Restoring 9% VAT is ‘vital’

Cork hoteliers are calling on the Government to deliver targeted measures to safeguard the long-term viability of Irish tourism and hospitality.

The call comes from the Cork branch of the Irish Hotels Federation (IHF) ahead of the upcoming Budget. Hoteliers say there are ongoing challenges for local tourism businesses, including serious cost competitiveness issues for hospitality food-related services.

Eoghan Murphy, IHF Cork Branch Chair said as Ireland’s largest indigenous and regional employer, tourism and hospitality supports over 270,000 livelihoods nationally including 27,000 jobs locally in Cork.

He explained: “It is vital that the Government takes decisive action to place Irish tourism and hospitality on a more stable and competitive footing. Local businesses in Cork are struggling to deal with exceptionally high operating costs and tight margins. This is especially challenging for regional food businesses. These businesses are now threading a fine line between covering ever-increasing costs and losing competitiveness.”

This comes at a time when Irish tourism is, hoteliers say, experiencing difficult headwinds on multiple fronts, including declining tourism revenues, economic challenges across our key source markets, increased political uncertainty internationally and the fallout from EU/US tariffs.

Mr Murphy urged the Government to deliver on its commitment to reduce the rate of VAT on hospitality food business. “A rate of 9% VAT for food related services would align us with the majority of our European competitors. For instance, Germany has recently announced a reduction in its VAT rate on food services to 7% from January next year, down from 19% currently in place. This move recognises the broader social and economic role played by the hospitality sector and the particular challenges facing food businesses.

“We need a similar approach here in Ireland without delay. Restoring the 9% VAT rate for food-related services from January would be a vital policy intervention for a sector that contributes significantly to our economy as a driver of regional employment, economic diversification and rural development.”

He also referenced how 18 of the EU’s 27 member states apply a food VAT rate lower than Ireland’s 13.5%. The average rate among those 18 countries is 9.5%. This makes Ireland’s food VAT rate an outlier in the EU and places, he claimed, unnecessary strain on the country’s food industry.