VAT and Sales Tax in Ireland

What is Irish VAT and how is it structured?

Value-Added Tax (VAT) in Ireland is governed by the Value-Added Tax Consolidation Act 2010 (VATCA 2010), which implements the EU VAT Directive (2006/112/EC). Revenue, Ireland's tax authority, administers registration, returns, and enforcement. The system operates across five positive rates plus zero-rating plus exempt categories. Unlike exemption, zero-rating allows the supplier to reclaim input VAT paid on purchases -- a meaningful cash-flow distinction for food producers, book publishers, and similar sectors [SC1].

Ireland is a full EU member state. Its VAT rates and rules must conform to EU minima and maxima, and significant changes -- such as rate reductions below EU-permitted floors -- require compliance with the EU VAT Directive before domestic legislation can take effect.

What VAT rates apply in Ireland?

Standard rate: 23%. This rate applies to most goods and services not otherwise specified in Schedule 1 to 6 of the VATCA 2010. Examples include professional services, clothing for adults, electronics, and most software. Ireland's 23% standard rate is among the higher EU member-state standard rates [SC1].

Reduced rate: 13.5%. This rate covers a broad range of supplies listed in Schedule 3 VATCA 2010, including construction and building services on residential property, renovation and maintenance of private dwellings, fuels for heating and lighting (gas, oil, solid fuel), short-term vehicle hire, hotel accommodation and guesthouses, hairdressing, repair services, and admissions to cinemas and theatres. Restaurant meals and catering services moved to 13.5% on 1 September 2023 after the temporary COVID-era reduction expired [SC1][SC2].

Second reduced rate: 9%. Applies to periodicals (print newspapers and qualifying e-periodicals), certain sports facilities provided commercially, and gas and electricity -- with the energy rate extended through 31 December 2030. Construction of qualifying new apartments also moved to 9% from 26 November 2025 through 2030 [SC1]. Budget 2026 change confirmed for 1 July 2026: food, catering services, and hairdressing move permanently from 13.5% to 9% [SC3]. This means restaurants, cafes, and takeaway food businesses will charge 9% from that date. Hotels remain at 13.5% for accommodation. Alcohol, soft drinks, and bottled water are excluded from the food reduction and remain at 23% [SC3].

Livestock rate: 4.8%. Applies to cattle, sheep, pigs, and deer sold for food production or breeding. Horses used in food preparation or agricultural work are also included [SC1].

Flat-rate farmer addition: 4.5% (2026). Unregistered farmers who are not required to register for VAT can add 4.5% to the price of agricultural goods or services they supply to VAT-registered businesses. The buying business treats the addition as normal input VAT and deducts it on its own return. The rate was 5.1% for 2025 and is set annually by Revenue to compensate unregistered farmers for the VAT they incur on farm inputs without allowing them to reclaim it directly [SC4].

Zero rate: 0%. Full input recovery is available to zero-rated suppliers. Supplies include most food and drink (excluding alcohol, confectionery, crisps, ice cream, and hot food), children's clothing and footwear up to age 11, oral medicines, books, e-books, audiobooks, solar panel supply and installation on private homes and recognised schools, and exports outside the EU [SC1].

Exempt supplies (no VAT, no input recovery). Financial services, insurance, residential rent, most educational and medical services, and certain cultural activities are exempt. Exempt suppliers cannot recover the VAT they pay on their own business costs, which is why voluntary registration is sometimes worth considering even for exempt-adjacent activities.

How does Irish VAT compare across the main rate bands?

What are the VAT registration thresholds?

Registration is mandatory once annual turnover in any continuous 12-month period exceeds the applicable threshold. Budget 2025 raised both thresholds with effect from 1 January 2025 [SC5]:

• Goods threshold: EUR 85,000 (raised from EUR 80,000).
• Services threshold: EUR 42,500 (raised from EUR 40,000).
• Mixed supplies: The applicable threshold depends on which type of supply predominates.
• Non-established businesses: Foreign businesses making taxable supplies in Ireland must register before making their first supply, regardless of value.

Voluntary registration below the threshold is available. It is often worth considering for B2B suppliers whose customers are themselves VAT-registered and can recover the charged VAT as input tax.

Assessment of threshold eligibility changed in 2025: Revenue now applies a rolling 12-month lookback rather than an accounting-year measure alone, meaning threshold breaches can trigger a registration obligation mid-year [SC5].

How does the VAT3 return work?

The VAT3 is Ireland's standard VAT return, filed through the Revenue Online Service (ROS). It captures output VAT (T1), input VAT (T2), the net VAT payable to Revenue (T3), or any repayment due to the business (T4). Intra-EU goods and service values are reported in E1/E2 and ES1/ES2 fields [SC6].

Most VAT-registered businesses file on a bi-monthly cycle -- six taxable periods per year covering January-February, March-April, May-June, July-August, September-October, and November-December. Returns and payment are due by the 23rd of the month following the period end when filed via ROS (the 19th for paper filers). Late filing triggers interest charges under Section 114 VATCA 2010 [SC6].

Monthly returns are required for traders who are regularly in a repayment position. Annual returns are available for smaller voluntarily-registered traders with limited activity. An Annual Return of Trading Details (RTD) is due each 23 January, providing a detailed breakdown of supplies by rate band for the preceding year.

The hospitality VAT saga: COVID cut, reversion, and the return to 9%

Ireland temporarily cut the VAT rate on hospitality, tourism, and certain entertainment from 13.5% to 9% on 1 November 2020 as a COVID-19 support measure. The rate was expected to revert at various points, but extensions continued until 31 August 2023, when it reverted to 13.5% as the government declined further extensions. Hospitality industry bodies argued throughout 2023-2025 that the 13.5% rate placed Irish restaurants and cafes at a competitive disadvantage relative to EU neighbours [SC3].

Budget 2026, announced on 7 October 2025, confirmed a permanent reduction for food, catering, and hairdressing from 13.5% to 9% effective 1 July 2026. The measure was officially confirmed by Revenue in April 2026. The reduction is estimated to cost EUR 681 million in a full year and to support over 150,000 hospitality-sector jobs [SC3]. Hotels are not included -- accommodation remains at 13.5%.

For businesses, the changeover date of 1 July 2026 means mid-year rate adjustments to point-of-sale systems, VAT3 return apportionment, and any mixed-supply pricing (for example, hotel packages bundling accommodation at 13.5% with meals at 9%).

For a broader overview of Irish tax obligations -- including income tax, corporation tax, and PAYE -- see the Ireland country overview. Questions about VAT registration mechanics, flat-rate farmer elections, or the hospitality rate change are best confirmed with a qualified tax professional. Browse the Ireland tax professionals directory to find an accountant or tax consultant who handles VAT compliance.