Ireland Finance Ministry questions tourism VAT subsidy
- Jul 31, 2018 | Richard Asquith
Ireland's reduced 9% VAT rate on tourism services has been challenged by the Finance Ministry as a ‘deadweight’ on the economy’s finances. The department has claimed this week the rate reduction is no longer relevant given the buoyant visitor numbers.
The rate was temporarily cut from 13.5% in 2011 at the height of the financial crisis as foreign visitor numbers dropped. It has since been credited with saving over 30,000 jobs in the key sector, and visitor numbers have grown sharply in the past five years. The estimated cost to date of the subsidy is €2.6 billion.
Reduced VAT on tourism across the EU
Few countries in the EU charge full VAT on such hospitality services. Countries such as Ireland and Germany have long provided a tax subsidy to this key industry, with considerable boosts in job creation and international visitor numbers.
| Country | Hotel VAT rate | Restaurant VAT rate | Theatres, Cinema VAT rate | Standard VAT rate |
|---|---|---|---|---|
| UK | 20% | 20% | 20% | 20% |
| Ireland | 9% | 9% | 9% | 23% |
| France | 10% | 10% | 10% | 20% |
| Germany | 7% | 19% | 7% | 19% |
| Italy | 10% | 10% | 10% | 22% |
