How VAT Works in Ireland (2026): Rates, Registration and the July 2026 Catering Change
Ireland operates four main VAT rates in 2026: 23% standard, 13.5% reduced, 9% second reduced (extended permanently to catering and restaurant supplies from 1 July 2026), and 0% zero rate. Businesses must generally register for VAT once taxable turnover exceeds approximately EUR 85,000 for goods or EUR 42,500 for services.
The four VAT rates in Ireland and what they cover
Ireland applies Value Added Tax (VAT) at four main rates in 2026, each covering distinct categories of goods and services as set out in VAT legislation administered by Revenue.ie: Standard rate (23%): the default rate that applies to all goods and services unless a lower rate or exemption specifically applies. This covers most professional services, electronics, adult clothing, alcohol, and luxury goods. Reduced rate (13.5%): applies to a specified list including hotel and other tourist accommodation, construction and renovation work on buildings, general repair and maintenance services, certain solid fuels, and certain other listed items. This is the main rate for the construction sector and for accommodation in the hospitality industry. Second reduced rate (9%): applies to natural gas and electricity supplies, and -- following a significant change from 1 July 2026 -- to restaurant and catering services, hot takeaway food, and hairdressing services. This rate also applies to newspapers, periodicals, and sporting facilities. Zero rate (0%): applies to most food for human consumption (basic and unprocessed food), books, children's clothing and footwear, oral medicines, and most exported goods. Zero-rated supplies are still taxable supplies -- businesses making zero-rated supplies can reclaim the VAT paid on their business inputs. Two additional special rates also exist: a 4.8% rate applies to livestock (cattle, sheep, pigs, and horses not used in sport), and a flat-rate addition of 5.1% is available to unregistered farmers under the Flat-Rate Farmer scheme, compensating them for unrecoverable VAT on farming inputs. Revenue.ie maintains the authoritative list of which goods and services fall under each rate, and this should be consulted whenever the correct rate is uncertain.
The July 2026 catering and hospitality VAT change
One of the most significant VAT developments in 2026 is the reduction of the VAT rate on catering and restaurant services from 13.5% to 9%, effective 1 July 2026. The same reduction applies to hot takeaway food and hairdressing services. The 9% rate had previously applied to these services during the Covid-19 pandemic as a temporary relief measure to support the hospitality sector. After the temporary relief expired, catering and restaurant supplies reverted to 13.5%. The 1 July 2026 change restores the lower rate on a permanent basis, intended to provide ongoing support to hospitality businesses facing sustained cost pressures. In practical terms, the change affects how businesses price their services and how they set up their invoicing and point-of-sale systems: Before 1 July 2026: a restaurant meal priced at EUR 100 excluding VAT carried EUR 13.50 in VAT, making the VAT-inclusive price EUR 113.50. From 1 July 2026: the same meal carries EUR 9.00 in VAT, making the VAT-inclusive price EUR 109.00. VAT-registered catering and hairdressing businesses must update their invoicing, cash registers, and accounting software from 1 July 2026 to apply the 9% rate. Revenue.ie issued guidance ahead of the change. Note that hot takeaway food and bakery products that were previously zero-rated (for example, cold sandwiches or unheated bakery goods) are not affected by this change -- the July 2026 reduction applies only to supplies that were previously taxed at 13.5%. The boundary between zero-rated cold food and taxable hot food can be a complex area; Revenue.ie publishes detailed guidance on the catering VAT rules.
VAT registration thresholds: when you must register
Not all businesses are required to charge VAT. The obligation to register depends on whether your taxable annual turnover -- the total value of your VAT-able supplies, including zero-rated ones -- exceeds the relevant registration threshold. From 2025, the registration thresholds are approximately EUR 85,000 for businesses supplying goods and approximately EUR 42,500 for businesses supplying services. These figures should be verified against the current thresholds on Revenue.ie, as they can be changed in future Budgets. A business supplying a mix of goods and services applies a proportionate calculation; Revenue.ie provides guidance on the blended test. You must register for VAT when your taxable turnover in the preceding 12 months exceeds the threshold, or when you reasonably expect it to exceed the threshold within the next 30 days. Registration is done through Revenue's myAccount or ROS portal. Once registered, you must charge VAT on your taxable supplies, issue VAT invoices, file periodic VAT returns (typically bi-monthly), and remit net VAT collected to Revenue. Voluntary registration below the threshold is permitted and may be beneficial if you have significant VAT-bearing input costs or if your customers are VAT-registered businesses who can recover the VAT you charge. Failure to register when required carries serious consequences: Revenue can assess VAT on all turnover from the date registration was required, plus interest and penalties. If your turnover is approaching the threshold, register promptly.
How VAT works in practice: output tax, input tax and returns
VAT is designed as a tax on final consumption, collected at each stage of the supply chain. The core mechanics are: Output VAT is the VAT you charge on your sales. It is not revenue -- it is collected on behalf of Revenue and must be remitted. Input VAT is the VAT you pay on your business purchases and expenses. As a VAT-registered business, you can generally reclaim input VAT as a credit against your output VAT liability, provided the purchases relate to your VAT-able business activities. Net VAT due to Revenue equals output VAT minus input VAT for the period. If you charged EUR 23,000 in VAT on sales and paid EUR 8,000 in VAT on purchases, you remit EUR 15,000 to Revenue. If your input VAT exceeds output VAT -- common for businesses making zero-rated supplies -- Revenue will refund the difference. VAT returns are typically filed bi-monthly (six returns per year), covering periods of January-February, March-April, and so on. Returns and payments are generally due by the 19th of the month following the period end, or the 23rd for those filing online via ROS. Late filing and payment attract interest and may trigger a Revenue compliance review. VAT invoices must contain specific prescribed details, including the supplier's name and VAT registration number, the invoice date, a description of the supply, the amount excluding VAT, the VAT rate applied, and the VAT amount. Supplier receipts that do not meet these requirements may not be valid for input VAT recovery. VAT rules contain many exceptions, special schemes, and sector-specific provisions. For registration decisions, rate queries on unusual supplies, or partial exemption calculations, consult Revenue.ie or a qualified VAT adviser.
FAQ
What VAT rate applies to restaurant meals in Ireland from July 2026?
From 1 July 2026, restaurant meals and catering services are subject to the 9% second reduced VAT rate, reduced from the previous 13.5% rate. Hot takeaway food and hairdressing services are also covered by this reduction. The change represents a permanent restoration of the lower rate for these sectors. Before 1 July 2026, catering services were taxed at 13.5%. Revenue.ie has published detailed guidance on which catering and hospitality supplies are covered by the new rate.
What is the difference between zero-rated and VAT-exempt supplies in Ireland?
Zero-rated supplies carry a 0% VAT rate: no VAT is charged to the customer, but the VAT-registered supplier can still reclaim input VAT paid on related business costs. Exempt supplies are outside the VAT system entirely: no VAT is charged, and the supplier also cannot reclaim input VAT on costs relating to those exempt activities. A business making only exempt supplies cannot register for VAT at all. Common exempt supplies in Ireland include financial services, insurance, health care by regulated professionals, and residential property lettings. Misclassifying a supply can lead to incorrectly reclaimed input VAT or missed recovery opportunities.
Do I need to register for VAT if my turnover is below the threshold?
Mandatory registration is not required if your taxable turnover is below the relevant threshold (approximately EUR 85,000 for goods or EUR 42,500 for services). However, voluntary registration is permitted and can be advantageous if you pay significant VAT on business inputs, or if your customers are VAT-registered businesses that can recover the VAT you charge them. If you sell mainly to consumers, voluntary registration may raise your prices without a clear benefit. Revenue.ie provides guidance on voluntary VAT registration to help you assess whether it makes sense for your business.
How often do I need to file VAT returns in Ireland?
Most VAT-registered businesses file returns bi-monthly (six times per year), covering two-month periods. Businesses with lower annual VAT liabilities may qualify for four-monthly or annual filing. Returns and payments are due by the 19th of the month following the period end, or the 23rd for businesses filing and paying online via Revenue's ROS system. Late filing or payment attracts daily interest charges and can result in a compliance review. Your assigned filing frequency is notified by Revenue when you register and can be reviewed over time as your business grows.
⚠️ Informational estimate, not tax advice. Payroll software may differ in edge cases. Verify with a professional.