If you run a restaurant, café or takeaway in Ireland, the words "hospitality VAT rate" probably make your jaw tighten. It is one of the biggest cost levers on your business, it has moved up and down for years, and getting it wrong on a single till button can mean under- or over-charging tax on every plate you sell. With 150 food-led businesses shutting their doors in the first three months of 2025 alone (Restaurants Association of Ireland, 2025), a few points of VAT is not a rounding error — it is the difference between a viable week and a loss-making one.
This guide answers the questions Irish owners are actually Googling right now: what the hospitality VAT rate is, what is changing on 1 July 2026, what it covers, and the one part nearly everyone gets wrong.
Key takeaways
- The hospitality VAT rate is the rate of VAT you charge on food and catering services — meals sold in a restaurant, café, hotel, bar, takeaway or any other catering setting.
- It falls from 13.5% to 9% on 1 July 2026 for food and catering services (and hairdressing), and the Government has confirmed the cut is permanent (RTÉ, 2025).
- Alcohol and soft drinks do not get the lower rate. Alcohol, bottled water, soft drinks, sports drinks and vegetable juices stay at the standard 23% even when served as part of a meal (Revenue guidance, 2026).
- It is a split-rate world. A table that orders food and a few pints is taxed at two different rates on the same bill — your POS has to handle that.
- The relief lands after the costs. The cut arrives six months after January 2026's minimum-wage rise and the start of pension auto-enrolment (Irish Times, 2025), so cashflow timing matters.
What is the hospitality VAT rate in Ireland?
The hospitality VAT rate is simply the rate of Value-Added Tax that applies to food and catering services — that is, prepared food and meals you supply to customers, whether they eat in or take away. It is sometimes called the "tourism and hospitality" rate because the same reduced rate has historically covered restaurants, cafés, takeaways and (in some periods) hotels and attractions.
Until 30 June 2026, that rate is 13.5% — Ireland's "reduced rate". From 1 July 2026 it becomes 9%, the "second reduced rate". It is the price you build into every meal: when you charge €20 for a main course at 9%, roughly €1.65 of that is VAT you collect and pass to Revenue.
It is worth being clear about what VAT is, because it shapes how the rate hits you. VAT is a tax on the customer, collected by you. You charge it on sales (output VAT) and reclaim it on most business purchases (input VAT), then pay Revenue the difference. So a lower hospitality rate does not put cash directly in your pocket — it lowers the tax wedge on each sale, giving you room to either hold prices and improve margin, or pass some saving on to compete.
What is changing on 1 July 2026?
In Budget 2026 (announced 7 October 2025), the Government confirmed a permanent reduction of the VAT rate on food and catering services, and on hairdressing, from 13.5% to 9%, effective 1 July 2026 (RTÉ, 2025; vatcalc, 2025). Minister for Enterprise Peter Burke described the reduction for the hospitality sector as "a permanent move" — a deliberate contrast with the temporary 9% periods of recent years (RTÉ, 2025).
To give a sense of scale, the measure is costed at €232 million in 2026 and €681 million in a full year (RTÉ, 2025) — money that, on the food side of your business, stops going to the Exchequer and stays in the trading economy.
For your business the practical effect is straightforward: from the first of July, the food portion of every catering sale carries 4.5 percentage points less tax. On a €1,000 day of food sales, the VAT element drops from roughly €119 (at 13.5%) to about €83 (at 9%) — close to €36 a day, or over €13,000 across a year of steady trade, that is no longer tax.
What stays at 23%? (the part owners get wrong)
Here is the catch that catches people. The 9% rate covers food and certain drinks supplied as part of a catering service — but a specific list of drinks is carved out and stays at the standard 23% rate, even when you serve them with a meal:
- Alcohol (beer, wine, spirits, cocktails)
- Bottled water
- Soft drinks
- Sports drinks
- Vegetable juices (excluding fruit juices)
That list comes straight from Revenue's guidance for the July 2026 change (Revenue guidance, 2026), and it is confirmed by the Budget 2026 analyses: "soft drinks and alcoholic drinks … remain subject to the standard (23%) VAT rate" (KPMG, 2025).
So a single table can generate two VAT rates on one bill. Picture a €60 order: a €40 food spend at 9% and €20 of pints and a Coke at 23%. Your till has to apply 9% to the food line and 23% to the drinks line — not a blended rate across the whole receipt. If your POS is set to tax the full bill at one rate, you will get it wrong every service: under-declare and you owe Revenue; over-charge and you are quietly inflating customers' bills. Splitting food and drink correctly in your point-of-sale system is the single most important thing to check before 1 July.
Does it apply to takeaway and hot food?
Yes. The reduced rate "will apply to most food and certain drinks sold in a restaurant, café, hotel, bar, takeaway or other catering environment" (KPMG, 2025). Hot takeaway food supplied in the course of catering moves to 9% along with eat-in meals.
Cold, basic grocery-type foods are a separate question — many are already zero-rated (0%) under long-standing Irish VAT rules, and that treatment is unchanged. If you sell a mix of hot prepared meals and cold shop-style items, it is worth confirming the right rate for each line with Revenue or your accountant rather than assuming everything in the shop now sits at 9%.
Does it cover hotels and tourist attractions?
No — not this time. Unlike some earlier 9% periods, the 2026 reduction does not extend to hotel or short-term accommodation services, or to admissions to tourist attractions (KPMG, 2025). The 9% rate is targeted at the food-led side of hospitality. If you run a room-and-restaurant operation, the accommodation element stays on its own rate while your food and catering services move to 9%.
Is the 9% rate permanent?
For the first time in years, yes. Previous 9% periods were temporary, time-limited measures that lapsed back to 13.5%. Budget 2026 confirmed this one as a permanent reduction (vatcalc, 2025), and the Minister for Enterprise has stated it is a permanent move (RTÉ, 2025). That changes how you plan: you can build the 9% food rate into your pricing, margins and forecasts for the long term rather than treating it as a temporary reprieve.
What this means for your margins — and what to do before 1 July
The relief is real, but the timing is tough. The cut lands six months after January 2026's minimum-wage increase and the start of pension auto-enrolment (Irish Times, 2025) — so you carry higher payroll and pension costs from January and only get the VAT relief in July. Plan the cashflow gap; do not spend the saving before it arrives.
A short pre-July checklist:
- Reconfigure your POS so food sits at 9% and the carved-out drinks (alcohol, bottled water, soft drinks, sports drinks, vegetable juices) stay at 23%. Test a mixed bill before the changeover.
- Decide your pricing position. Hold menu prices and bank the margin, or pass some saving to customers to drive covers — but make it a decision, not an accident.
- Brief your team so nobody overrides the till's rates manually.
- Talk to your accountant about straddling-date sales and your next VAT return.
And because a few points of VAT will not save a business on its own, it is worth looking at the cost lines you control directly. Delivery-app commission — what many owners now call "the new rent" — can swallow far more of a sale than VAT ever did, so owning your own ordering channel (your website and a direct order page, rather than routing every sale through an aggregator) keeps more of each euro in the building. That is the bigger margin lever sitting next to the VAT change. A simple own-website ordering setup — the kind DineHere builds from a photo of your menu — is one way to stop paying commission on orders you could take direct.
Frequently asked questions
What is the hospitality VAT rate in Ireland in 2026?
Until 30 June 2026 it is 13.5% on food and catering services. From 1 July 2026 it falls to 9%. Alcohol and soft drinks remain at the standard 23% rate throughout.
When does the 9% VAT rate start?
1 July 2026. It was confirmed in Budget 2026 (announced 7 October 2025) (RTÉ, 2025).
Does the 9% rate apply to alcohol?
No. Alcohol stays at the standard 23% rate, even when sold alongside a meal in a restaurant or bar (Revenue guidance, 2026).
Does the 9% rate apply to soft drinks?
No. Soft drinks, bottled water, sports drinks and vegetable juices (excluding fruit juices) stay at 23%, even when supplied as part of a catering service (Revenue guidance, 2026).
Does the 9% rate apply to takeaway and hot food?
Yes. The reduced rate covers food sold in a restaurant, café, hotel, bar, takeaway or other catering environment (KPMG, 2025). Hot takeaway food supplied as catering moves to 9%.
Is the 9% VAT rate permanent?
Yes. Unlike previous temporary periods, Budget 2026 made this a permanent reduction (vatcalc, 2025).
Does the cut cover hotels?
No. Hotel and short-term accommodation services, and admissions to tourist attractions, are not included in the 2026 reduction (KPMG, 2025).
What is the standard VAT rate in Ireland?
23%. It applies to most goods and services not covered by a reduced or zero rate — including the carved-out drinks above, even in a catering setting (KPMG, 2025).
How much does the VAT cut cost the State?
€232 million in 2026 and €681 million in a full year (RTÉ, 2025).
How do I handle a bill with both food and drink?
Apply 9% to the food line and 23% to the alcohol and soft-drink lines separately — not a single blended rate. Set your POS to tax each category correctly.
What should I do before 1 July 2026?
Reconfigure your POS for the split rates, test a mixed bill, decide whether you hold prices or pass the saving on, brief your team, and check straddling-date sales with your accountant.