Ireland: Minister’s Announcement on VAT Changes

Revenue announced a phased rollout of mandatory domestic B2B e-invoicing, impacting various businesses, with details to be clarified in a paper released tomorrow. This initiative supports VAT modernization and aligns with EU ViDA reforms. Additionally, adjustments to the 9% VAT rate for food and other services introduce complexity, while retaining it for energy aids.

The minister announced Revenue’s phased rollout of mandatory domestic B2B e-invoicing, impacting businesses across sectors. Revenue’s paper, due tomorrow, will detail the proposal.

This aligns with Revenue’s long-considered VAT modernisation agenda for e-invoicing and digital VAT reporting, though no timeline was given tomorrow’s paper may clarify.

Mandatory e-invoicing will significantly alter sales and purchase operations for many Irish businesses, requiring system and process updates, so sufficient preparation time is essential.

It builds on EU ViDA reforms mandating e-invoicing and digital reporting for cross-border transactions from 1 July 2030.

VAT Rate Reductions

The 9% rate applies to most food and some drinks in restaurants, cafés, hotels, bars, takeaways, or catering. Exceptions: soft drinks and alcohol at 23%.

Unlike before, it excludes hotel/short-term rentals and tourist admissions, adding complexity for combined services (e.g., splitting bed-and-breakfast between accommodation and food).

Deferral to July 2026 reduces 2026 Exchequer (a royal or national treasury) costs but requires businesses to charge 13.5% until then, posing interim challenges.

Retaining 9% on electricity and natural gas until 31 December 2030 is a welcome cost-of-living aid amid recent price hikes