host of international clients ranging from start-ups through to multinationals. With 21 years VAT experience behind her, Lisa has managed VAT compliance issues and solutions globally for over 11 years. Fintua have 12,000 + corporate clients in over 109 countries and many of these are members of the Fortune 500.
