Regulatory updates - Ireland

The Irish government has confirmed that the reduced 9% VAT rate will return from July 1, 2026 for food and catering services and hairdressing, in line with a programme for government commitment. Hotel accommodation is excluded from the reduced rate, though food and catering provided within hotels will qualify. The objective of this measure is to support businesses in these services sectors facing increased cost pressures.

Irish Revenue has issued guidance on the VAT treatment of restaurant, catering, and accommodation services. Key points include:

VAT on restaurant and catering services

Restaurant and catering services are classified as services rather than goods when food is accompanied by sufficient facilities or support, which is why their VAT treatment differs from takeaways and deliveries. From July 1, 2026, restaurant and catering services will be taxed at a reduced rate of 9%, though alcohol, bottled water, and soft drinks remain at the standard rate even when included as part of a restaurant or catering meal.

VAT distinction between takeaway and restaurant services

The guidance draws a distinction between restaurant services and takeaway supplies, with the latter treated as supply goods rather than services. From July 1, 2026, hot takeaway food moves to the 9% rate, while cold takeaway food remains zero-rated.

VAT on guest and holiday accommodation

Guest and holiday accommodation, which includes hotels, B&Bs, serviced apartments, and platforms like Airbnb, is taxed at 13.5% regardless of the length of stay, a rate that remains unchanged after July 1, 2026.

VAT on mixed accommodation and meal package

When accommodation and meals are bundled into a single price, they are treated as multiple supplies, with accommodation taxed at 13.5% and meals at 9% from July 1, 2026, requiring the total price to be apportioned between each element. Numerical examples are provided by Revenue in this regard.

On October 8, 2025, Ireland’s tax authority (Revenue) announced a phased plan for mandatory e-invoicing and real-time VAT reporting to meet VAT in the Digital Age (ViDA) requirements.

From July 1, 2030, the ViDA Directive will require businesses trading cross-border with other EU businesses to implement e-invoicing and real-time reporting to tax authorities. Anticipating these upcoming changes, Revenue announces preparations for implementing ViDA requirements ahead of time.

Timeline:

• Phase 1 — November 2028: Large corporates must use e-invoicing for domestic B2B transactions.
• Phase 2 — November 2029: All VAT-registered businesses involved in intra-EU trade must comply.
• Phase 3 — July 2030: Full ViDA compliance for all cross-border EU B2B transactions.

Technical requirements:

Structured e-invoices in EN16931 format will replace PDFs or scanned invoices. The new system will utilize various existing technical infrastructures, including the Pan-European Public Procurement Online (PEPPOL) framework. Detailed guidance and technical specifications will be provided before each phase.

Revenue is working closely with the Office of Government Procurement, Irelands PEPPOL authority, to prepare for the significant expansion in network usage expected as businesses adopt e-invoicing for domestic and cross-border EU transactions. Revenue is updating legislation, IT systems, and operational processes.

More details are provided in the VAT Modernization document released by Revenue.