Ireland cuts VAT for hotels and restaurants to 9%

Ireland has slashed its VAT rate for the tourism industry to 9% as it tries to stimulate its economy.

Hotels and restaurants in the country should both benefit from the new rate, which will fall from 13.5%. The reduction will also apply to cinemas, theatres, sporting facilities and even hairdressers. The cost of printed materials such as brochures and programmes will also fall.

The new rate will apply from 1 July this year to the end of December 2013 and is expected to cost €120m this year and €350m for each subsequent full year.

The move forms a central part of the Government's new tourism strategy and is likely to be watched with interest here in the UK, where hospitality businesses have long been campaigning for a reduction in the rate of VAT (currently 20%) for hotels and restaurant businesses grappling to win new business in a tough economic climate.

Irish Finance Minister Michael Noonan also announced plans to abolish the travel tax by as early as 1 July. However, this relies on an agreement with airlines to bring in additional passenger numbers, according to the Irish Times.

A new arrangement with the UK also means that overseas visitors to the UK will be allowed to enter Ireland without a separate visa.

Table Talk: Reducing VAT for tourism companies >>

Fast food outlets in line for VAT refund >>

Thousands of hotels could benefit from VAT refunds >>

By Neil Gerrard

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