Immediate reduction in Tourism and Hospitality VAT rate to 5% needed for restaurant survival.

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• Immediate inclusion on alcohol on sales in the 5% rate essential
• UK has cut the reduced Value Added Tax on hospitality services from the current 20% standard rate to the reduced rate of 5%
• EU member states have also taken the decision to reduce their hospitality VAT rate in recent weeks

The Restaurants Association of Ireland are calling for the immediate reduction of the Tourism and Hospitality VAT rate in Ireland to 5% and want to see an inclusion on alcohol on sales in the 5% rate.

This follows the announcement that the UK has cut the reduced Value Added Tax on hospitality services from the current 20% standard rate to the reduced rate of 5%.

Some EU member states have also taken the decision to reduce their hospitality VAT rate in recent weeks, with new Covid rates being introduced. These rates will see Germany at 5%, Belgium at 6%, Austria at 5%, and Cyprus at 9% until the end of 2020.

Adrian Cummins, CEO of the Restaurants Association of Ireland, said:

“Support measures are needed urgently to keep the Tourism and Hospitality sector afloat following the shock from the COVID Crisis. We are calling for a reduction in the Tourism & Hospitality VAT rate to 5% and an inclusion on alcohol on sales in the 5% rate.

The hospitality sector has been one of the hardest-hit by the COVID-19 pandemic. Concerns about the cost of running a restaurant post-Covid-19 continue to rise among our members. These include insurance companies not paying out for business interruption claims, landlords continuing to seek full rents throughout the period of closure, no wage supports for seasonal and new businesses, and utility providers disconnecting services.

For our sector, it will take beyond 2021 to recover, and businesses, through no fault of their own, may see themselves shutting their doors if the Government don’t step in and provide supports. The UK has cut the reduced Value Added Tax on hospitality services from the current 20% standard rate to the reduced rate of 5% on 8 July 2020 in the Chancellor’s economic update. The measure will be in place until 12 January 2021.  This is the kind of action we need to see happen. EU member states are also taking action, so why haven’t we seen any reduction in Ireland?

It is also worth noting that Pre-COVID Ireland had one of the highest VAT rates for Tourism and Hospitality in the EU. The supports currently being offered to businesses are not sector-specific and simply do not go far enough.”

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