Budget 2022 | Tourism & Hospitality Sector Overview

Austin Hickey, Director, BDO Consulting, provides a breakdown of the measures and supports announced in Budget 2022 that are relevant to the Tourism & Hospitality sector.

When the Government took the decision in Budget 2021 to reduce the VAT rate from 13.5% to 9% it was widely welcomed by many throughout the sector, although concerns were expressed at the time regarding the temporary nature of the reduction. While providing an immediate cashflow benefit to tourism businesses, it was felt by many, that it was only once international tourist activity re-commenced and normal business returned that the tourism sector and wider economy would see the full benefit of the reduction in the VAT rate. 

It is therefore unsurprising that the announcement that the 9% VAT rate will expire at the end of August 2022, reverting to 13.5%, has been met with much disappointment and angst in the sector. Notwithstanding the positive announcements regarding the aviation package, business continuity grants, continuation of the EWSS and enhanced overseas marketing budgets, it is the planned increase in the VAT rate that will generate much debate and discussion in the days and weeks ahead. 

Maintaining the competitiveness of Ireland’s tourism offering will be central to the sector’s recovery. An increase to the VAT from the current 9% will place Ireland’s tourism VAT rate amongst some of the higher tourism VAT rates across Europe, impacting on the competitiveness of Ireland’s tourism offering and potentially damaging the rate of recovery across our domestic and overseas tourism markets. 

If you have any queries related to the information above, please contact Austin Hickey at ahickey@bdo.ie.

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