Temporary reduction in Standard VAT rate takes effect from 1 September

Sep 07, 2020

The temporary reduction in the standard VAT rate from 23 percent to 21 percent took effect from 1 September. The standard VAT rate applies to approximately 53 percent of activity, including the supply of adult clothes and footwear, electrical equipment, cars, petrol, diesel, alcohol, and tobacco.  This is one of the Government’s July Stimulus Package measures and is estimated to cost €440 million in total.  The rate is set to revert to 23 percent on 28 February 2021.  See Revenue’s Tax and Duty Manual, Changes in rates of VAT for procedures to be followed by VAT registered traders when increases or reductions in VAT rates take place.

In a press release on the measure, Minister Donohoe said:

“This temporary reduction in the standard rate of VAT cuts across a wide range of economic activity and as such there is a broad range of the types of businesses and traders who will benefit. Discretion in relation to the setting of prices charged will remain that of relevant businesses, however, it will help consumer confidence, benefit consumers and generate economic activity if it was passed on to the final consumer.”