I propose to take Questions Nos. 207 and 208 together.
As the Deputy may be aware, it is possible to change the VAT rate for hospitality or accommodation without reference to the other. The respective costs of extending the 9% VAT for different sectors are set out in the below table but for the year 2024 the estimated cost would be €159.5 for accommodation, €569.3m for hospitality, €24m for other entertainment, and €36m for hairdressing.
While the Deputy's assumption that under any such arrangement that bed and breakfast deals would attract the 13.5% rate is noted, Revenue believes there is likely to be still significant practical operational concerns in having different VAT rates applying to hotel accommodation and meals given how the sector operates, with various packages other than just bed and breakfast such as all-inclusive board and lodging packages.
This could lead to the underpayment of VAT because the charge for accommodation and meals would have to be apportioned. In the views of Revenue, it would undoubtedly provide opportunities for tax planning, which would be difficult to police. This would give rise to administrative and operational complexity as well as increased risk of avoidance and scope for manipulation of the VAT system.
Estimated cost in €m of applying a 9% VAT rate to tourism and hospitality sectors
Sector
|
Jan/Feb 2024
|
Mar/Apr 2024
|
May/Jun 2024
|
Jul/Aug 2024
|
Sep/Oct 2024
|
Nov/Dec 2024
|
Total
|
Accommodation only
|
20.9
|
22.2
|
27.3
|
33.4
|
30.3
|
25.4
|
159.5
|
Food and Catering Services only
|
83.7
|
92.8
|
97.9
|
97.9
|
96.2
|
100.8
|
569.3
|
All Entertainment
|
4.0
|
4.0
|
4.0
|
4.0
|
4.0
|
4.0
|
24.0
|
Hairdressing Services
|
6.0
|
6.0
|
6.0
|
6.0
|
6.0
|
6.0
|
36.0
|
Total Cost per VAT period
|
114.6
|
125.0
|
135.2
|
141.3
|
136.5
|
136.2
|
788.8
|
Total Cumulative Cost
|
114.6
|
239.6
|
374.8
|
516.1
|
652.6
|
788.8
|
788.8
|