VAT regimes — 23, 13.5, 9 and 0%

Ireland applies four VAT rates — standard 23%, reduced 13.5%, reduced 9% and zero 0% — plus an exemption regime. Its European peculiarity is an unusually broad zero-rate list: basic food, children's clothing and footwear, oral medicines, books. This EU-protected legacy makes the distinction between zero-rate and exempt central — it is invisible on the VAT amount (EUR 0 in both cases) but determines whether the supplier keeps or loses the right to deduct input VAT.

History — the pre-1991 zero-rate legacy

Ireland introduced VAT in 1972, before joining the EEC in 1973. During the harmonisation of Community VAT, EU law allowed member states to retain the zero rates they already applied before 1991 (the "standstill" clause). Ireland — like the UK at the time — had a broad range of 0% products: it could keep them, whereas countries that came to VAT later could no longer create new zero rates.

That is why Ireland today shows a far wider zero-rate list than the EU average: basic food, books, children's clothing, oral medicines. These rates are not recent "niches" but a protected legacy that the Irish legislator cannot freely extend.

Governance — VAT Consolidation Act 2010

Irish VAT is codified in the VAT Consolidation Act 2010 (VATCA 2010), consolidating decades of legislation. The rates and their scope sit in its Schedules: Schedule 2 lists zero-rated supplies, Schedule 3 the reduced rates, Schedule 1 the exemptions. Each annual Finance Act can amend these lists (rates, thresholds, temporary measures such as the 9% on energy).

The framework is bounded by the VAT Directive 2006/112/EC and, since 2022, by Directive (EU) 2022/542 liberalising reduced rates — which gives Ireland more headroom on 0% and super-reduced rates, notably for residential solar.

Schema — rates, EN 16931 categories and coding

Irish VAT rates (2026) — VAT Consolidation Act 2010
===================================================

Standard rate  23.0 %  | default — goods & services not listed
Reduced rate   13.5 %  | construction, property services, domestic
                       | energy (gas, electricity, oil), repair
                       | services, restaurant (by category)
Reduced rate    9.0 %  | newspapers & periodicals, e-books, certain
                       | gas/electricity supplies (temporary measures
                       | rolled over)
Zero rate       0.0 %  | BROAD LIST — see below (input deduction KEPT)
Exempt           —     | financial services, insurance, health,
                       | education (input deduction LOST)

Reference schedules : VATCA 2010, Schedules 2 (zero) & 3 (reduced)

In an EN 16931 e-invoice, each line and each VAT subtotal carries a VAT category (UNCL5305 code). This is where the zero / exempt distinction becomes technical:

VAT coding in an EN 16931 e-invoice (BG-23 / BT-118 / BT-151)
============================================================

VAT category (BT-151 / BT-118), UNCL5305 codes:

  S  = Standard rate         -> 23% / 13.5% / 9%
  Z  = Zero rated goods      -> 0% (book/food/children's clothing)
  E  = Exempt from tax        -> financial services, health, education
  AE = VAT Reverse charge     -> self-account (intra-EU B2B, construction subcontract)
  G  = Free export item       -> export outside the EU
  K  = Intra-community supply -> exempt intra-EU supply

TRAP: Z (zero) and E (exempt) both yield EUR 0.00 of VAT
      but have OPPOSITE consequences on input deduction.
      A wrong code distorts T2 of the VAT3 return.

Zero-rate vs exempt — the expert distinction

Irish zero-rate list — examples

• Basic food — most unprocessed food (bread, milk, vegetables). Caution: confectionery, sugary drinks, supplements and "hot" takeaway items fall out of 0% and move to full or reduced rate.
• Children's clothing and footwear — subject to size (corresponding to a child under 11). Above that: standard 23%.
• Oral medicines — medicines for human use taken orally. Other forms (injectables, devices) follow distinct rules.
• Printed books — at 0%. Newspapers and periodicals fall under 9%, and e-books were also brought to 0% (print/digital alignment).
• Exports outside the EU — zero-rated (category G), as everywhere in the EU.

Common pitfalls

• Coding zero as exempt (Z vs E). The most frequent error: it loses or distorts the right to deduct and corrupts the RTD.
• Assuming "food = 0%". Many foods (confectionery, sodas, hot meals, restaurant) sit at 13.5% or 23%. The boundary is complex and a source of disputes.
• Forgetting the registration threshold. The Irish thresholds (services vs goods) determine the obligation to register; exceeding them without registering exposes you to assessments.
• Confusing 13.5% and 9%. Domestic energy has moved between the two under the temporary measures of Finance Acts — check the rate applicable at the date of supply.
• Mishandling reverse charge (AE). Construction subcontracting and intra-EU B2B acquisitions self-account — the invoice shows EUR 0 of VAT with category AE, and the buyer reports the VAT.

Cross-links

• Ireland hub — full view
• ROS — Revenue Online Service
• Revenue — VAT modernisation
• Identifiers — PPSN, TRN, VAT number, CRO
• OGP — Peppol Authority B2G 2019
• Revenue — VAT rates
• VAT Consolidation Act 2010 — Statute Book