Ireland VAT Changes for Hospitality Services 2026

May 8, 2026

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In mid-April, the Kentucky General Assembly passed House Bill 757, changing the state’s economic nexus rules for sales tax purposes. The change in the economic nexus threshold simplifies Kentucky’s nexus standard, aligning it with a broader trend among the US states that have moved away from transaction-based thresholds following concerns that they disproportionately affected smaller online sellers making many low-value sales.

New Economic Nexus Threshold

Under the recently adopted Bill, starting from August 1, 2026, remote sellers and marketplace facilitators will only be required to register and collect Kentucky sales tax if they exceed USD 100,000 in gross sales in the state. The Bill effectively removes the 200 transaction threshold, leaving only the total sales revenue threshold as the defining factor for establishing an economic nexus in the state.

Importantly, taxable persons who registered for sales tax purposes in Kentucky solely because they exceeded the 200 transaction threshold, without reaching USD 100,000 in annual gross sales, should reassess their registration status, as they may no longer be legally required to maintain a Kentucky sales tax registration once the new rules take effect. These taxable persons may either keep their registration voluntarily or choose to close their sales tax accounts if they no longer meet the nexus threshold.

While the removal of the transaction-based threshold is the biggest change under the Bill, it is not the only change. The Bill also introduces new indirect taxes targeting digital betting-style platforms and online gaming activities. Starting January 1, 2027, a 14.25% excise duty will be imposed on the prediction market operators' transaction fees. Notably, the tax base will be extended beyond traditional service fees and include contract purchase payments themselves. The operators will also have to file and pay dues taxes monthly.

Additionally, Kentucky plans to impose a separate 12% excise duty for online fantasy sports contests. As a result, from January 1, 2027, online fantasy game operators will have to collect and remit excise on their adjusted gross fantasy contest receipts, which are calculated as total entry fees collected from participants minus winnings paid out to players.

Conclusion

By removing the 200 transaction threshold, Kentucky aims to simplify compliance for smaller remote sellers. In contrast, by broadening taxation into digital gaming and prediction-based markets, creating specific tax rules for platform operators, and requiring ongoing monthly compliance obligations, Kentucky seeks to ensure that these emerging industries are not left outside the scope of taxation.

Source: Kentucky General Assembly - House Bill 757, KPMG

What VAT rate will apply to restaurant and catering services in Ireland from July 2026?

Starting on July 1, 2026, restaurant and catering services in Ireland will generally be subject to the reduced 9% VAT rate. This includes meals served in restaurants, hotels, guesthouses, B&Bs, and similar accommodation establishments.

Which beverages remain subject to the standard 23% VAT rate in Ireland?

Alcoholic drinks, bottled water, soft drinks, sports drinks, and vegetable juices other than fruit juice will continue to be taxed at the standard 23% VAT rate, even when supplied as part of restaurant or catering services.

Does the 13.5% VAT rate still apply to guest and holiday accommodation services?

Yes, the 13.5% reduced VAT rate for guest and holiday accommodation services remains unchanged. Accommodation providers must continue applying this rate to qualifying accommodation supplies.

How should hotels and B&Bs handle VAT on bundled accommodation packages?

Hotels and B&Bs must separately identify and apportion the value of accommodation, meals, and any additional items included in a package. Different VAT rates apply to different components, so businesses cannot apply one single VAT rate to the entire package.

Why are the new Irish VAT rules important for hospitality businesses?

The updated VAT rules create additional compliance obligations for hospitality businesses because different elements of a service package may now be taxed at different VAT rates. Businesses need to adjust pricing, invoicing, and accounting systems to remain compliant.

When did the Irish Tax and Customs update the VAT guidance manuals?

The Irish Tax and Customs updated the VAT manuals on April 28, 2026, to reflect the changes introduced by the Finance Act 2025 affecting hospitality, restaurant, and catering services.

Ireland

Europe

Tax Compliance

VAT Compliance and Reporting

Tax Rates

VAT

Hospitality

Accommodation

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