Ireland

VAT rate extension As inflation continues to surge across Europe, it is becoming more discernible that government responses are centred predominantly around their fiscal structures.   Ireland’s fiscal policies, specifically its VAT rates, have taken on the following accommodations to allow for inflation:  

• Temporary reductions on gas and electricity from 13.5% to 9%, will be extended to 31 October 2023;  
• The temporary reduction on VAT on tourism and hospitality, from 13.5% to 9%, will be extended to 31 August 2023. 

These VAT cuts will come at some cost to the Irish government- 115 million Euros and 300 million Euros respectively, underlining the strategic value attached to government’s decision when implementing revised tax rates.   

New VAT measures in budget The Irish budget was published on 27 September 2022 and has incorporated a range of VAT-related initiatives. These include:

• Zero-rating of VAT on paper and digital newspapers and periodicals
• Extension of 9% VAT rate on gas and electricity to 28 February 2023 (this was initially due to expire on 31 October 2022)
• Zero-rating for range of medical supplies.

These measures will take effect from 1^st January 2023.

Extension of reduced VAT rate for hospitality and tourism As Europe enters a post-Covid recovery era, countries are conscious of the balance between promoting a return to previous rates and retaining reduced rates. Recent events in Ukraine and rising food costs have hampered the progress of countries who had hoped to return to pre-Covid fiscal measures. To this effect, Ireland has extended the reduced VAT rate for hospitality and tourism through February 2023. This was initially scheduled to expire on 1 September 2022. Tungsten Network supports all valid Irish rates on our portal.

New guidelines published for the B2G sector The Irish government is actively promoting e-invoicing throughout the country to raise greater awareness around e-invoicing. To this effect, it has published guidelines which assist suppliers in sending invoices to the public sector. Ireland has recently stated that it will draw inspiration from the e-invoicing models in other countries as a basis for its own e-invoicing model. It will be interesting to see the developing e-invoicing landscape and the appetite for e-invoicing in the country further to this campaign driving greater recognition of the sector.

VAT reduction on gas and energy bills The recurring trend for the reduction in VAT rates for energy and gas continues unabated across Europe, considering rising inflation and the post-Covid economic recovery. Ireland is no exception- and the Irish Ministry of Finance has announced a VAT reduction from 13.5% to 9% to take effect from 1 May 2022. This is expected to run until 31 October 2022. VAT reductions often prove to be costly - and in Ireland, the reduction in VAT rates for energy and gas will come at a cost of 46 million Euros to the government. In addition to rising inflation, it is likely the measure was introduced to counteract the carbon tax, which is also commencing on 1^st May 2022. Such measures serve to demonstrate that VAT must be viewed as part of a greater intricate framework of taxes within the fiscal structure rather than a tax in isolation and underlines the challenging role of the government to balance and manage the effects of taxation.

VAT reduction for energy and electricity rates Recent events in Ukraine has led to a surge in energy and electricity prices. To this effect, the Irish government will cut VAT on electricity and energy from 13.5% to 9%. This will take place from 1 May 2022 to 31 October 2022 and is estimated to come at a cost of 46 million Euros.

Consultation on VAT digital reporting and e-invoicing Many countries are working towards achieving a more efficient and streamlined VAT process and reducing tax fraud. Ireland is no exception- the European Commission has recently put Ireland’s tax gap at 1.7 billion Euros. To this effect, Ireland is currently reviewing plans to implement e-invoicing and e-reporting in the country. The Irish Revenue has indicated that it will draw inspiration from e-invoicing models in other countries. Plans to implement e-invoicing are in their infancy at the moment, but Tungsten will monitor any developments in Ireland and keep you informed to this effect.

Ireland: Reduction in VAT Rate for hospitality sector

Ireland will temporarily reduce the VAT rate for the hospitality sector (hotels, restaurants, bars, etc.) from 13.5% to 9%. The change is effective from November 1, 2020 until 31 December 2021.