Updated on June 2, 2022
1. WHAT HAS CHANGED?
First announced on June 1st as part of the Economic Recovery Plan, the second reduced rate of 9 percent will now be in effect for a further six months. The current tax rate of 9% will continue in effect until the 1st of September 2022 until a new law is passed.
This extension is viewed as a vital government support for the business following lengthy closures resulting from Covid 19 restrictions, and hence the 9 percent rate is applied to specific suppliers of products and services in the tourism and hospitality sector.
The decreased rate will remain in effect until the end of the summer of 2022 in order to give the hardest-hit industry more time to recover.
2. WHO IS AFFECTED?
Also included in this relief is entrance to cinemas and promotional events, as well as admittance into museums and exhibitions, which will also be covered. The reduction will also help hairstyling services and printed materials like brochures, catalogues, and maps, among other things.
3. WHAT TO CONSIDER?
Products and services previously subject to a 9 percent tax rate will now be subject to the 13.5 percent tax rate that was in effect until the end of 2021. This has now been extended till September 1, 2022, at the earliest.
The second half of 2021 and the early half of 2022 will be a good time to put off any IT system upgrades that companies may have planned.
Businesses in the hospitality industry may additionally need to reevaluate the rate that would apply if the business is or has taken advance bookings for the remaining extended period, as a second consideration Invoices must be accurate and show the correct VAT rate for the date/tax point at which the supply was made.
In the event you have any questions or need assistance, please contact your regular RSM contact.
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