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Temporary reduced VAT rate for hospitality and tourism in the Republic of Ireland

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Description

In the Irish Budget 2021, it was announced that the VAT rate applicable to certain goods and services, primarily in the hospitality and tourism sector, would temporarily be reduced from 13.5% to 9%.

What changed?

The reduced rate of VAT (9%), effective from 1 November 2020 to 28 February 2023, applies to:

  • The supply of restaurant and catering services, guest and holiday accommodation.
  • Various entertainment services such as admission to cinemas, theatres, museums, fairgrounds and amusement parks.
  • Hairdressing and certain printed matter such as brochures, maps and programmes.

Full details of the reduction can be found in the Revenue Budget Summary and on the Budget website >

If the reduced rate of VAT applies to your business, there are some simple changes you need to make in your software. Follow the stpes in this article to make the changes.

Resolution

You can create a new tax code to represent the temporary 9% VAT rate, which make's it easier to identify transactions you're entering during the temporary reduced VAT rate period for reconciliation and analysis purposes.

Create new tax codes

You can create new tax codes for transactions that qualify for the reduced 9% VAT rate as follows:

  • Create two new tax codes to represent the existing tax codes T3 and T13.
  • If you deal with EU reverse charge, or reduced rate purchases from the EC you should also create further tax codes to represent T20, T25 and T26 which are linked to T3 and T13.

We recommend using T44, T45 and if required, T46, T47 and T48. If these are already in use, use the next available codes.

  1. On the menu bar, click Settings, click Configuration then click Tax codes.
  2. Select the tax code T44 or the next available code, and click Edit.
  3. Complete the edit tax code window as follows:
    RateEnter the required percentage as 9.00
    Include in VAT ReturnTo ensure the transactions are picked up by the VAT Return, select this check box
    Reverse ChargeFrom the drop-down list, choose No
    ResaleSelect this check box
    Outside ECLeave this check box unticked
    Enable EC CodeLeave this check box unticked
    RateFrom the drop-down list, choose Reduced
    DescriptionEnter this description: Temp reduced rate sales and purchases of goods for resale
  4. Click OK.
  5. Select tax code T45, or the next available code, and click Edit.
  6. Complete the Edit tax code window as follows:
    RateEnter the required percentage as 9.00
    Include in VAT ReturnTo ensure the transactions are picked up by the VAT Return, select this check box
    Reverse ChargeFrom the drop-down list, choose No
    ResaleLeave this check box unticked
    Outside ECLeave this check box unticked
    Enable EC CodeLeave this check box unticked
    RateFrom the drop-down list, choose Reduced
    DescriptionEnter this description : Temp reduced rated purchases of goods for non-resale
  7. Click OK.
  8. Select tax code T46 or the next available code and click Edit.
  9. Complete the edit tax code window as follows:
    RateLeave the percentage rate as 0.00
    Include in VAT ReturnTo ensure the transactions are picked up by the VAT Return, select this check box
    Reverse ChargeFrom the drop-down list, choose EU reverse charge
    ResaleLeave this check box unticked
    Outside ECLeave this check box unticked
    Enable EC CodeSelect this check box and then select the following options: EC Purchases, Services
    Link toChoose T44 or any alternative code you have used
    RateFrom the drop-down list, choose Reduced
    DescriptionEnter this description : Temp reduced rate EU reverse charge
  10. Click OK.
  11. Select tax code T47 or the next available code and click Edit.
  12. Complete the edit tax code window as follows:
    RateLeave the percentage rate as 0.00
    Include in VAT ReturnTo ensure the transactions are picked up by the VAT Return, select this check box
    Reverse ChargeFrom the drop-down list, choose No
    ResaleSelect this check box
    Outside ECLeave this check box unticked
    Enable EC CodeSelect this check box and then select the following options: EC Purchases, Goods
    Link toChoose T44 or any alternative code you have used
    RateFrom the drop-down list, choose Reduced
    DescriptionEnter this description : Temp reduced rate purchases from EC suppliers
  13. Click OK.
  14. Select tax code T48 or the next available code and click Edit.
  15. Complete the edit tax code window as follows:
    RateLeave the percentage rate as 0.00
    Include in VAT ReturnTo ensure the transactions are picked up by the VAT Return, select this check box
    Reverse ChargeFrom the drop-down list, choose No
    ResaleLeave this check box unticked
    Outside ECLeave this check box unticked
    Enable EC CodeSelect this check box and then select the following options: EC Purchases, Goods
    Link toChoose T45 or any alternative code you have used
    RateFrom the drop-down list, choose Reduced
    DescriptionEnter this description : Temp reduced rate purchases from EC suppliers
  16. Click OK, then click Apply.
  17. Click Close, then, if prompted, to save the changes, click No.



This article provides general rather than specific guidance to assist all of our customers, including both in the United Kingdom and Republic of Ireland. We always do our best to make sure that the information is correct but as it's general guidance, no guarantees can be made concerning its suitability for your particular needs. The information is valid for our general customer base at the time of publishing and is provided without any warranty of any kind, express or implied. You should take professional advice if you require specific guidance on your individual circumstances, for example to ensure that the results obtained from using our software comply with statutory or regulatory requirements. For VAT, customs and excise and duties enquiries you should contact The Revenue. In no event will we be liable to you for any direct, indirect, consequential or incidental loss or damage arising out of or in connection with your use of the information provided.
The VAT or tax codes used in this article are based on the default or recommended codes set up in the software. These may be different in your software.