VAT rate is killing Galway restaurants
Up to a dozen eateries have closed in Galway already this year – on top of at least 17 cafes, restaurants and gastropubs that shut their doors across the county in 2024.
That’s why restaurants – here and nationally – are again lobbying hard for the 9% VAT rate for food-led hospitality businesses to be reinstated in the next budget.
The Restaurants Association of Ireland claims that, at 13.5%, Ireland has one of the highest VAT rates on food services in the EU, with more than half of EU countries applying reduced VAT rates to hospitality.
And they claim that the estimated €545 million cost of restoring the 9% VAT rate would reap immediate benefits.
A report by economist Anthony Foley last year projected that a 10% drop in tourism numbers, linked to reduced food service availability, which could result in a loss of over a billion in lost tourism spending.
That scenario appears to be becoming a reality with the latest data from the Central Statistics Office showing a 17% fall in tourism numbers in the first five months of 2025.
Independent analysis by economist Jim Power shows that the closure of 500 restaurants could result in a €680m hit to the wider economy when job losses, tax revenue decline, and increased welfare dependency are considered.
With more than 200 restaurants closing in 2025 across the country, Adrian Cummins, CEO of the Restaurants Association of Ireland, said Budget 2026 must be a turning point.
“Temporary measures are not enough. We need a pro-small business, pro-hospitality budget that supports survival now and enables long-term growth,” said the Portumna native.
“Restaurants are more than businesses, they’re the heart of communities, tourism and culture in counties like Galway. But high VAT, soaring input costs and government-induced pressures are pushing many to the brink.”
Caption: Adrian Cummins.
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