VAT rate change for hospitality industry

What changed?

To help businesses mainly in the hospitality, holiday accommodation, and attractions sectors, the Irish Government reduced the rate of VAT from the reduced rate of 13.5% to the second reduced rate of 9% on a temporary basis. This will revert back to the 13.5% reduced rate from 1 September 2023. This change applies to:

• The supply of restaurant and catering services, guest and holiday accommodation
• Various entertainment services such as admission to cinemas, theatres, museums, fairgrounds, and amusement parks
• Hairdressing and certain printed matter such as brochures, maps, and programmes

Details of the reduction can be found on the Budget 2023 website.

The reduced VAT rate of 13.5% applies to the supply of:

• restaurant and catering services
• guest and holiday accommodation
• various entertainment services such as admission to cinemas, theatres, museums, fairgrounds and amusement parks

If you are still unsure whether your transactions should be at the reduced rate, check with your accountant or the Revenue.

Which VAT rate to use

In Sage Accounting use the Second Reduced Rate 13.5%.

Make sure the reduced VAT is applied correctly

Set the default VAT on ledger accounts

Consider setting the Reduced Rate 13.5% VAT rate by default on ledger accounts you use for hospitality and tourism.

You may want to create new Ledger accounts specifically for tourism and hospitality transactions.

Bank feeds and imported bank transactions

Make sure you select the  Reduced Rate 13.5% when processing transactions from a bank feed or imported bank statement.

Copy invoices, quotes, estimates and credit notes

If you copy existing transactions that relate to tourism and hospitality, make sure that they are still using the Reduced Rate 13.5%.

VAT rates are copied at the rate applied to the original transaction.

Future dated transactions

Make sure any transactions created with a date in the future are using the Reduced Rate 13.5%.