What is excise tax?

Excise tax is a tax on specific goods, mainly alcohol, tobacco, energy products and electricity, based on the quantity produced or sold. In Ireland, Revenue collects it and calls it excise duty.

The EU sets the framework and minimum rates for these goods, and Ireland sets its own rates at or above those minimums. The government’s overview of excise duties explains how the system applies here.

Say you run a craft brewery in Galway. Every hectolitre of beer you release for sale carries Alcohol Products Tax based on its strength, whatever price you charge the pub. That’s the big difference from VAT, which rises and falls with the price.

How excise tax works

Council Directive (EU) 2020/262 sets the general excise rules for energy products, electricity, alcohol and tobacco across the EU. The EU fixes minimum rates for each product, and Ireland sets its own rates through its Finance Acts.

Duty becomes chargeable when goods are produced or imported, but you pay it when they’re released for consumption. That usually happens when goods leave a Revenue-approved tax warehouse, or when imported goods enter the Irish market.

Think of a tax warehouse as a bonded storeroom. Goods held there are duty-suspended, so no excise is paid yet. Once they leave for sale, they become duty-paid and the bill falls due.

Excise is usually worked out per unit of quantity, and the unit depends on the product. Revenue charges excise:

per hectolitre per % of alcohol by volume (vol), for beer
per litre of alcohol, for spirits
per hectolitre of product, for wine
per 1,000 litres, for petrol and diesel
per 1,000 cigarettes, plus a share of the retail price, for cigarettes

Excise duties in Ireland

Revenue manages several excise duties, and most small businesses deal with only one or two. The main ones are:

Alcohol Products Tax (APT), on beer, cider, wine, spirits and other alcoholic drinks
Tobacco Products Tax (TPT), on cigarettes and other tobacco products
E-liquid Products Tax (EPT), on e-liquids used in vapes
Mineral Oil Tax (MOT), on petrol, diesel and other fuels, including a carbon charge
carbon taxes on natural gas and solid fuel, plus electricity tax
sugar sweetened drinks tax and betting duty
excise licences, such as liquor licences for pubs and off-licences

Minimum Unit Pricing (MUP) sets a price floor for alcohol instead. Since 4 January 2022, drinks must sell for at least 10c per gram of alcohol. The extra margin stays with retailers and producers rather than going to the State, so MUP sits outside the excise system.

Excise duty rates in Ireland

The rates below are the ones Revenue listed as current on 20 October 2026. You’ll find the full set on Revenue’s excise duty rates pages.

Alcohol Products Tax rates

Irish alcohol excise hasn’t had a general increase since Budget 2014. Revenue’s Alcohol Products Tax rates include:

€42.57 per litre of alcohol for spirits
€22.55 per hectolitre per % vol for beer over 2.8% vol
€424.84 per hectolitre for still wine between 5.5% and 15% vol

Those amounts add up at the bar. The Drinks Industry Group of Ireland (DIGI) commissioned research, reported by RTÉ in August 2026, on excise across Europe. It found a pint in an Irish pub carries €0.55 in excise, against €0.05 in Spain and Germany. Alcohol Action Ireland, a public-health group, disputes the industry’s case for a cut.

Tobacco and e-liquid rates

Budget 2026 raised Tobacco Products Tax last year, and Budget 2027 added €1 to a pack of 20 cigarettes from 7 October 2026. Revenue’s tobacco and e-liquid rates page now lists:

€520.88 per 1,000 cigarettes, plus 8.67% of the retail price
€570.73 per 1,000 cigarettes as the minimum charge
€500 per litre of e-liquid, the E-liquid Products Tax rate since 1 November 2025

E-liquid costs go up next. Budget 2027 adds 20c per ml to e-liquid, or €200 per litre, from 1 January 2027.

Mineral Oil Tax rates

From midnight on 24 March 2026, excise fell by 15c per litre on petrol and 20c on diesel. A further 10c per litre came off each from midnight on 14 April 2026.

Revenue lists its current Mineral Oil Tax rates from 14 October 2026. Petrol is €502.88 per 1,000 litres and diesel is €371.85 per 1,000 litres. Both include a carbon charge at €71 per tonne of CO₂.

Budget 2027 extended the reduced fuel excise rates to 28 February 2027, with full rates restored in four phases by 30 June 2027. Check Revenue for the latest rates before you budget for fuel.

How to calculate excise duty

You can work out the excise on most products in four steps. Here’s how:

Identify your product category and its current rate on Revenue’s rates pages
Measure the quantity in the unit Revenue uses, such as hectolitres or litres of alcohol
Multiply the quantity by the rate to get the excise due
Add VAT at 23% to your selling price, which already includes the excise

Say your Galway brewery releases 100 litres (1 hectolitre) of beer at 4.5% vol. The Alcohol Products Tax is 1 × 4.5 × €22.55, which comes to €101.48 once you round €101.475. You then charge VAT at 23% on your full selling price, including that €101.48.

Who pays excise tax?

Whoever releases the goods for consumption pays the excise to Revenue. That’s usually:

an authorised warehousekeeper, who runs a tax warehouse
a registered consignee, who receives duty-suspended goods from another EU country
an importer, who brings excise goods into Ireland from outside the EU

The cost then moves down the supply chain. A distributor builds excise into the price it charges shops and pubs and restaurants, and they pass it on to customers.

Paying on time keeps your costs down. Revenue charges interest on late excise payments at 0.0274% for each day or part of a day.

Excise licences and reliefs

Many businesses that make or sell excise goods need a licence, and some qualify for relief. Here’s what applies to small businesses.

Excise licences

Liquor licences count as excise licences in Ireland. Revenue’s National Excise Licence Office (NELO) issues them, as its liquor licence compliance manual sets out. The main types are:

publican’s licences, for pubs
retailer’s off-licences, for shops selling alcohol to take away
manufacturer’s licences, for brewers, distillers and cider makers
wholesale or dealer’s licences, for businesses supplying other traders

If you plan to store goods duty-suspended, you’ll also need Revenue approval to run a tax warehouse.

Tobacco and vape retailers have needed a Health Service Executive (HSE) licence since 2 February 2026, with one licence per premises and per website. That’s a public-health licence, separate from excise.

Reliefs and refunds

Small breweries get a sizeable break. Under Revenue’s microbrewery relief, independent breweries producing 75,000 hectolitres or less a year get 50% off the Alcohol Products Tax on up to 30,000 hectolitres.

In the earlier example, that cuts the duty on 1 hectolitre of 4.5% beer from €101.48 to €50.74. If you’ve overpaid excise, you can apply to Revenue for a refund with evidence to support your claim.

Excise tax vs VAT

Excise and Value-Added Tax (VAT) often apply to the same sale, but they work differently. The main distinctions are that:

excise applies to specific goods, while VAT applies to most goods and services
excise is usually a fixed amount per unit, while VAT is a percentage of the price
excise is paid when goods are released for consumption, while VAT is charged on each sale
VAT is calculated on the price including excise, so you pay tax on the tax

The standard VAT rate is 23%. The 9% hospitality rate from 1 July 2026 covers food and catering, while alcohol and most other drinks stay at 23%.

Excise duty vs customs duty

In Ireland, excise, excise tax and excise duty all mean the same thing. The term people more often mix up with excise is customs duty.

Customs duty applies to goods from outside the EU, which can attract customs duty, excise and VAT together. Goods bought from another EU country carry no customs duty, but excise and VAT still apply, as Revenue’s guide to buying from EU countries explains.

Why excise tax matters to small businesses

Excise shapes your costs well before you make a sale. Here’s where it has the biggest effect on your business.

Excise is part of your cost of goods sold, so it belongs in your pricing strategy. Build it into your prices so your margin holds when rates move.

If you run a tax warehouse, you pay excise when goods leave, often before your customer pays you. Good cash flow management means setting that money aside ahead of time.

Accurate stock records show Revenue what you’ve released and what’s still duty-suspended. Clear inventory management makes those records easier to keep.

Rates can change at each October Budget, and fuel rates were cut twice in spring 2026, as covered above. Check Revenue’s rates after every Budget and update your prices to match.

Keep on top of excise costs with Xero

Excise is easier to manage when you can see exactly what it costs you. With Xero, you can track your business expenses, including excise and VAT. Real-time cash flow reports help you get ready for every duty bill. Try Xero today and get one month free.

FAQs on excise tax

Here are quick answers to common questions about excise tax in Ireland.

What is an example of excise tax in Ireland?

Fuel excise is the one most people pay. At current rates, each litre of petrol includes about 50c of Mineral Oil Tax, with VAT added on top.

Is excise the same as VAT?

No. Businesses usually pay excise before goods reach the shelf, while VAT is a percentage charged each time a VAT-registered business makes a sale.

How much of the price of a bottle of wine is tax in Ireland?

According to DIGI-commissioned research reported by BreakingNews.ie, an €11 bottle of wine from an off-licence carries €3.19 in excise and €2.06 in VAT. That’s €5.25, or 48% of the price.

When did alcohol excise last change in Ireland?

The last general increase came in Budget 2014, which added 10c to a pint of beer (including VAT) from 15 October 2013. Budget 2026 left alcohol excise unchanged, and Budget 2027 kept it the same.

Do small breweries pay less excise?

Yes, and the relief goes beyond beer. Qualifying independent small producers of other fermented beverages, such as cider and perry, can also get 50% off the tax due.

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Disclaimer

This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.

What is excise tax?

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