News & Events

Extension on Rates of VAT

The cost of living in Ireland is rapidly increasing, and a new set of measures, including an extension on rates of VAT, have been announced by the Irish Government to tackle this issue. From household bills to essential grocery items, Irish people across the country are feeling the pinch of rising costs.

Last week, Taoiseach Leo Varadkar made an announcement in respect of a Spring cost of living package. This package is aimed at the country’s most vulnerable citizens to help them make ends

meet during these difficult times. Due to the rising cost of living brought about by the effects of Covid on the Irish economy as well as Russia’s invasion of Ukraine, the government has agreed to a new €1.2 billion package of measures to be put in place.

This package is about helping families who are struggling with the cost of living, helping businesses with their energy costs, and helping those on fixed incomes like pensioners and people on social welfare: including carers and people with disabilities.

So, what does this mean for the citizens of Ireland? The measures include:

  • -A social welfare bonus of €200 in April 2023.
  • -A lump sum child benefit top-up of €100 per child in June 2023.
  • -An extension of some affected industry VAT rates in Ireland (see below).
  • -A once-off increase of €100 in the back-to-school clothing and footwear allowance.
  • -Junior and Leaving Certificate State Examination fees will be waived this year.
  • -The hot school meals programme will be extended to all DEIS primary schools from September.
  • -Reduced charges for school transport (starting from €50 per pupil).
  • -A phased restoration of the rates of excise on petrol, diesel and marked gas oil is to take place over the coming months.
  • -A €200 energy credit may also be issued in Autumn 2023.

The new cost of living measures has also taken into consideration the extension of VAT rates for some of the most affected industries in Ireland. Measures will include:

  • -An extension of the temporary reduction in VAT rates on gas and electricity in Ireland from 13.5% to 9% until October 31st. This is aimed at helping families, businesses and anyone who commutes to work or must drive long distances.
  • -Temporary reductions in VAT on tourism and hospitality from 13.5% to 9% will be extended to August 31st. The extension of these VAT rates is aimed at giving businesses in Ireland a boost during the upcoming holiday season.

New Cost of Living Measures in Ireland

These initiatives are expected to provide some much-needed financial respite to Irish households. In addition to this, specific new cost of living measures for businesses in Ireland have also been put in place:

  • -The Temporary Business Energy Support Scheme (TBESS) has been extended to May 31st. The scheme has been enhanced by reducing the qualification threshold from a 50% increase in electricity or gas costs to a 30% increase. This applies from September 1st, 2022. The TBESS aims to assist businesses with their energy costs. This is on the basis that they’ve experienced an increase of 50% or more in their average unit prices for energy. Qualifying businesses can claim 40% of these increases, capped at €45,000.
  • -There will be a new grant for businesses using Liquified Petroleum Gas (LPG) or kerosene, as these energy supplies don’t qualify for the TBESS.

The introduction of these new costs of living measures and the extension of the above-mentioned VAT rates suggests that the government is looking to provide extra support to those who need it most in Ireland. For advice on some of the supports available to tackle the cost of living, please visit Citizensinformation.ie.

At Cronin and Company, our team of experienced professionals offers an extensive range of taxation services and takes a hands-on approach in everything they do. For all the latest news relating to tax and VAT in Ireland, visit Croninco.ie. We keep you up to date with all the available methods to reduce your tax in Ireland.

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