The standard rate of Irish VAT will be temporarily reduced for six months from 1 September 2020 to 28 February 2021. Part of the July Stimulus, the Irish Government announced a temporary reduction in the Standard VAT Rate from 23% to 21%.
The standard rate of VAT applies to broadly 50% of activity in Ireland and a wide range of goods and services including cosmetics. In the instance of the Hair and Beauty industry, this VAT applies to products sold.
How does the VAT Range change impact the hair and beauty industry?
Consider how the change will impact your business and any actions you need to take to ensure you are ready for the change. Examples include:
- Pricing: Should you factor the VAT rate cut into your pricing? If you are a business who sets their prices on a VAT-inclusive basis, this is something that you might need to consider.
Clients might expect price adjustments in line with the VAT reduction from 23% to 21% on sales of cosmetics and sun-bed treatments, for example.
- Systems: Remember to update your systems to reflect the VAT rate cut.
It’s important to remember that the change will not impact the VAT treatment of supplies that qualify for the reduced VAT rate that remains at 13.5%. This includes many activities in the tourism and hospitality sector such as meals in a restaurant, hotel accommodation, housing, hairdressing and beauty.
For further information on VAT rates for goods and services, please follow the link here.