How should an Irish hotel split room and breakfast VAT in its PMS after 1 July 2026?
A bed-and-breakfast rate can look like one product to a guest while requiring separate tax calculations. This guide follows a €180 package from its selling values to the invoice and accounting report.
Split the package in your property management system (PMS): accommodation at 13.5% VAT and qualifying breakfast restaurant services at 9% from 1 July 2026. Allocate the price fairly using separate selling values, then carry each component into invoices and reports. Check drinks separately and review advance payments spanning the change. See Revenue’s accommodation guidance.
Set up components before the rate plan
For hotel room and breakfast VAT in Ireland, start with what is actually supplied. Revenue treats accommodation with meals as a multiple supply, even when sold for one price. Its current VAT rates distinguish the 13.5% reduced rate, 9% second reduced rate and 23% standard rate.
- Create separate revenue categories and tax mappings for accommodation, qualifying breakfast and standard-rated drinks. Treat these as configuration requirements to verify in your PMS.
- Define the package’s occupancy, breakfast quantity and supply dates. Record whether prices include VAT and whether breakfast is included or added separately.
- Keep dated room prices, breakfast menus and the approved allocation calculation. Ask your accountant to confirm that the selling values reasonably reflect the actual offer.
Worked example: a €180 package
This hypothetical VAT-registered Irish hotel sells one night for two guests with breakfast. The reasonable separate VAT-inclusive selling values are €150 for the room and €30 for breakfast for the booking. These are illustrative assumptions, not market prices or a customer case.
Assume the booking, stay, invoice and payment all occur in November 2026. Breakfast is consumed as a restaurant service and contains no standard-rated drinks. The €180 package equals the separate values, giving an accommodation-to-breakfast ratio of 5:1.
| Component | Including VAT | VAT rate | Excluding VAT | VAT amount |
|---|---|---|---|---|
| Accommodation | €150.00 | 13.5% | €132.16 | €17.84 |
| Breakfast | €30.00 | 9% | €27.52 | €2.48 |
| Total | €180.00 | Two rates | €159.68 | €20.32 |
Extract VAT from an inclusive amount using gross amount × VAT rate ÷ (100 + VAT rate). The room calculation is €150 × 13.5 ÷ 113.5 = €17.84; breakfast is €30 × 9 ÷ 109 = €2.48. Net revenue is €159.68 and total VAT is €20.32.
Each component’s VAT is rounded to cents; net equals gross minus that rounded VAT. Retain calculation precision internally and agree the invoice rounding method with your accountant. These are component totals, not a complete VAT invoice.
What happens with a 10% package discount?
For a promotion reducing the whole package from €180 to €162, allocate the €18 discount proportionately: €15 against accommodation and €3 against breakfast. The resulting gross values are €135 and €27. This follows the proportional approach in Revenue’s discounted-package example.
| Component | Including VAT | VAT rate | Excluding VAT | VAT amount |
|---|---|---|---|---|
| Accommodation | €135.00 | 13.5% | €118.94 | €16.06 |
| Breakfast | €27.00 | 9% | €24.77 | €2.23 |
| Total | €162.00 | Two rates | €143.71 | €18.29 |
For this offer, keep the 5:1 allocation. Assigning the whole discount to the room while leaving breakfast at €30 would change that allocation. Have any promotion applying to only one component reviewed on its own terms.
Match the rate plan, invoice and report
Use a test reservation before changing live rates. Revenue’s VAT invoice requirements include VAT-exclusive pricing, discounts, a breakdown by VAT rate and total VAT payable. Make both components identifiable.
- Rate plan: the €180 booking contains €150 accommodation and €30 included breakfast. Adding breakfast again must not increase the guest total to €210.
- Invoice: confirm €132.16 net accommodation plus €17.84 VAT, and €27.52 net breakfast plus €2.48 VAT. The total remains €180.
- Reporting: match those net amounts to the separate revenue categories and €20.32 to output VAT. Reconcile the same reservation reference across the folio, invoice and accounting export.
- Discount test: repeat with €162 and expect €143.71 net plus €18.29 VAT. Confirm the discount has not been deducted twice.
Check the drinks inside breakfast
Under Revenue’s restaurant and catering guidance, alcohol, bottled water, soft drinks, sports drinks and vegetable juices remain standard-rated, including within a meal. Fruit juice supplied as part of a restaurant service falls under the second reduced rate; takeaway treatment differs. Check the actual menu before assigning the entire breakfast value to 9%.
If the €30 includes a standard-rated drink, allocate a reasonable part of that €30 to a separate 23% component and recalculate. Keep meeting-room hire in a separate category for its own classification review; this breakfast calculation does not determine its treatment.
Test this scenario in RoomRaccoon
The RoomRaccoon property management system page describes invoice management, reservation charges and revenue reporting. Use those capabilities as the starting point for demonstrating this package.
Ask the team to show component tax settings, discount allocation, invoice output and the report or export your accountant will receive. Confirm which steps are automatic, manual or dependent on an integration or subscription. The public product page does not establish the exact Irish VAT configuration.
Bring the €180 and €162 examples to a demo and check the full booking-to-report calculation for your property.
Book a demo for your propertyRoom and breakfast VAT questions
Can breakfast be assigned zero value because it is “included”?
A marketing label does not remove the need to allocate the package price. Record a reasonable breakfast value supported by separate selling prices, following Revenue’s accommodation guidance.
Should a June advance payment be recalculated at 9%?
Do not automatically re-rate it. Under Revenue’s rate-change rules, an advance from an unregistered guest uses the rate when received. If the hotel uses invoice-basis accounting and receives an advance from a VAT-registered customer, use the earlier of the actual and required invoice dates. Review June advances separately from the July balance with your accountant.
Can one blended VAT percentage replace the two rates?
Keep the components and their rates separate. A blended percentage derived from €20.32 ÷ €180 is only a mathematical ratio for this example; it is not a VAT rate to assign to an invoice line.
Sources and checks
Checked on 13 November 2026. Revenue sources establish the tax treatment; the RoomRaccoon source establishes general product context. The examples are hypothetical configuration tests.
- Revenue: VAT treatment of guest and holiday accommodation — allocation and package discounts.
- Revenue: VAT treatment of restaurant and catering services — meals and drink exceptions.
- Revenue: current VAT rates.
- Revenue: information required on a VAT invoice.
- Revenue: changes in rates of VAT — advance payments and timing.
- RoomRaccoon: property management system.
