VAT Rate Changes
The Bill formally legislates for the VAT rate changes announced in the Budget, including:
Section 31E SDCA 1999 defines an apartment block as “a multi-storey residential property that comprises, or will comprise, not less than 3 apartments with grouped or common access”.
The term “apartment” is not defined for the purposes of section 31E, but published Revenue guidance in relation to this section would suggest it should be interpreted as “being a room or a group of related rooms, among similar sets in one building, designed for use as a dwelling”.
VAT rate on rooms in hotels and guesthouses used other than as accommodation
The bill amends legislation to confirm that, with effect from 1st January 2026, the hire of rooms in hotels and guesthouses for use other than as accommodation will be subject to VAT at the standard rate (currently 23%).
The purpose of this amendment is to level the playing field so that other facility providers that do not provide accommodation rooms are not at a competitive disadvantage such as those engaged in hiring rooms for conferences or meetings.
Flat-Rate Addition
As outlined in the Budget, the Bill confirms that with effect from 1 January 2026, the flat-rate addition for farmers will decrease from 5.1% to 4.5%. The Flat Rate Addition compensates farmers who are not VAT registered for VAT incurred on their purchases.
Waiver of Exemption
The Bill amends VAT legislation to provide for the removal of the VAT on property waiver of exemption provisions, and for the cancellation of all waivers of exemptions from the date of the passing of the Finance Act 2025
The Bill also provides for the deletion of certain legislative references which should no longer be necessary as a result of the above amendments.
Financial Services
The Bill amends VAT legislation to provide that the supply of financial services which consist of the managing of the Automatic Enrolment Retirement Savings Systems are exempt from VAT.
Persons not accountable persons unless they so elect
The bill amends VAT legislation to align the time period to be reviewed when undertaking the VAT registration assessment of farmers, with all other businesses, as required by EU VAT legislation.
It also clarifies that turnover from activities excluded from the flat-rate addition under an order as provided for in VAT legislation should be included in such an assessment.
Penalties
The bill amends VAT legislation to clarify that a penalty of €4,000 may be applied from the day after the filing date by which a Payment Service Provider is required to report data on certain cross-border payments. The return period is calendar quarterly and the filing date is the last day of the month following the period (i.e., Q1 CESOP return is due on 30 April).
A further penalty of €4,000 may be applied from the day after subsequent filing dates where the Payment Service Provider has still failed to report that data.