Reduced VAT Rate Offers Hope for Hospitality Sector in Ireland

The hospitality sector in Ireland is set to receive a significant boost with the planned reduction of the VAT rate from 13.5% to 9%, effective from July 2024. This change has been met with optimism from industry stakeholders, including Jose Philpott, who co-owned the restaurant Molly’s of Kilfinane for 23 years.

Philpott, who recently closed the restaurant she operated with her husband, Paul Philpott, and sister, Marie, believes this reduction will provide much-needed “breathing space” for small businesses. The couple ran the establishment through various challenges, including economic recessions, a pandemic, and the impacts of Brexit, ultimately deciding to sell the business in early September.

Reflecting on their decision, Philpott noted that while operating a restaurant was rewarding, it was time for new ownership to bring fresh ideas to Molly’s. She expressed hope that the upcoming VAT decrease would instill confidence in the hospitality sector. “When the VAT rate is high, it is felt very keenly, but when it goes down, the reduction is not as visible,” she explained.

The VAT cut is part of Budget 2026, aimed at supporting the struggling hospitality industry. Philpott emphasized the importance of this development, stating, “This will mean that people in hospitality can breathe.” While the reduction is welcomed, she acknowledged that it might not have an immediate impact on pricing for consumers.

Philpott elaborated on the nature of their business, highlighting that they catered primarily to local clientele rather than relying on seasonal tourist traffic. “Small businesses like ours have a consistent base of customers throughout the year,” she said, adding that maintaining the right price point is crucial for sustainability.

She shared insights from their experience in the industry, emphasizing that hospitality goes beyond just providing services; it requires a personal touch and a commitment to community. “We ran our business with love, and we put so much into it,” Philpott said. The regulars who visited several times a week were integral to their success, and she recognized that even a slight increase in prices could affect customer frequency.

Philpott’s perspective sheds light on the broader implications of the VAT reduction for small business owners. “For someone who is struggling to keep the doors open, or who is on the fence about closing up shop, this VAT rate coming next July might just give them hope,” she stated. She encouraged those uncertain about their future to hold on, suggesting that the upcoming change could provide the stability needed to navigate tough times.

As the hospitality industry awaits the implementation of this reduced VAT rate, the sentiment among operators like Philpott highlights the potential for renewed confidence and a more sustainable business environment. The reduction is not merely a financial shift; it represents a lifeline for many who have dedicated their lives to serving their communities.