Extension of the 9% VAT rate to 1 September 2022

1. What has changed?

The Irish government, as part of Economic Recovery plan launched on 1 June, announced a welcome but unexpected extension to the time-period the second reduced rate of 9% will apply for. Subject to a legislative change to be enacted, the 9% rate will remain in place until 1 September 2022.

In summary, the 9% rate applies to certain supplies of goods and services in the tourism and hospitality sector and this extension is seen as a key government support for the industry following the extended closures, arising from Covid 19 restrictions.

The extension of the reduced rate until the end of the summer 2022 season is to assist in providing a longer period of recovery for the sector hardest hit by the pandemic.

2. Who is affected?

In addition to the relief applying to catering services, hotel, and guest house accommodation, it will also extend for admission to cinemas and promotion and admission to live performances, museums, and exhibitions. Hairdressing services and the printed matter such as brochures, catalogues, and maps, etc., will also benefit from the reduction.

3. What to consider?

The availability of the 9% rate was originally due to cease at the end of 2021 meaning goods/services liable to 9% would revert back to the 13.5% applied previously. This has now been extended until 1 September 2022. 

As a result, businesses can defer any changes to their IT systems that they may been planning for the second half of 2021 and the first half of 2022.

Secondly, businesses in the hospitality sector may also need to reconsider the rate to apply if the business is or has taken advance bookings for the remainder of the extension period. It is important to ensure invoices remain accurate and show the appropriate VAT rate for the relevant date/tax point of the supply.

 If you have queries or required assistance, please get in touch with your usual contact at RSM.

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