VAT Registration

Posted in Our Blog, Taxation, VAT

When you are starting your own business, whether as a sole trader, partnership or a company, you need to determine if you are obliged to register for VAT and what VAT rate should be applied to your sales. Once registered VAT charged on sales needs to be paid to the Revenue Commissioners (after deducting VAT on purchases and expenses) on a timely basis.

Who needs to register?

The main reason for registering for VAT is that the business engages in the supply of taxable goods or services within Ireland.

A business whose turnover, in any twelve month period, does not exceed or is not likely to exceed €37,500 (in the case of supply of services) or €75,000 (in the case of supply of goods) is not obliged to register for VAT.

A business that does not, nor is likely to, exceed the relevant limit may still elect to register for VAT and will be obliged to charge and account for VAT on sales and can claim back VAT on purchases.

A word of warning. When you first commence in business you may not need to register for VAT due to turnover being under the threshold. However, once turnover exceeds the threshold, you will need to register and subsequently your sales prices will increase by the VAT amount. This is not normally a problem if you are selling business to business as your customer can claim back the VAT. However, it may cause problems if you are selling to the general public or to businesses not registered for VAT. These customers cannot claim back the VAT and may not be willing to pay higher prices.

Other reasons for VAT registration are:

  • The business makes intra Community acquisitions of goods.
  • The business receives fourth schedule services (for business purposes) from abroad.  Fourth schedule services include consultancy services provided by accountants, lawyers, consultants and engineers.  All persons, other than private individuals, who receive fourth schedule services from abroad (for business purposes), must self account for the Irish VAT and must therefore be registered for VAT regardless of the above.
  • The business is involved in property transactions within the State and needs to register for VAT as a result of same.

To register for VAT, you will need to complete a Form TR1 (sole trader/partnerships) or Form TR2 (for companies).

 

Exempt Activities

Certain business activities are exempt from VAT and are not permitted to charge VAT on their sales. Although they may be required to register for VAT if they are in receipt of fourth schedule services as outlined above.

Examples of exempt activities are certain financial services, education, medical services, charities and taxis.

VAT Rates

When it comes to VAT rates, there are no hard and fast rules. For example, there is a myth that goods are at 21% and services are at 13.5%. It is not as simple as that. Luckily the Revenue Commissioners have an index of VAT rates online which contains the VAT rates of thousands of services and goods. It is a good start when determining which VAT rate you should be charging on your sales. However, unless your business is straightforward, we advise seeking the advice of your local tax office or a professional advisor, before you start issuing invoices or setting up your cash register.

VAT Returns

VAT returns are normally prepared on a bi-monthly basis (e.g. January/February would be returned together). The VAT on sales for the two months as well as the VAT on purchases for the two months must be entered on the return and the difference paid over to the Revenue Commissioners. The deadline for submission of the return is the 19th day of the month following the VAT period (e.g. 19th March for the January/February return). If the return is filed and paid online (ROS) then the deadline date is extended to the 23rd of the month.  To register for ROS, go to www.revenue.ie.

Some businesses can prepare VAT returns on a six-monthly basis (whether the annual VAT liability is €3,000 or less) or four-monthly (VAT liability between €3,001 and €14,400). However, I always advise clients to prepare their VAT returns on a bi-monthly basis if possible as it ensures that the books and records are kept up to date and doesn’t allow a large VAT liability to build up over 4 to 6 months. Some clients have a separate bank account where they lodge the VAT portion of each sale so when it is time to pay their VAT liability they have the funds available.

Remember to file returns on time, otherwise penalties and/or interest will be applied – even if only a few days late.

See also:

Registering as a Sole Trader

Retailers: Cash Register Requirements

141 thoughts on “VAT Registration

  1. Hi Orla,

    I am considering opening a coffee shop and am trying to work out if serving coffee counts as selling goods or services. It seems to me to be both…

      1. Hi, I have read nearly all of the content here and it is great!!
        I have one question that i hope you can help me with.

        We are in the process of setting up a business partnership which hires out room decor to wedding venues. We are due to pay just over 300euro VAT on goods we are importing from china when they arrive at Dublin port late November and we want to claim it back. Is it financially advisable for us to register for tax in the long run or should we let the 300 go now to avoid any other unnecessary tax related charges in the future? I don’t think our sales will be over the 37,500euro threshold.

        Any advice you can give would be much appreciated.

        Steve

  2. Hi,

    I found your website while searching on whether I am liable for VAT. I was working for an American company, but had to return to Ireland for personal reasons. We decided that I should continue to work for them as a contractor. I have never charged them VAT (was in fact advised that I didn’t have to by a friend). They are not a VAT registered company. What is my position?
    And yes, I feel very foolish for not looking into this better beforehand!

    1. Hi,

      Thanks for the comment.

      If you are providing a service to an American company based in America then you shouldn’t need to charge VAT. (However, if you are providing a service to an American company and issuing an invoice to their Irish branch, then that’s another story.)

      Best regards,

      Seamus

  3. Hi Orla- Not sure what box on vat registration form should decide, it is Sole trader IT business. The business will most likely fall under: (( (a) website supply, web hosting, distance maintenance of programmes and equipment b) supply of software and updating of it c) supply of images, text and information, and making databases available))-as far as i know this is called Fourth Schedule Services (but could be wrong here).
    If sole trader have Not opted to register voluntarily i.e. sole trader opted to tick other box on the VAT Registration Form: (i) ”Are you registering because your turnover is likely to exceed the limits prescribed by law for registration” I have assumed this is the case where future customers that are indeed vat registered, do require from sole trader to be VAT registered to do business with sole trader.
    Or looking at the second scenario , ticking the box (ii) ”because you are in receipt of Fourth Schedule Services”-would ticking this box make more sense or even be correct thing to do?
    As an example lets assume start up business passed couple of years, and after a while (say 2-3years in future) assuming that business will not succeed and there will be decrease in the sale-As a result of downturn.
    Finally sole trader may decides to De-register for vat as vat registered clients decreased too in this example. Ticking one of these two boxes, Would my friend sole trader still have to repay vat i.e. clawback?
    Even if reasonable genuine explanation to revenue will be given?

    In other words, ticking what box on the vat registration form,would have what implications? Best Regards, Derek

  4. Hi Orla,
    In addition to above post, I read revenue guide regarding 4th schedule services and I got confused, if on the VAT registration form I opt to choose the 4th schedule services, will I still be able to claim/charge vat on my purchase/sale in Ireland. Is 4th schedule services anything different from being normally VAT registered business? Appreciate your help. Derek

    1. Hi Derek,

      Thanks for your comments. If I understand correctly you are wondering whether to register for VAT as a sole trader as you don’t know how the business will go. Because you mentioned Fourth Schedule Services I presume that you will be doing business with customers/suppliers outside of Ireland.

      Registration
      Firstly, I’ll deal with the question of registration. As you know, there are three different boxes to tick:
      (i) Registering for VAT because your turnover will exceed the limits (€37,500 in the case of services). You need to state your turnover in section 18.
      (ii) Registering for VAT even though you know your turnover won’t exceed the limit of €37,500. Some businesses register for VAT to claim back VAT on initial setup expenses which may be significant. Remember you must then charge VAT to all customers.
      (iii) Registering because you are in receipt of Fourth Schedule Services. This is where you are paying a foreign business for services. This has nothing to do with your business providing Fourth Schedule Services.

      You will more than likely have a decision to make between (i) and (ii).

      If you choose (ii) then if you subsequently deregister for VAT, the Revenue may seek to recoup any excess of VAT refunded over VAT paid during the 3 years prior to the cancellation (or the period of election if less). If you choose (i) you should not have this problem if you need to de-register later because your turnover falls.

      It may be difficult to predict what your turnover will be for the first year, so you need to give your best estimate. If you decide not to register for VAT initially you should monitor your turnover projections to see if you will go over the threshold and consider registering.

      You mention in your first comment about future customers requiring you to be VAT registered to do business with you. This shouldn’t be the case for Irish customers. The decision to register for VAT should be based on the Revenue guidelines above. If these customers are foreign customers they may be referring to the Fourth Schedule Services legislation, i.e. (iii) above.

      Fourth Schedule Services
      Finally, 4th Schedule Services becomes an issue if you are supplying services to foreign companies or receiving services from foreign companies. Have a look at the Revenue’s table on Fourth Schedule Services which may be of help:

      http://www.revenue.ie/en/tax/vat/leaflets/fourth-schedule-services.html

      If you want to give me some examples of Fourth Schedule services you will provide or receive, I can let you know what you need to do in terms of your VAT invoice and your VAT return.

      All the best,

      Seamus

  5. Hi Orla,
    Thank you for help. As example will be doing web design and possibly receive some web design services too.
    What would I need to do in terms of VAT invoice and VAT return ?
    Best Regards. Derek

  6. Hi Derek,

    Can you let me know which countries your customers will be based and which countries any suppliers of web design will be based so I can let you know how the VAT would be treated.

    Best regards,

    Seamus

  7. Hi Orla,
    Should I register for VAT if I buy some supplies from abroad? Let’s say, I need some materials to complete the project and these are cheaper in other EU country.
    Many thanks
    Damian

    1. Hi Damien,

      In the case of supplies in the State and intra – community (EU) acquisitions, registration is obligatory where certain turnover thresholds are exceeded or are likely to be exceeded in any twelve month period.

      The thresholds applicable are as follows:

      €37,500 in the case of persons supplying services
      €75,000 for persons supplying goods
      €41,000 for persons making intra – Community acquisitions

      You are not required to register for VAT if your turnover does not reach the appropriate threshold above. However, you may elect to register for VAT as per my post above.

      If you do register for VAT, remember that you will need to charge VAT to your customers at the appropriate rate. The rates for many products and services can be found at http://www.revenue.ie/en/tax/vat/rates/index.jsp. You can also then claim back VAT on your Irish purchases also.

      If your customers are the general public (or are business customers not registered for VAT) then your prices will go up by the VAT amount and they won’t be able to claim the VAT back. VAT registered business customers can claim the VAT back so it should not matter to them whether or not you are registered for VAT.

      Best regards,

      Orla

  8. Hi Orla,

    Can you explain how I calculate payment on vat in ireland. I’m currently setting up as a consultant in ireland so I think I fall under the 37500 threshold. I’m not registered at present but I am considerinmg it. In my case is vat only paid on profits above 37500? My concern is I am not registered at present and do not charge vat or allow for vat on my rates. If business picks up and I exceed 37500 I will have to register I have not allowed for that cost at the start.

    Kind regards
    Martin

    1. Hi Martin,

      Firstly, VAT is charged on your sales not your profit. Therefore you need to look at your sales figure for the next 12 months to see if your sales will exceed €37,500. If you think it will, then you should register. If not, then you don’t need to. You should review your projected sales figures regularly to see if you may exceed the threshold in future.

      VAT is added to your sales invoices so it isn’t any extra cost to you. Therefore if you currently invoice someone for €1,000, after registering for VAT, you would charge them €1,000 + VAT = €1,210. The additional €210 that you will get paid must be returned to the Revenue every 2 months (or 4/6 months depending on your level of VAT liability per year).

      If you are registered for VAT, you can also claim back the VAT on your purchases such as telephone, office equipment etc. Add up the VAT amount on the invoices for these type of items every two months and you can deduct it from the VAT on Sales (€210 in above example).

      If you find at the end of the year that your sales are €38,000 for example, just register from when you find out. You don’t have to backdate the VAT registration. Having said that, you will need to review your sales figures on an ongoing basis to see if you will reach the threshold in future.

      Best regards,

      Orla

  9. Hello Orla

    I wonder if you could give me information about my case, as I am pretty lost. I am foreign translator resident in Ireland, and I would like to do some freelance translation work for customers in EU. I dont think that I will reach the threshold of 37K, but I was thinking of registering for VAT to claim against Irish purchases, eg computing, printed material, advertising and other running expenses. Some of my potential customers would be private, some of them would be educational institutions which would count as business I guess. I was reading the new legislation about New Intra-Community VAT Rules on Place of Supply for Services (http://www.revenue.ie/en/tax/vat/leaflets/place-of-supply-of-services.html) but I find it most confussing. In Paragraph 2.2 Exceptions to the General Rules it says that for “Cultural, artistic, sporting, scientific, educational and entertainment or similar services, place of supply is where the services are physically carried out.” Does this mean I have to charge VAT regardless the client is private or business? Then, in “Paragraph 3.5 B2C supplies to customers outside the EU” it says that “No VAT will be charged by the service provider on the following services supplied to non-business customers established outside the EU (…)
    3. the services of consultants, engineers, consultancy firms, lawyers, accountants and other similar services, as well as data processing and the provision of information”.

    Any help appreciated, best regards

    Angelica

  10. Hi Orla,
    My VAT reg company will be suppling services to a charity, they say they are not VAT exempt, so how much VAT do I invoice them and why would they not be VAT exempt? ( they provide free Health services and are funded by various organisations, incl. HSE, Mental Health Ire).
    Any help would be greatly appreciated,
    Best regards,
    Leigh

  11. Hi Orla,

    I have a vat registered business. I recently entered into a contract to act as asubcontractor for a business in England which is also VAT registered. What are the VAT implications for me? Do I charge VAT when invoicing them? Can I claim VAT back? Just a little confused on the VAT issues with the UK.

    Many thanks

    1. Hi Deirdre,

      Can you let me know what business you are in and what service you will be providing to the UK company? Also, will the service be carried out in Ireland or in the UK?

      Best regards,

      Orla

  12. Hi Orla,

    My business will be maintaining gym equipment throughout Ireland but the contract is from a Company VAT Registered in the UK.

    Many thanks

    Deirdre

  13. Hi Orla, I came across this site and was very impressed well done. My question relates to you previous comment as follw; “Some clients have a separate bank account where they lodge the VAT portion of each sale so when it is time to pay their VAT liability they have the funds available.”
    I know this might sound like a basic question, but, what do you physically do with the cheque you receive for say €1210.00 when going to the bank? Is it best to fill out the vat portion of the cheque into the vat lodgement for the €210.00 as this would seem like it would be a problem as your business current account would only show up a lodgement of €1000.00? what’s the best way of lodging it into the account and the vat account at the same time? thanks in advance for your assistance.
    Many thanks, Dave.

    1. Hi Dave,

      Thanks for the comment! Glad you like the blog.

      When you are in the bank lodging the cheque for say €1,210, you could do a transfer to your VAT account of €210 at the same time. Alternatively, if you have internet banking you could transfer the VAT portions of all lodgements once a week/fortnight etc.

      While it might seem to be a chore at the time, when the VAT return comes around, you will be glad that you have saved up for it. As you will have transferred the VAT on Sales amount, you will have a surplus in the bank account amounting to the VAT on Purchases. You can either use this to save for income tax / corporation tax at the year end or use it towards the next VAT return (or return it to your regular current account).

      Best regards,

      Orla

  14. Hi Orla
    im set up as a sole trader in my courier business due to the down fall in business im taking on some landscaping job also some of the jobs i do i need to be vat register.Can i mix the two business

    1. Hi Tom,

      You can carry out the two types of trades under the one sole trader VAT number. To see if you need to register you will need to check the relevant thresholds, e.g. sales of €37,500 for services. As you are carrying out two separate trades you would normally combine the sales to see if you reach the threshold.

      You could argue that the trades are not of the same nature and that you should not combine them. However, this may be difficult if you are trading as a “one man and his van” type business.

      I would need to know the full facts before I could give a definitive answer.

      Best regards,

      Orla

  15. Hi Orla,

    As a self employed graphic design business, I want to pay a Freelancer in another EU country.

    Can I register these payments as expenses, goods for resale? He is actually providing logos or other graphic design services.

    I have to say that this freelancer I am working with….I don’t think he pays any taxes in his own country.

    Thank you for your help!

    1. Hi Ana-Maria,

      I would request an invoice from the freelancer for work done so that you have evidence of the transaction in your books and records. It can be included in your expenses in your books and records.

      Remember that there are VAT implications concerning providing services to a business in another EU country which both of you will need to comply with. http://www.revenue.ie/en/tax/vat/vat-international-transactions-foreign-traders.html

      Best regards,

      Orla

  16. Hi Orla,

    I am starting out doing kids parties and I need my van to get around but ive been told I need a VAT number to have a commercial vehicle now.
    What do I need to do? Im sure I wont be making 37,500 euro dont get me wrong that sounds great but in the real world dont think so.

    1. Hi Jason,

      This sounds very strange. Can you let me know who told you this e.g. Revenue official, car dealer etc?

      Thanks,

      Orla

  17. Orla,

    As a sole trader not registered for VAT, I may be providing goods (prints) to businesses who are registered for VAT.
    Is there a specific way the invoice need to be detailed, as the buyer will want to claim VAT back?

    Thank you for your valuable blog.

    1. Hi Steph,

      As you are not registered for VAT, you should not mention VAT at all on your invoice. As your invoice won’t contain VAT, your customer won’t be paying VAT so cannot claim any VAT back.

      Best regards,

      Orla

  18. Hi Orla,

    Congratulations on a great blog. In a college scenario, I understand that classroom courses in a pupil-teacher environment is VAT exempt, but if the college is also selling Vatable goods and services below the turnover thresholds, they can elect to register for VAT to recover input VAT. My question is, can the business recover input VAT on all purchases and expenses relating to the college e.g. stationery, telephone costs, equipment, repairs etc?

    Thanks,
    Ronan

  19. Hi

    We have started a small marketing business which has been running for a couple of months. We did’nt register for VAT but fortunately business is better than we expected it to be and it looks as if we are going to go over the €37,500 threshold.

    If we register now will we be liable to pay VAT on invoices that we have issued to customers up to now ie. invoices that we have not added VAT to ?

    Best Regards

    Simon

    1. Hi Simon,

      I understand my colleague Una replied to your query by email while I was away. If you have any further queries, please let us know.

      Best regards,

      Orla

      1. Hi Orla,

        I have been scrolling through your q&a’s and found it very useful. I found this question, from Simon, which is exacly the one I wanted to ask, and see that you didn’t post and answer, as it was answered by email. Wondering if you could please post the answer?
        In particular, I have just started working for myself, and have got some consulting work. I only started in November, so definitely won’t reach the VAT threshold in this tax year, so haven’t registered for VAT, and won’t add VAT on invoices initially. I was going to continue like this for a while until I see if there is potential in this business, or if I go back into employment again. If, like Simon, I stay in consultancy service as a sole trader and go over the 37,500 threshold, will I be liable for the VAT on income earned for services I provided before reached this threshold? ie, where I have not charged VAT to the client? Or do I just have to start charging and submitting VAT after this?

        Regards,

        Kerri

        1. Hi Kerri,

          As soon as you commence to trade as a sole trader you are obliged to register for income tax purposes with the Revenue Commissioners via a Form TR1. As you are aware you must register for VAT purposes where your turnover threshold is exceeded (€37,500 in your case) or is likely to be exceeded in any 12 month period.

          If at the outset you feel that your expected turnover in the next 12 months is not likely to exceed the relevant threshold then you do not have to register for VAT purposes. However you need to monitor your turnover regularly and as soon as you feel that you are likely to exceed the relevant threshold you must register for VAT immediately.

          You will then be liable to charge VAT on any invoices raised post VAT registration. VAT will not have to be charged on any invoices raised pre VAT registration.

          Please do not hesitate to contact us should you have any further queries.

          Regard regards,

          David

  20. Hi Orla,

    I purchased a tractor in 2007 before I registered for VAT in 2008. Being non-registered, I did not claim input VAT. After registering I bought a new tractor on which I claimed VAT, and used the 2007 tractor as a trade in. As I had not cliamed input credit on the 2007 tractor, the dealer told me I did not have to pay VAT on selling it to them. However, I now see that they gave me a self-billing invoice showing a VAT amount on the tractor I gave them, and saying I should account for it as input tax. I am now worried that I should have paid VAT on the tractor I traded in?

    Thanks,
    Devon

  21. Hi,
    I have a wedding stationery business and am thinking of doing a new business for DIY wedding invite supplies. Is the combined turnover looked at and would I then have to charge VAT on sales at both businesses?

    1. Hi Karen,

      Thanks for your comment.

      In general a business whose turnover, in any twelve month period, does not exceed or is not likely to exceed €75,000 (in the case of supply of goods) is not obliged to register for VAT. Assuming both business are operated as a sole trade, the combined turnover would be used in assessing VAT registration.

      IF you require any further information please get in contact with us on 021 4310266

      Kind regards,

      David.

  22. Hi, found your blog very interesting but still am confused as to the VAT thing. As a registered charity providing vol first aid / medical services in Ireland, do we have to pay VAT on our rent of our building especially considering we’re only there a couple of nights a week?. Any help you could give would be very much appreciated. Thank you in anticipation of any help

  23. Hi…I’ve started a business where I sell 2nd hand baby gear, toys & children’s clothing for people. I am definately not making €37,000 to register for VAT but someone told me that because I am selling 2nd hand items for people that I would be VAT-exempt. Is that true? Thank you for your response.

    1. Hi Maureen,

      Thanks for your query. Second hand goods are chargeable to VAT at the same rate as the goods when sold as new. Therefore, if something is 23% when sold new, it would also be 23% when sold second hand. But the rates can be different depending on the items being sold – Children’s clothing is liable to VAT at zero percent, toys are liable to vat at the standard rate of 23%.

      If you have any other questions with regard to the VAT, please get in touch with me.

      Kind regards,
      David

  24. HI Orla, This is a great post! Appreciate. I am in the same situation like Derek.. trying to find out whether I need to register for VAT.. I am a web developer, starting business, sales seems will not exceed 37500 threshold for this year but I use suppliers from non-EU country (India) for online consulting,training & website development. However, my suppliers are not VAT registered..They provide freelance services. Are these services come under 4th schedule services? Do I need to register for the VAT in this case? Could you please advise. Thanks

  25. Hi,
    Thanks a million for taking my question.
    I am a professional golfer(sometimes!;0)
    Are golf lessons given to or as educational purposes exempt from VAT if I am registered and can I then exclude these lessons from my income for taxation purposes?
    Thanks,
    Dave

    1. Hi David,

      Thanks for your query. Sports coaching provided in the course of a business is liable to VAT at the standard rate i.e. 23%. All income earned from these lessons needs to be accounted for and included as income for taxation purposes.

      Kind regards,

      David

  26. Great website, I am looking for an accountant that will assist me but the first question. I am over the threshold for VAT, 6 months in to trading and I am wondering since the company is based in the UK and I have VAT exemption there do I have to register here for VAT, I am an Irish citizen living here and I have many customers here.
    I get conflicting answers.

    What are the regulations regarding VAT and trading in other countries, it would be much easier for me just to pay VAT in UK and if I have customers in other European countries does that mean I have to register in those countries for VAT. I talked to an accountant already here and he seems so confused with my situation and keeps asking why not form a company here and that I need to register for VAT in Ireland, but I don’t understand. They keep asking why do you have a UK company? I am VAT exempt in UK so long as I do not have UK customers.

    Does having a UK company, change everything? Why does it complicate it? I need to organise this over the next few weeks urgently and just want to ensure I am doing the right thing. Where is VAT payable, is it in the country where the service received or the work done etc? At the moment I am flexible since I have only started in January but want the simplest and best solution.

    Thanks in anticipation for some clarity,
    Rachel

  27. Hi Orla,

    Great Post, Im wondering can you help me, I have been selected for a revenue risk assessment audit for 2010, I am a sole trader within the construction industry, looking back at the year 2010 I see my turnover exceeded the threshold in both 2009 and 2010, I am trying to make a disclosure for the audit and looking for advice on the VAT registration, I know that I must pay VAT on what I received but am I entitled to deduct the VAT that I paid for materials and tools etc.

    Regards
    Jack

    1. Hi Jack,

      Thank you for your comment.

      In the normal course of calculating your VAT liability your allowed to deduct the VAT that you paid on most business expenses. Therefore reducing the amount you have to pay to the Revenue Commissioners. Should you require any further assistance please do not hesitate to contact us.

      Kind regards,

      David

  28. Hi David/Orla

    Great blog, well done!

    I am working for a company from the UK that will be providing services to another UK company, but these will be taking place in Ireland. They are cultural/entertainment services so I believe the “taxable” place of supply will be Ireland. My company intends on registering for VAT in Ireland as they now have an establishment here. The customer is VAT registered in the UK but is not established in Ireland.

    My question is this, can we zero rate the Irish VAT on our invoice to the UK company as they are VAT registered in another EU country?

    Thank you

    1. HI Matthew,

      Thank you for your comment.

      You are correct in stating that you would be zero rating your invoice as you will be providing work to an EU company. But bear in mind that you must obtain the EU companies VAT number, verify it as a valid VAT number, ensure the VAT number appears on your invoice and finally ensure that you make reference on the invoice that this is an intra community supply and how VAT is treated.

      There are also other issues that you may need to be aware of when establishing the business here in Ireland. I have sent you a direct email with regard to these.

      Kind regards,

      David .

  29. Hello,
    My daughter, Josie, is a self-employed beauty therapist paying a percentage of her income as rent to the owners of the treatment room where she works (which forms part of their home/holiday accommodation business). Until now there has been no written lease, simply a verbal agreement about the rent, and that Josie is to report any issues with the room promptly for them to deal with appropriately (damage/maintenance etc).
    This has worked well, but the owners are VAT registered, and now realise that they should be charging / paying VAT on the rent. In order to avoid the VAT they are asking my daughter to sign a lease. Unfortunately, the lease they presented her with had all sorts of clauses about liability / maintenance / insurances etc, for which she cannot afford the responsibility. Neither can she afford to pay more rent – her income is low, and in order to attract local clients she needs to keep her prices very competitive.
    I notice in your first paragraph (above) that VAT is not due on purchases/expenses. Since the owners pay all bills relating to the room, presumably pay insurance for the building, and carry out all repairs/maintenance – would all this be classified as expenses, and therefore not subject to VAT? If so, could they reduce the VAT they’d need to charge e.g. by charging Josie separately for ‘rent’ and ‘bills/maintenance’?

    I hope you can suggest something to help sort out this issue, which is worrying Josie.
    Regards,
    Hazel.

    1. Hi Josie,

      I assume that your daughter is not currently registered for VAT and would not exceed the threshold of €37,500 (in the case of services) to register for VAT. She would however, have the option to elect to register for VAT. This would then mean that VAT would be charged on any services provided by your daughter at 9% but she could in turn reclaim the VAT on any expenses that she incurs for business purposes. For example, if VAT on sales is €200 and VAT on all expenses is €100, she would have to pay €100 to the Revenue Commissioners for VAT. Alternatively, she could be in a refund position if VAT on her expenses were greater then VAT on her sales.

      Regarding the issue with the lease, I would suggest that she discuss the situation further with her landlord and possibly get the advice from her accountant to ensure the business in financially viable moving forward. She will need to establish if rent is now to be a fixed sum or if it will still be as a percentage of her income and whether this is inclusive or exclusive of VAT. She will also need to determine if she will be invoiced for a portion of the running expenses (light & heat, etc.) – these would all be VAT deductible for her should she decide to register for VAT.

      Kind regards,

      David

  30. Hi there, great thread! I need to ask what may seem a stupid question. If i start a consultancy business, just a small one, I have one client and i will be invoicing her €200 a week approx. What are my VAT liabilities on that? Thanks, Lorraine

    1. Hi Lorraine,

      Thank you for your comment.

      A business whose turnover, in any twelve month period, does not exceed or is not likely to exceed €37,500 (in your case) is not obliged to register for VAT. As you are invoicing €200 per week or €10,4000 per annam approx. you are not required to register for VAT but you do have the option to register if you so wish.

      kind regards,

      David

  31. I am a sole trader providing business consultency service. I am registered for VAT but in the last two years have not exceeded the threshold.
    I have been asked to provide remote consultency (phone and review materialin Dublin) to a client in Guatemala. Di I charge VAT. if so what is the rate? Thank you in advance.

    1. Hi Richard,

      Thank you for your comment.

      Business consultancy services supplied to customers outside the EU are not subject to Irish VAT whether received for private or business purposes.

      Kind regards,

      David.

  32. Hi there, I was wondering if you can help me please. I set up a company to avail of an Enterprise Ireland innovation voucher which is payable directly to a third level institution. I got the voucher, and am liable for 23% vat on 5k. I tried to register for vat to claim vat back but they told me I am not eligible to claim back vat as I am not currently trading and I am focused on research and development for an invention. Does this sound right to you in your experience?
    Any guidance you can give is greatly appreciated.
    Kind regards
    Paul

    1. Hi Paul,

      A taxable person for VAT purposes is a person who carries out a business in the State. To register for VAT there is a requirement that the taxable person is acting in the course of furtherance of business. As you are merely carrying out research and development activities for an invention and not necessarily carrying out a trade or business in the State Revenue may decline VAT registration in this instance.

      If you have any further queries please contact the registration section in Revenue on 1890 36 83 78 or our office on 021 4310266.

      Kind regards,

      Cathy

  33. Orla/ pat
    Does a charity shop have to pay vat on second hand goods sold .is that not like double taxation if they do.does that mean they have to take note of everything sold eg instead of say clothing on the till it should say men’s/ child’s/women’s. ??
    Thanks

    1. Hi Cathy,

      Thank you for your query.

      A charity carrying on a trade is obliged to register for VAT in respect of such trading activities subject to the threshold for registration, currently €75,000 for goods, being exceeded.

      Kind regards,

      Cathy

  34. Hi,

    I am somewhat confused. Here it is always stated that the threshold for the supply of goods is €75k. However reading the Revenue website it says:
    At least 90% of the total annual consideration of €75,000 i.e. (€67,500) must relate to the supply of goods, and the goods involved must not be goods, which, when supplied are liable at the reduced rate or standard rate of VAT but which were manufactured or produced mainly from materials liable at Zero. Otherwise the €37,500 threshold applies.

    In my case most of my supply is standard rate stuff and my products will be sold mostly at standard rate.
    Can you please clarify.

    Thanks for your help, very much appreciated.

    Rasmus

    1. Hi Rasmus,

      Thank you for your query.

      Normally the threshold for the supply of goods is €75,000. However a threshold of €37,500 applies where an individual is supplying goods liable at reduced or standard rates which they have manufactured or produced from zero rated materials.
      The general threshold for the supply of services is €37,500. However for persons supplying both goods and services where 90% or more of their turnover is derived from supplies of goods (other than the kind referred to above) then the threshold for goods applies i.e. €75,000.

      I trust that the above clarifies matters for you.

      If you have any further queries please do not hesitate to contact our office on 021 4310266.

      Kind regards,

      Cathy

  35. Hi

    Excellent blog folks – it is a really helpful resource and the answers to other questions are particularly useful when getting used to all the aspects of running a business. Thank you!

    My question is to do with VAT on Training & Coaching services. Is Training provided to companies and employees of companies exempt from VAT? If I provided training courses for the general public is it considered the same activity?

    I noted above that Sports coaching is VAT liable at 23% is it the same for all coaching services (career coaching, executive coaching)

    Thanks for your guidance
    Louise

    1. Hi Louise,

      Thank you for your query.

      In general terms training is exempt from VAT, where provided in a classroom type setting, regardless of your customer i.e. private, business. Sport training is liable at the standard rate i.e. 23%. We would always recommend that clients contact Revenue and receive an official determination in respect of their specific supply for VAT purposes.

      Kind regards,

      Cathy

  36. Hi Cathy,

    I started distance sales selling kids clothes. I just registered for VAT. I am not sure if I should charge VAT on children clothes. I know there should be no VAT for clothes up to age 11. The problem is my purchase invoice doesn’t specify if it is children clothes, it says ‘Minnie Mouse t-shirt’ for example. When I sell them on ebay, I do specify that they are for girls and the age it is for. I also create sales invoices and have each size different coded, so the sales invoice states what age is the item for. Should that be enough? Or I will have to charge VAT on all kids clothes?

    1. Hi Jack,

      Thank you for your query.

      This will depend on your expected turnover and whether it will exceed or is likely to exceed the relevant VAT registration threshold per the Revenue guidelines.

      Kind regards,
      Cathy

  37. Hi,
    wow, this is really a great blog, thank you so much!
    I will formatting a company in the next weeks (sole trader or Ltd., not sure yet). I will sell goods to customers in Ireland and in the EU but order material in the US.
    In guess the beginning my turnover will not exceed 35.000 EUR but is it still a liability for me to register for VAT?
    If not, would that be different if I sell my products worldwide?
    Thanks a million
    Ben

    1. Ben,

      You only have to register for VAT if your sales exceed €75,000 p.a. wherever you sell to.

      Regards,

      Seamus

  38. Hi, I have read nearly all of the content here and it is great!!
    I have one question that i hope you can help me with.

    We are in the process of setting up a business partnership which hires out room decor to wedding venues. We are due to pay just over 300euro VAT on goods we are importing from china when they arrive at Dublin port late November and we want to claim it back. Is it financially advisable for us to register for tax in the long run or should we let the 300 go now to avoid any other unnecessary tax related charges in the future? I don’t think our sales will be over the 37,500euro threshold.

    Any advice you can give would be much appreciated.

    Steve

    1. Steve,

      It is difficult to give a definitive answer as I am not aware of your circumstances but it may be best not to register for VAT to keep your prices competitive?

      Regards,

      Seamus

  39. Hi!

    I hope you can help me with my question related to the VAT registration… I’m a sole trader, offering IT services mostly to companies based in other EU countries but also to one or two Irish businesses. Additionally, I order some services from companies established in other EU countries, all these services fall into a Fourth Schedule Services category.

    – Do I need to register for VAT assuming my turnover will not exceed €37,500?

    – What if I wouldn’t be ordering any services from other companies and my turnover would not exceed €37,500 threshold?

    – And finally, what happens if my turnover over the last 12 months exceeds €37,500 but just for a very short time period, what should I do in this case – can I register for VAT and then cancel VAT registration shortly after? I don’t have many expenses and because of that prefer not to be registered for VAT.

    I would appreciate any feedback on this!

    Thanks,
    Peter

    1. Peter,

      You are not obliged to register for VAT if turnover from the provision of services will not exceed €37,500 in the next 12 months.

      However, if you receive services for business purposes from abroad (formerly known as Fourth Schedule services) you are obliged to register for VAT. This is because you must self-account for VAT on these purchases at Irish VAT rates.

      Please note no registration threshold applies in respect of the requirement to register for VAT where you are in receipt of such services for business purposes; once you are in receipt of these services, you must register for VAT.

      If you do register for VAT and if you make sales to the EU you will also be obliged to register VIES and make quarterly / monthly VIES returns to Revenue. These are returns of information only, no liability attaches to them, but Revenue can levy a penalty of €4,000 per each return that is not filed.

      Re Q2: If turnover from the provision of services does not exceed €37,500 and you are not making purchases of services from the EU, you are not obliged to register for VAT.

      Re Q3: Once turnover exceeds the threshold, regardless of the time period involved, you are obliged to register for VAT.
      If turnover subsequently falls beneath the threshold, yes you can de-register for VAT.

      Hope this helps!

      Seamus

  40. Hello,
    I have registered my company for VAT. I want to but comericial van for my business from UK can I claim back the VAT paid on purchase or I can simply not pay the VAT

  41. Hi,

    I want to setup a business as Sole Trader this year (November 2015) and not get above 37k threshold.
    I was employed this year but finished working.
    Now I want to provide software services to company abroad.
    Company from abroad (inside EU) uses VAT and will need to pay me 25k for my online services.
    Do I have to register for VAT as Sole Trader if this EU company also uses VAT or I don’t need to?

    Thanks,
    Marcin

    1. Marcin,

      You only have to VAT register if you exceed the threshold OF €37,500. Whether you register or otherwise is not contingent on your customers VAT position.

      Seamus

  42. Dear Seamus,

    I am about to start to work as a selfemployed photographer and I would like to know, if I need to register for VAT.
    I doubt I will have more than the threshold of €37,500, but most of my clients are in Germany and I also receive invoices from there, for example from graphic designer or other photography related businesses. Would that be a reason to register for VAT? Thanks a lot for your help! Best, Emma

    1. Emma,

      If your clients in Germany are VAT registered and you are being charged VAT it may be to your advantage to register for VAT even though you do not now exceed the registration threshold.

      Feel free to call me on this (021 4310266)

      Seamus

  43. Hello Orla and Seamus,

    I am not self-employed, but a PAYE worker who will supply archival services as a once-off to a university. Even if this happened again, I would never reach the threshold for VAT. But do I need to register as partly self-employed for carrying out a once-off job? This is likely a very innocent question, since I will somehow have to pay taxes on the income I get.Thank you very much for your help!

    Vera

  44. If I’m under the 37500 threshold to register for VAT can I still register? as Iv started selling goods online and paypal is looking for a VAT number which I do not have. What can I do?

    1. Hi,

      You can still register if you are under the VAT threshold which will keep Paypal happy.

      Seamus

  45. Hi. Great blog. Thank you so much. We’ve just started a ratings website and intent to charge individual users to access the information. I’ve read the €37.5k requirement. My question is do I have to show the VAT amount on the website or is this all hidden from the user and we just have to pay revenue 23% in the background. Thanks a lot. Helen

    1. Helen,

      I would show it but many online businesses just include VAT in the overall price and not separately.

      Seamus

  46. Hello,

    Our company is not vat registered yet, should we pay vat when rent an office? if so later can we get back that vat?

  47. Hi could you please tell me my husband registered for vat last year as he was advised to by his accountant however we never met the 75000 threshold and we have still got a bill for 6 months of over 3500 is there anything we can do about this it seems unfair that we have to pay it but I expect because he registered we have no way out. Our business is winding down we are not making a great deal of money not sure what to do.

    1. Louise,

      If you regisatered for VAT, you will have to pay the VAT you charged less any valid VAT incurred.

      Should you consider cancelling the VAT registration now?

      Seamus

  48. Hi, am I correct in saying that as I was unregistered for vat in 2013 when I purchased my van I do not have to account for vat on the sale even though I registered for vat in 2016 due to exceeding the threshold. I can then claim the full amount of vat from the new van. Thanks

    1. Maura,

      You do not have to account for VAT on the sale of your van as you were not VAT registered at the time you purchased it.

      Regards

      Seamus

      Seamus

  49. Hi,

    I’m a PAYE worker looking at providing services in my spare time as a sole trader. When examining VAT thresholds, do I have to include my PAYE earnings or can I just include the turnover from my self-employment?

    Thanks.

  50. Dear Seamus,

    Do I have to register for VAT If my annual turnover is approx € 50,000. That is on supply of goods ( 70%) and services ( 30%) combined? Thank You in advance

    1. Darius,

      Yes Vat must be registered for. If the sales of taxable goods is less than 90% of total turnover then the threshold is €37,500.

      Seamus

  51. I have my own limited company and I am charging VAT as well on services but I think my annual turnover will be less than 37500 euros .
    do I need to pay VAT ? which I received from Medical services or file a VAT bimonthly ?

    kind regards

    1. Ikramul,

      If you are charging VAT then you have to pay VAT to the C.G.

      Do I understand the question?

      Seamus

  52. Hi Seamus,

    This is a very educational website.

    I returned to Ireland early last year with the intention of staying. I set up a limited company and was doing IT consultancy. The accountant I was using was charging VAT on my invoices as I was expecting to earn over the 37500 threshold. However after only 3 month I had to leave Ireland again. My VAT registration had not been completed at this time. When revenue found out I was no longer in the country and not trading under my limited company anymore they did not issue me VAT registration number. I did not earn more than 37500 but did charge VAT to my clients.

    My question is, how do I repay this VAT to revenue. I have called and been redirected to multiple departments. Nobody seems to be able to tell me how to pay back the VAT I received.

  53. Hi

    We are a UK architects providing planning services in relation to land in Ireland owned by a UK co. Neither we nor the client is registered for VAT in Ireland. Do we need to register OR can we rely on them registering and then reverse charge them? If we don’t have to register, do we issue a 0% VAT invoice?

    We expect to do more of this type of work. Should we register in case future clients are VAT registered in Ireland as I understand this changes the position?

    Thanks

    1. Pam,

      My understanding is that where the customer is not registered for Irish VAT and the service provided is in relation to a building, the service is deemed to be supplied where the building is located. Therefore if a UK architect supplies services in relation to a building in Ireland and the customer is not registered for Irish VAT then the UK architect should register for and charge Irish VAT on this work.

      But get specialist VAT advice to ensure you are acting properly. I can refer you if you wish.

      Hope this helps.

      Seamus

  54. Great website. My question is the following; can a company claim back appropriate VAT payments made, say in the last 9 months prior to its VAT registration? (Company registered in month 1).

    1. Tony,

      Generally you can claim VAT on pre setup expenses but check it first with your own accountant as Revenue may look into it.

      Seamus

  55. Hi,
    I am thinking of setting up a promotional-corporate gifts business but I’ve been told that even if I’m not registered for VAT that I should include my PPS/tax number on my invoices, is that right? I always thought that if I wasn’t registered for VAT that I wouldn’t include it on my invoices.

    1. Annie,

      It would be unusual to include your PPSN.

      Hope business goes well and stay safe.

      Seamus

  56. Hi there. I’m currently expanding a part time business doing digger/contract work. I will not earn anywhere close to €37000. I am looking to buy another digger but vat is pushing most diggers out of the budget is it possible to register for vat to claim back for this purchase and other expenses. Thanks

    1. Derry,

      You can choose to register for VAT even if below the threshold and claim back the VAT.

      Seamus

  57. Thanks for all this information! It is very useful and hard to find elsewhere.

    I found this page because I am currently worried about my own VAT situation. I am a sole trader, working in IT, and I have been doing my own accounts since I started. The first eight years or so were not very profitable so I never had to worry about VAT.

    This year things have changed. I completed my Form11 for last year yesterday and only then did I realise that I surpassed the VAT threshold for last year by about €3,000. I understand that I should register for VAT at this point.

    What I am really worried about is what happens for next year. Maybe I should have spotted these figures earlier, but as it stands, I have been sending invoices for the last 10-12 months without charging VAT, when I should have been. Will revenue see this as a breach of compliance and could they potentially come looking for VAT that I never collected? I estimate that this years income could be €8,000 over the threshold.

    I would hope that if I register for VAT this week then everything would be fine. It should be obvious to revenue that I wasn’t collecting VAT and that I registered for VAT as soon as I realised I was over the threshold.

  58. Hi Seamus,

    Loads of great information here through the website and real life queries.

    I am at very early stages of being self employed. I will be no where near the VAT threshold for I assume the next 2 years, I am currently engaged in a small project with a client which I mistakenly charged VAT , this project is very early stage and no payment has changed hands, I would like to revert back on this and make it right before the project progresses further. Is there a recommended way to address this or would you have any advice.

    Thanks in advance.

  59. Hi Seamus, We have a very small business giving training to general public. Income is much lower than VAT threshold. A local company is looing to use us to give training to their customers but is insisting on us being VAT registered before agreeing the contract. Are there any options open to us ? Thanks very much.

    1. Dave,

      No need to VAT register if below threshold but you might not get the contract then.

      I suspect the local company is misguided so get your accountant to call them to resolve the matter.

      Hope this works out.

      Seamus

  60. Hi Seamus, I am a self-employed translator established in Ireland, my income is well below the Irish VAT registration threshold. My customers are businesses established in France and they are VAT registered there. Do I have to register for VAT to trade with them? I am a bit confused about the reverse charge rules and what it implies for me. Thank you for your help!

  61. Hi Seamus!
    Am I right that if the company incorporated in Ireland and have no office, no employees, no customers, no suppliers in Ireland and conduct only foreign trade outside Ireland then it is impossible to register such company for VAT in Ireland? Does it mean that such company does not fall under the definition of the accountable person and there is no obligation to register for VAT in Ireland irrespective of the type of the activity and the threshold?
    When the company was incorporated it was planned to open an office in Ireland and relocate the employees and hire some locals, but due to the pandemic situation the plans are changed, so there is a huge question how to follow the VAT requirements in case if the company have no presence in Ireland. Thank you very much in advance.

    1. Marina,

      You will not get an Irish VAT number based on the information provided but you may have to register in another country.

      Seamus

  62. Hi Seamus, I am a self-employed running small internet shop. I applied for VAT registration at opening the shop in 2011. Since the turnover of the shop is low for last few years, I would like to deregister from VAT. I do not know how to qulify remaining trade stock.
    I can cease the VAT registration using ROS service, then I am asked for following:

    Assets and Equipment
    Did the business have assets or equipment? *Yes No

    My business still have “stock for resale” remaining and I would be grateful if you could advice me if this qulify as an asset for this purpose.

    I do not have any equipment worth attention as this is internet shop and I only store items for resale.

    1. Daniel,

      Stock qualifies as an asset.

      VAT is payable on the value of any stock retained and should be accounted for in the final VAT return.

      Hope this helps

      Seamus

  63. Hi Seamus,

    I recently set-up as a sole trader in Ireland (am fully resident and based in Ireland) offering consultancy services (B2B). However, as yet, all my customers are exclusively US-based companies.

    I expect to go over the annual VAT threshold for supply of services in the near future, however, I’m not sure if I am considered an ‘accountable’ person/sole trader business given I only service US customers/businesses (whom are not eligible to pay VAT on supplier services from Ireland).

    In this instance, I’d greatly appreciate your advice as to whether I should register for VAT once my turnover exceeds the threshold?

    Many thanks,

    Shellie

    1. Shellie,

      No Irish VAT registration is required as all sales are currently outside the scope of Irish VAT. This should be reviewed if sales are made within the EU or Ireland.

      Seamus

  64. Hello,

    Thank you for your time and this resource, I am looking at setting up a business growing produce. The produce I will be selling has a VAT rate of zero. I have a few questions in relation to VAT I was hoping you could help me with.

    1. As the only product I am selling is zero rated would I still need to register for VAT once I exceed the 75k threshold?
    2. The raw material required to grow the produce are charged at the standard rate. As such I will be paying VAT on these. Can I register for VAT to claim this back or am I ineligible to do so as the sole item I sell is zero rated?
    3. If I buy some materials used in the growing process from other EU countries is the threshold that I am liable to register for VAT reduced from 75k to 41k or is the 41k threshold only applicable if I sell the materials purchased from the other Member State. The materials in question are used in house during the growing process but are not part or the final produce, they are used to facilitate growing and are then disposed of if that makes a difference.

    Thank you for your help
    Paddy

    1. Paddy,

      1. Yes you should register for VAT as soon as you are likely to exceed the VAT registration threshold in any continuous period of twelve months.
      2. VAT can be reclaimed. The 0% rate is a VAT rate but it would be different if your sales were VAT exempt.
      3. The €41k threshold applies to EU acquisitions, it is irrelevant if the goods purchased are not resold. If the amount of EU acquisitions exceeds €41k, then you must register for VAT.

      Hope this helps.

      Seamus

  65. Hi Seamus,
    I am planning to become an Irish sole trader – offering IT services (development, sysadmin, etc). My business plan currently is that I will stay below the 37 500 EUR VAT treshold so I do not plan to register for VAT.
    I plan to have business clients from abroad too – EU member states.
    Let’s suppose I have a client – Hungarian company, and I know and checked their EU VAT number. So this a B2B EU trade offering service.
    Based on this site:
    https://www.revenue.ie/en/vat/vat-on-services/when-is-vat-charged-on-services/vat-obligations-of-Irish-traders-supplying-services-to-business-customers-abroad.aspx
    – I will put their VAT number on the invoice
    – Should I put “reverse charge” on it?
    – Do I have to “include the supply on the VIES return if it is taxable” – as I would not register for VAT, do I have to do anything with VIES?

    Thank you very much for your help!
    Sal

    1. Sal,

      As you are not registering for Irish VAT there is no need to include client VAT number or reverse charge.

      VIES not applicable too.

      Seamus

  66. Hi Seamus!
    I am a self-employed translator, who worked as an employee for a US-based company from 2014-2021. I am now registered as a sole trader in Ireland as of 2022. Over the past 7 years, I have only exceeded the 37.5k threshold, so I didn’t originally register for VAT. In November (i.e., based on invoices from October), I passed 38k in gross revenue. Do I need to start charging VAT on my invoices for November/December? Will I have to charge VAT on my invoices in 2023 even though I may not exceed the threshold?

    Another quick question: If I write invoices in December that are not paid until January, does that income count towards my 2022 income or my 2023 income?

    Thanks in advance for your help.

    Best
    Jennifer

    1. Jennifer,

      No need to VAT register if next year’s income is below the threshold.

      If your accounts year end is December than December 2022 income is included in 2022 accounts.

      Seamus

  67. Thanks, Seamus
    Does that mean I will have to include VAT on my invoices for November/December?
    So, even if my invoices aren’t paid until January, that income counts for 2022?
    Jennifer

    p.s. I meant to say that I only exceeded the threshold 2x in the past 7 years, which is why I didn’t charge VAT. I won’t know, of course, if I will exceed the income in 2023.

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