Vintners' sharply criticise delay in VAT cut on food services
Michael McAleer
The Vintners’ Federation of Ireland (VFI) has sharply criticised the delay in introducing a reduced VAT rate for the hospitality sector, saying it fails to deliver for the thousands of traditional pubs now fighting for survival and leaves food pubs waiting months for promised support.
In his budget speech, Minister for Finance Paschal Donohoe said he was reducing the VAT rate from 13.5 per cent to 9 per cent on food and catering businesses and for hairdressing services. This measure will come into effect from July 1st 2026.
Responding to today's budget announcement, the VFI said that while the decision to cut VAT on food services is welcome, "delaying the change until mid-2026 is unacceptable".
"Food pubs face their toughest trading period in the first half of the year and will now have to endure another six months of crippling costs before any relief arrives, at the very moment when new cost burdens such as the January increase in minimum wage will take effect. The Government is piling on extra costs early in the new year, but making struggling pubs wait until July for even modest relief.
Its chief executive Pat Crotty said: “This Budget is a bitter blow for traditional publicans, even allowing for the vital reduction in the hospitality VAT rate. Food-led pubs must somehow survive the hardest months of the year without the VAT support they were promised, while the thousands of traditional pubs, who don’t serve food and form the backbone of rural Ireland, get absolutely nothing."
He said the budget "shows little understanding of how fragile the pub trade has become. Small publicans are being asked to carry the weight of endless new costs while being given no meaningful help to survive. Communities will lose their pubs if this continues, and once they’re gone, they’re gone for good.”
The VAT cut was welcomed by the Restaurants Association of Ireland. However it warned of looming cost burdens in early 2026, saying that many hospitality businesses will struggle to survive the first half of 2026 unless action is taken to offset rising labour costs ahead of the VAT reduction in July.
"We must be clear, July 2026 is too far away for many businesses already on the brink. The combined impact of a significant minimum wage increase and the rollout of pension auto-enrolment in January will place unbearable strain on food-led hospitality businesses, many of which are small, family-run enterprises operating on razor-thin margins.”
“Ireland’s restaurant and hospitality sector is one of the largest employers in the country, with over 220,000 people working in the industry, the vast majority in small and medium-sized enterprises that are central to local economies, particularly in rural Ireland. With 99.6 per cent of the 20,213 hospitality businesses in the sector being SMEs, they simply do not have the capacity to absorb the planned cost increases in January 2026.”
