Indirect Taxes

Finance (No 2) Bill 2026 (“the Bill”)

In line with Budget announcements the Bill proposes the following changes:

• The rate of payment to non-VAT registered farmers to compensate them for the fact that they cannot recover VAT, known as the flat-rate addition, will increase from 4.5% to 4.8% effective from 1 January 2027.
• The VAT rate for non-oral respiratory vaccines used for livestock will be reduced from 23% to 9% from 1 January 2027.

New measures not announced in Budget 2027 

• The Bill introduces electronic invoicing (“e-invoicing”) and digital reporting for domestic business-to-business (“B2B”) supplies as part of Ireland’s implementation of the EU’s VAT in the Digital Age (“ViDA”) initiative. These obligations will apply from 1 November 2028 to VAT-registered businesses managed by Revenue’s Large Corporates Division (“LCD”) on 1 January 2027. From 1 November 2029, they will extend to other businesses engaged in intra-EU transactions or managed by LCD on 1 January 2028. It is also possible for taxable persons who are not mandated to issue electronic invoices to elect that e-invoicing will apply in respect of their domestic supplies to business customers. Public bodies and businesses who are not registered for VAT will be issued with a tax reference number to be included on electronic invoices issued to them by their suppliers. The new measures follow Revenue’s previously announced phased approach, although its plan to introduce electronic invoicing and digital reporting for intra-EU B2B transactions from 1 July 2030 are not included in this Bill.
• An intermediary registered in Ireland for the Import One Stop Shop scheme (“IOSS”) will be required to hold a tax clearance certificate throughout its registration and notify Revenue if it ceases to hold one. The Bill does not specify a commencement date for this measure, so it is expected to take effect on enactment.
• The Bill updates the wording of the VAT exemption for transactions involving current, deposit or savings accounts, payments, transfers, debts, cheques and other negotiable instruments to align Irish legislation with the EU VAT Directive. As noted in the Explanatory Memorandum, no change in practice is expected as Revenue already applies the rules in the EU VAT Directive. 
• The Bill confirms details regarding mineral oil rates introduced by Financial Resolutions passed on the 28th of August 2026 and on the Budget Day respectively, including:
  • Postponement of carbon tax increases from 14 October 2026 to 1 May 2027
  • Extended reduction, effective from 14 October 2026, in the Mineral Oil Tax rate on non-propellent kerosene (fuel used to heat homes)
  • Postponement on the 1 May 2027 carbon tax increase on marked gas oil (green and chemically marked diesel) to 13 October 2027
  • Extension of existing cuts to Mineral Oil Tax and the postponement of the start of the phased restoration of rates until 28 February 2027.
  • Confirmation of amendments to rates of Solid Fuel Carbon Tax which were scheduled for 14 October 2026, and which will now not come into effect until the 1 May 2027.
  • VRT rates are maintained at current levels until 2028.
• The increase excise rate levied on tobacco products and on vaping liquids were confirmed.
• The VRT relief provisions are being extended to 31 December 2028 for electric vehicles.
• ‘Remote Intermediary duty’ is renamed as ‘betting intermediary and pool betting duty’ and provides for the collection of duty from remote betting intermediaries and from pool betting intermediaries at a rate of 25%.
  • The on-course exemption is extended to pool bets taken at authorised venues. 
  • Totaliser Act 1929 licence holders stay outside the charge while their licences remain in force.
  • Sections 64 and 67 of the Finance Act 2002 are amended to delete obsolete definitions and to clarify the definitions of ‘licenced greyhound racetrack’ ‘pool bet’, pool betting operator’ and ‘winnings’. Seven obsolete definitions are deleted.

Who will be affected?  

The introduction of an e-reporting regime in Ireland for domestic transactions is a significant and well signposted development. Businesses whose tax affairs were managed by LCD on 1 January 2027 will need to change how they invoice and report domestic B2B supplies from 1 November 2028. From 1 November 2029, businesses managed by LCD on 1 January 2028 and those engaged in qualifying intra-EU trade will also need to make these changes. 

IOSS intermediaries will need to maintain tax clearance throughout their registration and notify Revenue if they cease to hold it.

Farmers who cannot fully recover input VAT will benefit from the reduced 9% VAT rate on non-oral respiratory vaccines for livestock from 1 January 2027. Suppliers will need to update their VAT rate for these products from the same date.

Farmers who are not VAT-registered will receive additional support through the increased flat rate addition, which maintains support for this sector based on updated economic data.

The changes in the Mineral Oil Tax rates are extended as a direct response to elevated fuel costs caused by geopolitical events.  High fuel prices impact upon business and consumers and can give rise to inflation. As such, the Government has maintained many of the measures adopted earlier in 2026 to mitigate the impact that high fuel prices have on the cost of living. 

Consumers of tobacco and vaping products will now pay more excise duty.

Regarding betting excise duties; non-track pool betting operators and remote betting intermediaries are the main group impacted by the changes introduced in the Finance Act 2026 and will be subject to tax at a rate of 25%. Pool betting taken on course is exempt.

Our view 

The move to structured electronic invoicing and digital VAT reporting is a significant change to how businesses issue invoices and report transactions to Revenue. The arrival of these requirements has been widely communicated by Revenue and the phased approach gives businesses time to prepare. Impacted businesses should assess their invoicing systems and data quality well before November 2028 and 2029. While implementation will require investment and coordination with customers and suppliers, the measures should support more accurate VAT reporting and reduce manual processing over time.

We welcome the alignment of the wording in Irish VAT legislation with the EU VAT Directive on banking and payment transactions and the confirmation in the Explanatory Memorandum that no change in practice is expected.

We welcome the reduction in VAT rate and the increase in flat rate addition to support animal health and farm productivity and the wider agricultural sector.

Freezes to the excise duties paid on Mineral oil taxes are to be welcomed at a time when many are struggling with cost-of-living challenges. Furthermore, it gives businesses, particularly transport-intensive operators, greater cost certainty. These reliefs however, maybe difficult to unwind according to the schedule envisaged and may need to be retained depending on how global events unfold.

The Government's anti-smoking policies continue to be reflected in how tobacco products are taxed. It will be interesting to continue monitoring whether this results in a decrease in tobacco smoking. The significant increase in the tax levied on vaping fluid may be indicative of the Government's scepticism towards vaping being considered 'a healthier alternative' to smoking and an attempt to dissuade young people from consuming these products.

The modernisation of pool betting rules brings more clarity to this area and supports the viability of applicable racing venues.

We welcome extending electric-vehicle VRT relief to end-2028, which should support fleet-planning certainty and the transition away from fossil-fuel vehicles, while maintaining the commitment to de-carbonisation.