Restaurants Association of Ireland repeats call for return of 9% VAT rate
The Restaurants Association of Ireland, supported by economic research from economist Tony Foley, today launched a significant report making the case for the restoration of the 9% VAT rate for food services and addressing recent criticisms of the policy measure.
The Restaurants Association of Ireland said it rejects some recent commentary and claims questioning the desirability of restoring the 9% rate.
It said the restaurant sector has faced significant cost increases from market-priced inputs and Government induced costs, with independent assessments confirming these pressures.
Small firms dominate the sector, with 76.6% of hospitality enterprises employing between one and nine people, it said.
“These firms are particularly vulnerable to market and policy shocks – just 0.4% or 73 out of 20,213 hospitality enterprises are considered large businesses or food chains,” it added.
Recent data has shown declining food services sales volume in 2025, weak lending to restaurants, and underperforming tourism related restaurant activity.
“The sector is not booming, and margins are under extreme pressure,” it stressed.
The report emphasises that food services are a cost-of-living issue for the wider population and the restoration of the 9% rate is justifiable in both a macroeconomic context and a strategic economic development context.
Even with a 9% VAT rate, the hospitality sector would continue to contribute significantly to the economy.
The association said the CSO Monthly Services Index shows food services sales volume and value are declining in 2025.
Speaking on the launch of the report, Adrian Cummins, the CEO of the Restaurants Association of Ireland said the 9% VAT rate is critical for thousands of restaurants and cafés across Ireland.
“Businesses have built their financial planning around its promised return, and any delay or uncertainty risks undermining that planning,” Adrian Cummins said.
“The financial model for food businesses is broken and without the reinstatement of the 9% VAT rate many just simply will not survive,” he said.
“With 99.6% of food businesses in Ireland classified as SMEs, the Government must honour its commitment to the 9% VAT rate and safeguard more than 20,000 enterprises and the 220,000 people they employ,” he said.
“Only 73 of these businesses or just 0.4% are considered large companies. Supporting SMEs is critical for the sustainability of our sector and the wider economy,” he added.
Anthony Foley, Emeritus Associate Professor of Economics at DCU and economic researcher on the report, said the sector plays a significant role in both regional and national employment and economic activity.
“However, its business model has been severely undermined by rising labour and input costs, much of which stem from government policies,” he noted.
“Without a supportive measure like 9% VAT the sector is like to face a substantial decline based on market forces and non-viability at current prices. In addition, 9% VAT supports ordinary consumers as well as thousands of small enterprises,” he said.
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