Ireland €640m tourism VAT subsidy challenge

Irish government officials have challenged the continuing discount on the country’s tourism VAT rate. Currently hotels, restaurants, cafes and related industries only levy the reduced VAT rate of 9% compared to the other reduced VAT rate of 13.5% which was applied to tourism prior to 2011.

The discount is worth €640m per annum to the sector, and was introduced in 2011 at the height of the European financial and currency crisis.

However, tourism numbers have now more than recovered, and government officials have declared that the effective subsidy can be withdrawn as its ‘job is done’. They confirmed that the VAT rate returning from 9% to the other VAT reduced rate of 13.5% would raise €640 million per annum.