Tax Credits
Seanad Éireann — 2026-06-25
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Kieran O'Donnell (FG), Limerick City

I thank the Senator for raising this important issue and highlighting the role that pubs and the hospitality sector play in Irish life and culture by providing a central hub and meeting place in towns and villages across all of rural Ireland, which she articulated very well. I am taking this matter on behalf of the Tánaiste and Minister for Finance, Simon Harris.
The Government’s commitment to the sector was most recently demonstrated by the reduction in the VAT rate to 9%, recognising that the sector was highly labour intensive. Senator Lynch acknowledged that reduction. The sector forms a key part of the domestic economy and is expected to support over 150,000 jobs across the country. While acknowledging that the VAT reduction will not apply to all, it will help to keep the doors of many open, including those pubs that offer food and hot drinks as part of their trade.
The Department of Finance receives pre-budget submissions from a wide range of stakeholders in advance of each budget and all are given consideration as part of the annual policy cycle. With regard to rural pubs, the particular point raised by Senator Lynch, I am aware that the Department has received and acknowledged a submission from VFI outlining a proposal for a payable tax credit for pubs. The proposed payable credit would be linked to the number of draught product kegs purchased by a business, and the proposed credit would be subject to a per premises cap of €20,000. Proposals for new tax expenditures are examined by reference to the Department’s tax expenditure guidelines, which outline the Government’s approach to when tax expenditures are best used, noting that these narrow the tax base, and how they should be evaluated.
In the case of a proposal for a targeted tax incentive, such as that put forward by the VFI, consideration must also be given to European state aid requirements. Measures that may confer a selective advantage on a specific sector, such as incentives to support rural pubs, have the potential to constitute a state aid and, therefore, could not be introduced unless compliant with an existing framework or undertaking a full notification process. The VFI submission references the tax credits available for film and digital games and their relevance to supporting Irish culture. It is noted, however, that these are all approved state aids, largely under the terms set out in the EU’s “Communication from the Commission on State aid for films and other audiovisual works”, which would not have relevance to the on-trade sector.
Additionally, any tax credit given to rural pubs or, indeed, to all pubs would potentially be contrary to the alcohol structures directive where it is based on the supplies of alcohol products to those pubs. I am aware that the VFI has, in the past, proposed a general reduction in alcohol excise. However, this proposal was not taken forward, as excise duty on alcohol is governed by EU law, with which Irish excise law is obliged to conform. It is worth noting that there has been no general increase in excise duty rates for alcohol since 2014. While the retail price of beer has risen over that period, the excise duty has remained unchanged and, therefore, the total tax as a percentage of the retail price of each pint is now lower than it was more than a decade ago.
I am aware that recent years have been challenging for the hospitality sector as a whole, particularly through the period of Covid-19 restrictions. The Government is conscious of the challenges facing pubs, including rural pubs, and all other businesses in the current economic climate, and the cost of business advisory forum is working to look at the structural issues that are driving up costs and the steps that could be taken to mitigate them.
There are also a number of existing tax supports available to all businesses, including the on-trade, to encourage investment in the economy and, in particular, indigenous SMEs. These include the employment investment incentive, the start-up relief for entrepreneurs and the start-up capital investment. A range of direct expenditure supports are also available to businesses, and details can be found online on the national enterprise hub.
Notwithstanding the above, I the Senator that the matters raised in the submissions by VFI will continue to inform ongoing policy considerations in the context of the budgetary process.

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Record URI: https://data.oireachtas.ie/akn/ie/debateRecord/seanad/2026-06-25/debate/main
Retrieved: 2026-08-14T04:55:07+00:00
Sitting date: 2026-06-25