Ireland cuts reduced vat rates on tourism from 2011 to 2013

Sun 15th May 2011

The Irish government has announced Irish VAT rate cuts for the travel and tourism industries.

Short term VAT cut to attract tourists

From July 1 2011 VAT on restaurants, hotels and tourist attractions will be cut from 13.5% to 9%, where it will remain until December 2013. The current Irish VAT rate is 21.5%. The scope of this reduced VAT rate extends also to cinemas, theatres, sporting events, golf fees, newspapers and magazines due to their links with the tourism industry. This measure is combined with a cut to the €3 Air Travel Tax, on the condition that airlines use it to boost passenger numbers and open new routes.

Part of larger economic stimulus package

This announcement came as part of a larger Jobs Initiative which is aimed at encouraging employment and improving Ireland’s economic competitiveness. This will be done through boosting tourism and investing in schools and training and investment initiatives.

Guarding Ireland’s low business tax rate

Following it’s €85 billion bail out, Ireland has resisted pressure from other European countries to increase its ultra-low business tax rate of 12.5&. Finance Minister Michael Noonan again confirmed that this rate is ‘here to stay’. The Jobs Initiative will be funded in part by a levy on private pension funds of 0.6%.