Ireland may have to raise restaurant reduced VAT rate

Mon 23rd Sep 2013

The Irish VAT rate on restaurants and hospitality may have to increased from the reduced rate of 9% back to 13.5%.

The Irish Finance Minister has indicated this weekend that the temporary tax break costing €360m would not be extended beyond the next budget.  This comes despite heavy lobbying for an extension of the reduced tourist Irsh VAT rate from the industry.

Irish tourist VAT rate cut to 9% in 2011

The reduced VAT rate on Irish tourism was first introduced in 2011.  It was intended as a short-term economic stimulus for the key industry.  The tourism sector lobby has since claimed that the VAT subsidy has created 9,000 jobs.

Greece cut VAT on restaurants in August 2013.  However, this cut from the standard Greek VAT rate of 23% to 13% has already had mixed results as the entertainment prices have not fallen significantly.  It is possible that restaurants are instead holding onto the tax as profits.  Portugal is looking to reduced VAT tourism rate soon.  Both the Greek and Portuguesse VAT changes require EC, ECB and IMF approval.

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