Key Tax, Customs and Employment Law Developments for Irish Businesses
As we enter the second half of 2026, a number of important tax, customs and employment law developments have come into effect or are currently being implemented in Ireland.
This update brings together four key developments affecting Irish businesses and employers. If you have any queries on the areas discussed below please contact your local Xeinadin advisor.
VAT Rate Changes
As of 1 July 2026, the VAT rate applicable to catering and restaurant supplies (excluding alcohol, soft drinks and bottled water), hot take-away food, tea & coffee and hairdressing services has reduced from 13.5% to 9%, a reduction which is welcomed across the impacted sectors.
Businesses should review their systems and processes carefully to ensure the correct VAT treatment is applied, particularly where bookings and payments were received prior to 1 July 2026.
Impact of the Change
The impact of the VAT rate change depends largely on how a business accounts for VAT.
Businesses generally operate either on an invoice basis, where VAT is accounted for when an invoice is issued, or on a cash basis, where VAT is accounted for when payment is received.
For many businesses, such as restaurants and hairdressers, where services are provided and paid for immediately, the transition should be relatively straightforward. However, businesses accepting advance bookings may face more complex VAT considerations.
Hotels, wedding venues and event operators should pay close attention to advance bookings. For businesses operating on the invoice basis, the VAT rate applied is determined by when the invoice is issued (or should have been issued), rather than when the event takes place.
A wedding booked prior to 1 July 2026 for an event taking place after 1 July 2026 may be subject to different VAT rates across various stages of billing. A deposit invoiced before the rate change may attract VAT at one rate, while the final balance invoiced later could attract a different rate.
Businesses should also be aware that room rental and accommodation services may be subject to a 23% VAT rate, creating further complexity when pricing hospitality packages.
Systems Review
Transitional periods often increase the risk of errors and Revenue challenges. Business owners should ensure that their finance, management and sales teams understand the new rules and undertake a review to ensure systems and processes are operating as intended.
2. New Customs Rules for Low-Value Imports to Ireland
From 1 July 2026, significant changes have come into effect for goods purchased online from countries outside the European Union, including the United Kingdom.
These changes arise from the abolition of the longstanding €150 customs duty relief threshold for low-value imports.
Previously, goods imported into Ireland with a value of €150 or less could generally enter the EU free from customs duty (although VAT could still apply).
A €3 customs duty charge now applies to each distinct item contained in parcels purchased online from non-EU countries, including the United Kingdom.
The new rules apply to deliveries arriving in Ireland on or after 1 July 2026, regardless of when the goods were originally purchased.
What to Expect
- Additional customs charges on low-value imports.
- Potential increases in the overall cost of online purchases from non-EU retailers.
- Customs payment requests from delivery companies before goods are released for delivery.
Increased Risk of Fraud
Businesses and consumers are advised to remain vigilant regarding fraudulent customs payment notifications and to verify any payment requests directly with their delivery service provider.
Commercial Impact
The removal of the low-value customs duty relief represents a significant change for Irish businesses and consumers that frequently purchase goods from non-EU suppliers.
While the individual charge may appear modest, it can have a material impact on the cost of multiple-item purchases and on businesses importing large volumes of low-value products.
Businesses involved in e-commerce, retail, distribution or regular cross-border purchasing should assess the potential commercial impact and consider whether alternative EU-based sourcing options may be appropriate.
3. Employment (Contractual Retirement Ages) Act 2025
The Employment (Contractual Retirement Ages) Act 2025 came into effect on 29 June 2026 and introduces a significant new employment right for eligible employees in Ireland.
The legislation allows certain employees to notify their employer that they do not consent to retire at their contractual retirement age and wish to remain in employment until they reach the State Pension Age, currently 66.
Who Is Covered?
- Employees with a contractual retirement age of 65 or younger.
- Employees who have completed their probationary period.
- Employees seeking to remain in employment until State Pension Age.
The legislation does not apply where the contractual retirement age is 66 or higher, or where retirement ages are prescribed by law for certain occupations.
Employee Notification Requirements
- Employees must give at least three months’ notice before their intended retirement date.
- Notice cannot be provided more than twelve months before the intended retirement date.
- Where a longer contractual notice period exists, that notice period or six months (whichever is shorter) must be given.
- Employees must state the legal basis for their request.
Employer Obligations
- Respond in writing within one month.
- Explain the reasons for any decision to enforce a contractual retirement age.
- Demonstrate that the retirement age is objectively and reasonably justified by a legitimate aim and that the means used are appropriate and necessary.
Code of Practice on Longer Working
An updated Workplace Relations Commission Code of Practice on Longer Working took effect on 29 June 2026. The Code provides practical guidance, recommended procedures, template notifications, and guidance on employer responses and policies.
What Employers Should Do Now
- Review contractual retirement age provisions.
- Update HR policies and workforce planning procedures.
- Train HR teams and managers on the new requirements.
- Implement a formal process for handling employee requests.
- Document the justification for any mandatory retirement ages.
The Act represents a significant change in Irish employment law and reflects a policy objective of supporting longer workforce participation. Employers should review existing arrangements and ensure retirement policies can be objectively justified and administered consistently.
4. EU Pay Transparency Directive
The 7 June 2026 deadline for the transposition of the EU Pay Transparency Directive has passed. As anticipated, Ireland has not met this deadline, with the Government confirming that a phased approach to implementation is planned.
The Directive has already been partially transposed by way of the Gender Pay Gap Information Act 2021, however many aspects of the implementation remain unclear.
Legislative work is ongoing and employers should not underestimate the scale of the preparations required.
The Directive will introduce significant new obligations for employers across the EU and represents a major shift towards greater transparency in pay practices.
Employers should use the remaining lead-in time to assess their current arrangements and prepare for the changes ahead.
Key Changes for Employers
- Providing salary information to job applicants.
- Prohibiting questions about salary history.
- Ensuring gender-neutral recruitment processes.
- Removing pay secrecy restrictions.
- Expanding employee information rights.
- Enhancing gender pay gap reporting obligations.
- Requiring joint pay assessments where significant unexplained pay gaps arise.
What Actions Can Employers Take Now?
Employers will be required to demonstrate that pay decisions are based on objective and gender-neutral criteria.
Employers should have clear and defensible frameworks governing remuneration, grading, promotion and reward decisions.
With increased levels of scrutiny expected, employers should consider beginning their preparations now.
Suggested First Steps
- Review pay structures.
- Identify potential pay gaps.
- Review recruitment processes.
- Review governance and policies around pay, promotion and career progression decisions.
Next Steps
If you have any questions on any of the items discussed please reach our to your local Xeinadin office.
