Restaurant Industry in Ireland Petitions for Resumption of 9% Value-Added Tax Rate
Ireland's Restaurant Sector Calls for 9% VAT Rate Restoration
A significant campaign is underway in Ireland, led by key industry groups like the Restaurants Association of Ireland and Irish hoteliers, to restore the 9% VAT rate on food services. This move is being advocated ahead of Budget 2026 [1][2][3][4][5].
The restaurant and hospitality sectors are currently facing substantial cost increases, both from market forces and government-imposed costs, which have squeezed profit margins significantly [1][2]. A lower VAT rate is seen as crucial to alleviate this economic pressure.
Small businesses dominate the sector, with 76.6% of hospitality enterprises employing between one and nine people. These small firms are particularly vulnerable to cost and policy shocks, making a lower VAT rate critical for their survival [1][2].
Recent official data shows a decline in food services sales volume throughout 2025 and weak lending to the sector, indicating that it is under severe financial strain and not recovering strongly [1][2].
Ireland’s current 13.5% VAT rate on food services is higher than in many other EU countries; 18 out of 27 EU member states have a lower VAT rate on food services, with an average among those states at around 9.5%. For example, Germany is set to reduce its VAT rate to 7% early next year [3][4]. This competitive disadvantage is another reason for the call to restore the 9% VAT rate.
The hospitality sector supports over 270,000 jobs, with over 70% of these roles outside Dublin. Restoring the 9% VAT rate is positioned as a key protective policy for these jobs, as it supports regional employment, economic diversification, and rural development [3][4].
Reduced VAT on hospitality food services benefits the wider population by keeping costs lower for consumers, reinforcing the rate as a social as well as economic support measure [2].
The Restaurants Association of Ireland has specifically rejected recent critiques questioning the desirability of restoring the 9% rate, emphasizing that the current pressures make the reduced rate justified. However, explicit counterarguments from government or other stakeholders against the rate restoration are not detailed in the provided results [1][2].
While not directly stated, potential arguments against reducing VAT could typically relate to fiscal costs to the government (reduced tax revenue), concerns over complexity in tax administration, or priorities for budget allocation elsewhere—these are not covered in the retrieved sources.
As of late August 2025, the government's response remains pending. The Irish Hotels Federation and Restaurants Association are lobbying government ministers ahead of budget decisions, emphasizing urgency and sector viability concerns. There is no confirmation yet that the government has agreed or decided to restore the 9% rate, but strong sectoral advocacy suggests it remains a key topic in policy debates ahead of the budget [1][3][4][5].
[1] Restaurants Association of Ireland (RAI). (2025). Restoring the 9% VAT rate on food services: A policy brief. Dublin: RAI.
[2] Foley, A., & Cummins, A. (2025). The economic case for restoring the 9% VAT rate on food services. Dublin: RAI.
[3] Irish Hotels Federation (IHF). (2025). Budget 2026: The hospitality sector's priorities. Dublin: IHF.
[4] Department of Finance. (2025). Budget 2026: Consultation document. Dublin: Department of Finance.
[5] Central Statistics Office (CSO). (2025). Monthly Services Index. Dublin: CSO.
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