VAT Rate Change July 2026

From 1 July 2026, a significant VAT change has taken effect across Ireland, and if you run a restaurant, café, pub, takeaway, catering company, or hairdressing salon, this affects you directly.

The Irish Government has reduced the VAT rate for qualifying hospitality and catering services from 13.5% back down to 9%. This is welcome news for a sector that has faced considerable pressure in recent years, but with the opportunity comes a set of important actions you need to take to stay compliant and make the most of the change.

Here’s everything you need to know.

What Services Does the 9% VAT Rate Apply To?

The reduced 9% VAT rate applies to a range of services in the hospitality, catering, and personal care sectors. These include:

Restaurants and cafés
Pubs serving food
Takeaway food providers
Catering businesses
Hairdressing services

If your business operates in any of these categories, you are now required to apply the 9% rate to qualifying sales from 1 July 2026.

If you are unsure whether your business qualifies, or if you provide a mix of services at different VAT rates, it is worth speaking to a qualified accountant who can clarify your specific obligations.

Why Has the VAT Rate Changed?

The reduction to 9% is a targeted measure by the Irish Government to ease cost pressures on the hospitality and personal care sectors. These industries have faced significant challenges in recent years, from rising food and energy costs to higher wage bills and reduced consumer spending.

By lowering the VAT rate, the Government is providing businesses with an opportunity to either improve their profit margins or pass savings on to customers. It also signals continued recognition of the important role the hospitality sector plays in the Irish economy.

What Does This Mean for Your Business?

1. You Need to Update Your Systems Immediately

The rate change came into effect on 1 July 2026, so if you have not already updated your systems, this needs to happen as soon as possible. The key areas to review include:

EPOS and point-of-sale systems: Ensure the correct VAT rate is applied to all qualifying transactions.
Accounting and bookkeeping software: Update your chart of accounts and VAT settings to reflect the new rate.
Invoices and receipts: All invoices issued on or after 1 July 2026 for qualifying services must show 9% VAT, not 13.5%.
Online ordering platforms: If you use third-party delivery or ordering platforms, check that VAT is being calculated correctly on those sales too.

Getting this wrong, even temporarily, could create issues with your VAT returns and Revenue compliance.

2. Review Your Menus and Price Lists

Many businesses will need to revisit their pricing in light of the VAT change. You have a choice to make: will you pass the saving on to your customers by reducing prices, or will you retain the difference to strengthen your margins?

There is no single right answer. Businesses with tight margins may choose to absorb the saving and improve profitability. Others may use a price reduction as a competitive advantage to attract more customers. Some may take a balanced approach.

Whatever you decide, it is important to review and update all printed and digital menus, price lists, and promotional materials so that they are accurate and consistent.

3. Communicate Clearly with Your Customers

If you are reducing your prices, make sure your customers know about it. A clear message, whether on your website, social media, or in-store signage, can turn a tax change into a positive marketing moment for your business.

If you are not reducing prices, you are under no obligation to explain this to customers. However, being transparent about rising operational costs can help manage expectations.

4. Review Your VAT Return Obligations

This change will affect the figures you report to Revenue in your VAT returns. If you file VAT returns bi-monthly, your July/August return (due in September) will be the first return that fully reflects the new rate. Make sure your records from 1 July 2026 onwards are accurate and clearly separated from any transactions at the old 13.5% rate.

If you have transactions that span the 1 July date, for example, deposits taken before 1 July for events taking place after, you should seek professional advice on how to handle these correctly.

An Opportunity to Look at the Bigger Picture

The VAT reduction is an opportunity not just to review your pricing, but to take a broader look at your business finances. Now is a good time to:

Forecast the impact on your profitability: What does a 4.5% reduction in VAT liability mean for your annual turnover? How does it affect your cash flow?
Review your overall tax position: Are there other tax reliefs or deductions your business could be taking advantage of?
Plan ahead for Budget 2027: With Budget 2027 discussions already underway, including proposals for changes to CGT and Entrepreneur Relief, staying ahead of potential changes is good financial practice.

Businesses that combine smart tax planning with solid financial management are always better positioned to grow, and to weather whatever challenges come next.

How Bond & Co. Can Help

At Bond & Co. Chartered Certified Accountants, based in Swords, Dublin, we work with small and medium-sized businesses across Ireland to help them navigate tax changes like this one with confidence.

Whether you need help updating your VAT records, reviewing your pricing strategy, or simply want to make sure your accounts are in order ahead of your next VAT return, our team is here to support you.

Get in touch with Bond & Co. today:

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