The number of hospitality companies going out of business fell by 23 per cent in the first nine months of the year, as the Government’s VAT cut for the sector further boosted the sector.
PwC Ireland’s latest insolvency barometer reveals that some 25 hospitality businesses collapsed into insolvency in the three months to the end of June. It meant that 86 companies in the sector went out of business in the nine months to the end of September, well below the sector’s average of 35 insolvencies per quarter since the start of 2023.
The volume of insolvencies was also down 23 per cent year-on-year.
PwC said the decline “suggests further stabilisation” in the sector, “potentially supported” by the Government’s decision to slash the VAT rate for restaurant and catering businesses from 13.5 per cent to 9 per cent on July 1st.
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However, insolvencies were already declining across the hospitality sector in the six months to the end of June, before the cut was introduced, according to previous PwC data.
Announced in Budget 2026 after intensive lobbying by various representative bodies, the measure is expected to cost the exchequer €232 million this year and €681 million in 2027, a total of €913 million over 18 months. The cost is equivalent to that of increasing the standard rate income tax bands by €2,328, or hiring 8,846 nurses or 6,053 teachers, the Irish Fiscal Advisory Council said last year.
The VAT cut accounted for 17 per cent of the Coalition’s overall tax package last year, making it the most expensive tax measure announced in the budget.
Overall, the Irish corporate insolvency rate remained “remarkably consistent”, running “well below the long-term average” in the first nine months of 2026, PwC Ireland said on Friday.
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There were 204 business failures in the third quarter of the year, bringing the total for the first nine months to 648, broadly in line with 633 over the same period last year.
Insolvency volumes also remain below the long-term average of around 250 per quarter since 2005, the firm said.
By the end of September, the insolvency rate per 10,000 businesses operating in the Republic was 27, well below the 21-year average of 49 per 10,000 businesses.
Still, retail sector insolvencies surged by 25 per cent in the first nine months of 2026 compared with the same period last year. Construction sector insolvencies also increased by 26 per cent year-on-year.
Ken Tyrrell, business recovery partner at PwC Ireland, said the increase in retail insolvencies is driven by structural issues, including “shifting consumer behaviour”, as well as rising costs, which are a particular issue for construction businesses.
“Given the low insolvency levels, it points to the fact that Government measures and support in recent years have contributed to the relatively low level of business failures in Ireland,” he said. “We expect that Budget 2027 will continue to deliver measures to support and protect the long-term competitiveness of Irish SMEs and our economy.”
