Effects of cost-of-living crisis prompts extension of VAT rate cut from 13.5% to 9% to 28th Feb 2023
Ireland’s government has announced on 10 May 2022 a second extension of the reduced VAT rate on restaurant, cafe, catering and tourism services past the planned deadline of 31 August 2022. The new deadline is 28th February 2023. This latest extension will cost Ireland €250 million.
Spiralling inflation replaces COVID-19 economy woes
The last prolongation is due to increased inflation. Ireland’s April 2022 annual inflation rate was 7.3%, up from 6.7% in March.
The cut was originally introduced during the COVID-19 pandemic from 30 November 2020. It was initially to run to 31 December 2021, but it was extending in the October 2021 budget to the current 31 August 2022.
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Affected services include:
- Hotel and similar accommodation
- Entrance to cinema, sporting, cultural, circus, concert and amusement parks
- Restaurant, cafe and general catering services
Ireland had reduced its standard VAT rate from 23% to 21% between September 2020 and the end of February 2021. Ireland had previously reduced its tourism VAT rate from 13.5% to 9% between July 2011 and January 2019 to alleviate the effects of the Euro crisis. The UK, Germany, Austria and many others around the world have cut their tourism and accommodation rates.
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