Ireland Reduced VAT Rates 2025: Everything You Need to Know

Ireland offers several reduced VAT (Value Added Tax) rates to stimulate specific sectors, improve consumer purchasing power, and help businesses remain competitive. As of 2025, these rates apply to a variety of goods and services, ranging from utilities to cultural services. If you’re in the tourism, hospitality, energy, or retail sector, understanding the reduced VAT rates is vital for ensuring compliance and maximizing potential savings.

Overview of Ireland’s VAT System

Ireland uses a multi-tier VAT system, with the standard rate at 23%. However, certain goods and services are eligible for reduced VAT rates to support sectors like tourism, hospitality, agriculture, and energy. These reduced rates help encourage growth, support the economy, and provide essential services to the public at a more affordable price.

Current Reduced VAT Rates in Ireland

VAT Rate at 9%

The 9% VAT rate, which was introduced temporarily during the COVID-19 pandemic, has been extended to a number of sectors, especially in energy and essential services. As of 1 May 2022, this reduced VAT rate applies to:

  • Electricity and Gas: Domestic and industrial heating or lighting, with the exception of vehicle fuel and certain gases for specialized use.
  • Heat Pump Installation (From 1 January 2025): The VAT rate for the supply and installation of heat pumps will be reduced from 23% to 9% to encourage eco-friendly energy solutions.
  • Certain Printed Materials: Brochures, maps, and programs, but not books or periodicals.

This reduced rate was extended until 31 October 2025 and is designed to ease the cost of living for households and businesses, particularly in the energy sector. It provides an opportunity for those investing in renewable energy solutions, such as heat pumps, to benefit from tax savings.

VAT Rate at 13.5%

The 13.5% VAT rate is considered a standard reduced rate and applies to various goods and services, including:

  • Tourism and Hospitality Services: Hotel accommodations, guesthouses, holiday parks, restaurants, and catering services (excluding alcohol and soft drinks).
  • Cultural and Entertainment Services: Admissions to cinemas, theatres, concerts, museums, and amusement parks.
  • Hairdressing and Beauty Services: Services such as haircuts and grooming.
  • Cleaning and Maintenance Services: General cleaning, building maintenance, and repair services.
  • Agricultural and Construction Services: Certain building services and agricultural-related supplies.

These reduced rates help stimulate the tourism, hospitality, and construction sectors, which have a significant impact on the Irish economy, offering a financial cushion during tough times like the post-pandemic recovery phase.

VAT Rate at 0% (Zero Rate)

Ireland also applies a 0% VAT rate to essential products and services that provide social and economic benefits:

  • Certain Health Products: Non-oral hormone replacement therapy, period products, defibrillators, and non-oral nicotine therapy.
  • Newspapers and Periodicals (2023 onwards): A 0% VAT rate has been applied to newspapers, news periodicals, and e-newspapers, to support the free flow of information.
  • Solar Panels and Equipment for Schools: The supply and installation of solar panels and related equipment on school buildings are subject to a 0% VAT rate as of 2024.
  • Live Animals: Certain livestock and animals used for agricultural production benefit from the 0% VAT rate.

These zero-rated products are essential for public health, education, and environmental sustainability, and they contribute to the government’s strategy of promoting well-being and public service access.

Recent Changes in Ireland’s Reduced VAT Rates

The Irish government has made numerous adjustments to VAT rates in response to inflation and sectoral needs. Some of the more recent changes include:

  • Extension of VAT Reduction for Gas and Electricity: Initially introduced in 2022, the reduced 9% VAT on gas and electricity has been extended until 31 October 2025.
  • Reduction of VAT on Heat Pump Installation (From 2025): As part of Ireland’s push towards a greener future, the VAT on heat pump installations will be reduced to 9%, making energy-efficient heating systems more affordable.
  • Tourism and Hospitality Services: VAT for the hospitality sector returned to 13.5% in August 2023 after the temporary 9% rate was removed.

These changes are indicative of the government’s approach to addressing the economic pressures of rising energy costs while promoting sustainability and tourism recovery.

Practical Use Cases for Businesses and Consumers

Businesses in sectors such as tourism, hospitality, and construction should keep track of these reduced VAT rates to manage their pricing strategies effectively. For example:

  • Tourism and Hospitality Sector: Hotels, restaurants, and cafes that provide essential services like meals, accommodation, and cultural experiences can benefit from VAT reductions, making them more competitive in a crowded market.
  • Energy Providers: Companies in the renewable energy sector can use the reduced VAT rates on energy-efficient products like heat pumps to boost demand and support the government’s sustainability goals.
  • Cultural and Creative Industries: Museums, art galleries, and cultural institutions can benefit from the reduced VAT rates on admissions, making cultural experiences more affordable to the public.

On the consumer side, these VAT reductions offer financial relief, especially for households dealing with rising energy costs or those investing in renewable energy solutions.

Impact of Reduced VAT Rates on Irish Economy

The reduced VAT rates in Ireland help:

  • Encourage Green Energy Adoption: With VAT reductions on heat pumps and solar panels, Ireland is making green energy solutions more accessible and affordable, contributing to its sustainability goals.
  • Support the Hospitality and Tourism Sector: The VAT reductions on hotel stays, dining, and cultural services help stimulate demand in a recovering industry.
  • Relieve Financial Pressure on Households: The reduced VAT on essential utilities and health products provides significant savings for Irish households, helping mitigate the impact of inflation.

Here’s a list of FAQs related to VAT in Ireland, incorporating the questions you provided and expanding them into clear, helpful answers:

FAQs

Ireland applies reduced VAT rates of 9% and 13.5% on certain goods and services, with some at 0% for essentials.

Services like hotel accommodation, restaurant services, and cultural admissions fall under the 13.5% VAT rate.

The 9% VAT rate applies to services such as electricity, gas, and heat pump installations (from 2025).

Reduced VAT rates help businesses remain competitive by lowering costs for tourism, hospitality, and energy services.

Health products, newspapers, and solar panels for schools are subject to a 0% VAT rate in Ireland.

Conclusion

Ireland’s reduced VAT rates provide significant advantages for both businesses and consumers across various sectors. Whether you’re in hospitality, energy, health, or the creative industries, understanding how VAT applies to your services is crucial for compliance and maximizing savings. As the country moves towards a more sustainable future and recovers from the economic challenges of the last few years, these VAT reductions play a vital role in shaping Ireland’s economic landscape.