Indirect Tax News - December 2020

Temporary reintroduction of the second reduced VAT rate for the Tourism and Hospitality sector

In the 2021 Budget the Irish Government announced that the VAT rate for the tourism and hospitality sector will be reduced from 13.5% to 9%. This reduced VAT rate will be effective from 1 November 2020 through 31 December 2021.

The goods and services to which the 9% VAT rate applies includes certain food and drink supplied in restaurants, hotels, cafes, take-aways, and catering sectors; admissions to cinemas, museums, and exhibitions; hotel, guesthouse, and other holiday or short-term accommodation; hairdressing services; and supplies of certain printed matter. 

The 9% VAT rate will continue to apply to the sale of printed newspapers, digital supplies of e-books and e-publications, and the provision of sporting facilities by profit-making bodies.

It will be at the supplier’s discretion as to whether they pass the VAT rate cut on to the consumer.

Flat-rate addition

As part of the 2021 Budget the Irish Government also announced that the Flat-Rate Addition payable to farmers who are not VAT registered will increase from 5.4% to 5.6% beginning 1 January 2021. The Flat-Rate Addition scheme compensates non-VAT registered farmers for irrecoverable VAT they paid on purchases. 

Emma Galvin