Everything you need to know about the latest Irish vat increase

The increase has been described as the "nail in the coffin" for many Irish businesses.

At midnight last night, Ireland's VAT rate for tourism, hospitality and some other services was increased by 9% to 13.5%, despite warnings and protestations from those working in the affected industries. Services affected by the increase include:

• Entrance to cinema, sporting, cultural, circus, concert and amusement parks;
• Restaurant, cafe and general catering services;
• Hotel, guest and holiday accommodation; and
• Hairdressing services.

[caption id="attachment_115255" align="alignnone" width="2048"] Via Getty. [/caption] The lower rate was was originally introduced as a measure to ease the pressure on businesses during the various lockdowns as a result of the Covid-19 pandemic. The reduced rate had been due to expire in February of this year, but the Government extended it for six months as part of a cost-of-living package. The Government made the decision to revert back to the higher VAT rate after an assessment by Government officials found there was no economic case for any further extension. Ministers have ruled out any further extension to the lower rate, considering it to be "both regressive and costly". Chief executive of the RAI Adrian Cummins has said that the increase will "add to consumer inflation at a time when Government announced it wouldn’t add to the cost of living", and speaking to The Examiner earlier this summer, forecast that it will be up to individual businesses how they respond to the increase. Since the news of the increase, a number of Irish hospitality businesses have already taken to social media to announce price hikes - Three Fools Coffee, a Cork-based coffee chain announced that they had "no other choice" but to up their prices, as did Póta, an Irish speaking café in Connemara.

 

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It's hard to say whether the majority of businesses will up their prices or try to find a way to absorb the costs themselves - but it's an undeniable layer of added pressure for those working in hospitality in Ireland today. In a statement yesterday, Cummins warned the increase could be the "nail in the coffin" for many businesses, writing: “The increase is wrong at a time when the country needs to reduce inflation, a vat increase only adds to inflation. Government need to restore the 9% Vat for Food related Hospitality businesses in Budget 2024 and we will me making the case for this when we meet with the Minister for Finance next week. The increase the vat rate is the final nail in the coffin for many small cafes, restaurants and food led pubs.” Header image via Getty  READ NEXT:  - Newly reopened Irish hotel named as one of the best in the world - Animal shelter uses AI to show how dog would look if her ears weren't cropped - Ireland one of the best locations worldwide to invest in an Airbnb property