Ireland just cut hairdressing VAT to 9%. The clever move is to not pass it on

For once the tax news is in your favour. Since 1 July 2026 the VAT on hairdressing services in Ireland is 9%, down from 13.5%, and it is permanent. If you hold your prices, that difference stops going to Revenue and starts staying with you. Here is exactly how much lands on your profit, the two catches that decide whether you actually see it, and why the smartest thing you can do is bank it rather than hand it back to your clients.

The straight answer

You searched for what is happening to VAT on hairdressing. Here it is in one line: from 1 July 2026 the VAT rate on hairdressing services in Ireland dropped from 13.5% to 9%, and this time it is permanent, not a temporary Covid-style measure. It is the same cut the government gave cafes, restaurants and catering on the same day, announced back in Budget 2026 on 7 October 2025.

VAT is the slice of every price that you collect for the state and hand over. When that slice shrinks, one of two things happens: either your client pays less, or you keep more. Nothing forces you to drop your prices. So for most salons this cut is a straight, permanent uplift to margin, if you choose to take it that way.

What 9% actually puts back in your till

Forget percentages for a second and put it on a real service. Take a treatment you charge €50 for, all in.

• At 13.5% VAT: you were handing Revenue €5.95 of that €50, and keeping €44.05.
• At 9% VAT: you hand over €4.13, and keep €45.87.

Same €50 off the client, €1.82 more in your pocket, on that one service, every time. Across everything you sell it works out to roughly €3.60 more kept on every €100 of service takings (about 3.6%).

Scale that to a salon turning over €150,000 a year in hairdressing services (the price clients actually pay). Hold your prices and you keep about €5,450 a year that used to go to Revenue. That is not a one-off. It repeats every year the rate stays at 9%, which the government has said is for good. For a small salon, €5,450 of pure margin with no extra work is a real result.

Catch one: it only helps if you charge VAT at all

Here is the first thing a lot of the coverage skips. This cut only reaches you if you are VAT-registered. In Ireland you only have to register once your service turnover passes €42,500 in any twelve months (that is the current services threshold from Revenue). Plenty of one-chair barbers, mobile stylists and part-time salons sit under that line, are not registered, and do not charge VAT on anything.

If that is you, this change does nothing for your prices or your margin, because you were never adding VAT in the first place. The cut mostly rewards the established, busier salons already over the threshold. No shame either way, but know which side of the line you are on before you plan around it.

Catch two: it is your chair, not your shelf

The 9% rate is for hairdressing services. The products you sell off the shelf, shampoos, styling products, tools, are goods, and goods like these sit at the standard 23% rate, which has not moved. So this does nothing to make your retail line cheaper to stock or sell.

That matters for how you read the win. The cut rewards the labour part of your salon, the cutting and colouring, not the product part. If anything it is a nudge to grow retail for a different reason (margin and value at sale), not because the tax changed.

Bank it, or pass it on?

This is the real decision, and it is where the easy advice is wrong. Every rival and half the trade press will tell you to pass the saving to clients to win more bookings. On the €50 example you could drop the price to about €48 and be no worse off than before.

For most salons, do not. Two reasons. First, your prices almost certainly were not the thing capping your bookings, so a cut buys you little extra demand and simply gives away the margin. Second, a price cut is a one-way door: you can quietly hold a price, but announcing €50 is now €48 and later clawing it back is painful and public. The last time Ireland ran a 9% rate, plenty of businesses sensibly kept prices where they were and banked it. A permanent margin gain you did nothing to earn is rare. Take it.

The one time passing it on makes sense is if you are deliberately using price to break into a busier slot or fill dead midweek hours, and even then, do it as a limited offer, not a permanent markdown of your whole board.

What it does to what your salon is worth

Now the part that outlasts this year. A buyer values a salon on the profit a new owner would actually keep, its seller's discretionary earnings, times a multiple. A permanent cut to a cost line lifts that profit permanently, so on paper it lifts what your salon is worth.

But a sharp buyer will spot instantly that the uplift came from a tax change, not from anything you built, so they will not hand you full credit for a windfall that could be competed away the moment rivals start discounting. The way you turn €5,450 of found margin into real, defensible value is to spend it on the things a buyer does pay for: recurring revenue they can count on (memberships, prepaid blocks, a retail attachment habit) and a salon that runs without you standing at the chair. Do that and the tax cut becomes the seed money for durable margin. Leave it sitting in the current account, or hand it back in price cuts, and in two years it will be gone with nothing to show. Track it monthly on your net margin so you can see it land, and prove it landed.