Thousands of couples getting married next year will see their wedding costs climb by hundreds of euro as a result of the VAT changes affecting the hospitality sector outlined in Minister for Finance Paschal Donohoe’s recent budget.
From the beginning of next year the hospitality sector will revert to paying VAT at 13.5 per cent after an extended seven-year break on a 9 per cent rate and wedding parties are likely to be among those hit hardest.
In recent days hotels have started writing to couples with weddings booked for next year and 2020 alerting them to the fact that prices that have previously been agreed will not be honoured on the basis of the 4.5 point VAT increase.
With many hotels charging well in excess of €10,000 for average-sized receptions – excluding the drinks bill – the additional costs to be borne by many couples will be more than €500.
One bride-to-be who spoke to The Irish Times expressed dismay at the unexpected price increase and pointed out that, like most couples, they had budgeted right down to the last cent and will now have to jettison certain things to make sure the numbers add up.
“I don’t know exactly how much it’s going to add because the VAT will only be on the food and won’t be on the alcohol but we have 110 people coming and it’s €79 per person and I think the changes will probably add somewhere between €300 and €500 on to the total cost,” she said.
“That means we will have to scale back some of the things we had planned. I know it is not a huge amount of money but every penny is accounted for.”
Spencer Simmonds, a Dublin-based wedding planner, said couples were increasingly raising concerns about the VAT increase.
“I don’t think there is any real way of avoiding the charge,” he said. “Hotels could take the hit and absorb the tax increase themselves but margins can be very tight and I can’t see many going down that route.”
A spokesman for the Department of Finance confirmed that the higher rate of VAT would be applicable for all weddings taking place from the beginning of next year unless couples had paid for in full before the start of January.
“The Revenue Commissioners has fixed guidelines in relation to accounting for VAT before and after a change in a VAT rate,” he said. “The applicable VAT rate is based on when the payment is made as opposed to when the [event] takes place.”
If part or all of a hotel reservation for next year is paid for this year, the 9 per cent VAT rate applies to the portion paid. If the payment is made next year, then the 13.5 per cent Vat rate will apply