Indirect tax - Budget 2026

VAT rates

• As part of continued cost of living measures, the reduced 9% VAT rate for gas and electricity is extended until 31 December 2030.
• The VAT rate on the sale of new apartments will decrease from 13.5% to 9% with effect from 8 October 2025 until 31 December 2030.
• The VAT rate will reduce from 13.5% to 9% for food and catering businesses and for hairdressing services from 1 July 2026.

Farmer’s flat rate payment

• Farmers flat-rate addition to be decreased from 5.1% to 4.5% with effect from 1 January 2026.

Excise Duty

• The cost of a 20 pack of cigarettes will be increased by an extra 50c, with pro-rata increases to the price of related tobacco products.

Carbon tax 

• Carbon tax will be increased from €63.50 to €71.00 per tonne of CO2. This increase will be applied to petrol and diesel from 8 October 2025, and all other fuels from 1 May 2026. 

VRT

• The VRT relief for electric vehicles, which was due to end on 31 December 2025, is being extended to 31 December 2026.

VAT modernisation and electronic invoicing

• The Revenue Commissioners will begin a phased roll-out of electronic invoicing (e-invoicing) arrangements for domestic business-to-business transactions. Further details to be published on 8 October 2025.