Value Added Tax sits on top of almost everything sold in Ireland, yet plenty of business owners still work it out by hand and pick the wrong rate or mix up the price before and after tax. This guide sets out the rates that apply in 2026, explains the hospitality VAT cut that took effect on 1 July, and shows how to move between a price with and without VAT in both directions.
How VAT works
VAT is a tax on the value added at each stage of a sale. A VAT-registered business charges it on what it sells (output VAT) and reclaims the VAT it was charged on its own purchases (input VAT). At the end of each period it pays Revenue the difference, so the tax effectively falls on the final consumer, not on the businesses in the chain. If you are not registered, you cannot reclaim the VAT you pay, so it becomes a real cost.
To check any figure quickly, the Ireland VAT calculator adds or strips VAT at the rate you choose.
Ireland’s VAT rates for 2026
Ireland uses four rates, all published by Revenue:
- 23%, the standard rate. The default for most goods and services: electronics, adult clothing, furniture, alcohol, professional services and anything not given a lower rate.
- 13.5%, the reduced rate. Construction and home repairs, fuel for heating, hotel and guesthouse accommodation, and admission to tourist attractions such as cinemas and amusement parks.
- 9%, the second reduced rate. Restaurant, catering and hot takeaway food, hairdressing, newspapers and e-newspapers, sporting facilities, and the supply of gas and electricity (electricity and gas stay at 9% until 31 December 2030). Restaurant, catering and hairdressing moved into this band on 1 July 2026.
- 0%, the zero rate. Most food and drink, oral medicines, children’s clothing and footwear, and books. Zero-rated is not the same as exempt: a zero-rated business still reclaims its input VAT, while an exempt one (such as some financial or medical services) cannot.
Quick reference: which rate applies
| Category | 2026 rate |
|---|---|
| Most goods and services, electronics, alcohol, adult clothing | 23% |
| Construction, home repairs, heating fuel | 13.5% |
| Restaurant, catering, hot takeaway food, hairdressing (since 1 July 2026) | 9% |
| Gas and electricity (to 31 December 2030) | 9% |
| Newspapers, e-newspapers, sporting facilities | 9% |
| Hotel and guesthouse accommodation, admission to tourist attractions | 13.5% |
| Alcohol, soft drinks and bottled water, even served in a restaurant | 23% |
| Most food, oral medicines, children’s clothing and footwear, books | 0% |
The change: hospitality VAT fell to 9% on 1 July 2026
The headline move for 2026 has now landed. From 1 July 2026 the 9% second reduced rate covers food and drink supplied as part of a restaurant, catering or hot takeaway service, and hairdressing, both cut from 13.5%. Unlike the temporary 9% rate used during the pandemic, this one is permanent, with no scheduled expiry date. It is meant to ease pressure on the hospitality sector after several years of rising costs.
The cut is narrower than the earlier hospitality rate, so the boundaries matter. Hotel and guesthouse accommodation was left out and stays at 13.5%, as does admission to tourist attractions, which means a bed-and-breakfast package now splits across two rates: the meals at 9% and the room at 13.5%. Alcohol, soft drinks and bottled water stay at the 23% standard rate even when served with a meal, so a restaurant bill can carry three different VAT rates at once. Hair care products sold in a salon stay at 23% too, separate from the 9% now charged on the haircut itself.
In practice a cafe selling a 5.00 coffee at the old 13.5% rate was charging about 0.59 of VAT on a 4.41 net price. At 9% the VAT on the same 4.41 net price is about 0.40, so a business can either pass the 0.19 saving to the customer or keep it as margin. If you run a food business, the margin calculator shows how a rate change feeds through to what you actually keep on each sale.
Adding and removing VAT
The arithmetic is the same whatever the rate. To add VAT to a net (VAT-exclusive) price, multiply by one plus the rate. To strip VAT out of a gross (VAT-inclusive) price, divide by one plus the rate.
- Add 23% to a 100 net price: 100 times 1.23 is 123.00, of which 23.00 is VAT.
- Remove 23% from a 123 gross price: 123 divided by 1.23 is 100.00 net, so the VAT was 23.00.
A common mistake is to take 23% off the gross price to find the net, which is wrong: 23% of 123 is 28.29, not 23. Always divide by 1.23 rather than subtracting 23%. The markup calculator helps when you are setting a shelf price and need to build the right margin in before VAT is added.
VAT registration thresholds
You must register for VAT once your turnover passes the threshold for your activity. Since 1 January 2025 the thresholds are 85,000 euro for the supply of goods and 42,500 euro for services, the figures that still apply in 2026. Below those levels registration is optional, and many small operators stay unregistered to keep prices simple, accepting that they cannot reclaim input VAT. Cross-border and distance-selling rules can pull you in sooner, so check Revenue’s guidance if you sell abroad.
A worked example
Say you run a small homeware shop and buy a lamp from a wholesaler for 60 plus 23% VAT, so 73.80 in total. You sell it for 120 plus VAT, a gross price of 147.60.
- Output VAT you collect: 27.60.
- Input VAT you reclaim: 13.80.
- VAT you pay Revenue: 27.60 minus 13.80, which is 13.80.
Your own income is the 120 net minus the 60 net cost, a 60 gross profit, and the VAT washes through without touching that margin. To see how your trading profit then meets income tax, USC and PRSI, the Ireland salary calculator runs the take-home side.
FAQ
What is the standard VAT rate in Ireland in 2026?
The standard rate is 23%, unchanged for 2026. It applies to most goods and services that do not qualify for a reduced or zero rate.
When did the 9% hospitality VAT rate start?
It took effect on 1 July 2026 and is permanent. The 9% second reduced rate now covers restaurant and catering services, hot takeaway food and hairdressing, all reduced from 13.5%. Hotel accommodation and admission to tourist attractions were left out and remain at 13.5%, while alcohol and soft drinks stay at 23%.
What is the difference between zero-rated and exempt?
A zero-rated business charges 0% VAT but can still reclaim the VAT on its purchases. An exempt business charges no VAT and cannot reclaim input VAT, so the tax becomes a cost to it.
How do I work out the VAT in a price that already includes it?
Divide the gross price by one plus the rate. For the 23% rate, divide by 1.23 to get the net price, then subtract that from the gross to find the VAT. Do not just take 23% off the gross.
Do I have to register for VAT?
Only once your turnover passes 85,000 euro for goods or 42,500 euro for services in a twelve-month period. Below that you can register voluntarily if reclaiming input VAT is worth more than the extra administration.
What happens when a sale mixes goods and a service?
Revenue applies the two-thirds rule. If the VAT-exclusive cost of the goods used in supplying a service comes to more than two-thirds of the total VAT-exclusive price charged, the whole supply is taxed at the rate that applies to the goods, not the service rate. A typical worked example is a repair job where expensive parts dominate the bill: if the parts cost more than two-thirds of the price, the labour is dragged up to the 23% goods rate. Where the goods are two-thirds or less, the service rate applies to the whole charge.
Sources
- Revenue (Ireland), VAT rates.
- Revenue (Ireland), VAT registration.
- Irish Statute Book, Value-Added Tax Consolidation Act 2010.
- Revenue (Ireland), the two-thirds rule.