Reduction of VAT rate for food businesses and hairdressers effective from 1 July 2026

As provided for in Finance Act 2025, a reduced VAT rate of nine percent will apply to hairdressing services and to the supply of food and drink in the hospitality sector from 1 July 2026. The reduced rate will not apply to hotel accommodation. 

A press release issued by the Department of Finance outlines that approximately 85 percent of the benefits from this measure will flow to the SME sector. Commenting on the VAT rate reduction, Minister for Enterprise, Tourism and Employment, Peter Burke TD noted:

“This reduction represents the Government standing by its commitment in the Programme for Government to reduce the VAT Rate for the Hospitality sector. Our food-businesses, restaurants and cafes are vital to local economies across the country, providing economic activity and supporting the employment of over 170,000 people in both rural and regional towns and villages up and down this country.”