VAT · REGISTRATION

When do you have to register for VAT in Ireland?

McManus McCabe · Chartered Accountants · Dublin

In Ireland you must register for VAT once your taxable turnover exceeds, or is likely in a 12-month period to exceed, the relevant registration threshold - and there are two different thresholds, a lower one for services and a higher one for goods (in the region of €42,500 for services and €85,000 for goods, though these figures are periodically increased, so confirm the current thresholds with Revenue). You must register once you cross, or expect to cross, the threshold. Below it, registration is voluntary - some businesses register early to reclaim VAT on costs or to trade credibly with VAT-registered customers. Registration means charging VAT, filing VAT returns and paying it over to Revenue.

VAT registration is one of the first compliance questions a growing Irish business faces, and it catches people out in both directions - some register too late and face a bill, others assume they must register when they need not. Here is when registration becomes obligatory, when it is optional, and what it means for your business.

The thresholds

Ireland has two VAT registration thresholds, and which applies depends on what you sell. There is a lower threshold for the supply of services and a higher one for the supply of goods (broadly in the region of €42,500 for services and €85,000 for goods at the time of writing). These thresholds are reviewed and increased from time to time, so always confirm the current figures with Revenue rather than relying on a number you saw a while ago. Mixed businesses need to consider how the rules apply to their supplies.

When registration is obligatory

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  When your taxable turnover in a continuous 12-month period exceeds the relevant threshold.

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  When it is likely to exceed the threshold in the next 12 months - you must register in anticipation, not only after the fact.

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  Certain situations trigger registration regardless of turnover (for example some acquisitions and received services from abroad).

The 'likely to exceed' point matters: you are expected to register when you can reasonably foresee crossing the threshold, so it is worth watching turnover as you grow.

Voluntary registration

Below the threshold, you can choose to register voluntarily, and for some businesses it makes sense. Registering lets you reclaim the VAT you pay on your business costs, which benefits a business with significant VATable expenses or one that mainly sells to other VAT-registered businesses (who can reclaim the VAT you charge). It can also present the business as more established. The trade-off is the administration of charging VAT and filing returns, and that VAT-registered status makes your prices higher to non-registered customers.

What registration means in practice

Once registered, you charge VAT at the correct rate on your taxable sales, you can reclaim VAT on eligible business costs, and you file VAT returns and pay the net VAT to Revenue on the required cycle. Good bookkeeping makes this routine; poor records make it painful. Deciding when to register, and getting the returns right, is exactly where a chartered accountant helps. See setting up a limited company for the wider setup and your first year as a new Irish company for the compliance calendar. McManus McCabe advise on VAT registration and returns across Ireland.

General guidance, not advice

This is general information about setting up and registering a business in Ireland, not tax or legal advice for your situation, and thresholds and rules change. Confirm the current position with Revenue and the Companies Registration Office, and speak to a chartered accountant about your own circumstances.

Frequently asked questions

• What is the VAT registration threshold in Ireland?

  There are two thresholds - a lower one for services and a higher one for goods (broadly in the region of €42,500 for services and €85,000 for goods at the time of writing). These are periodically increased, so confirm the current figures with Revenue. You must register once your taxable turnover exceeds, or is likely to exceed, the relevant threshold.
• Do I have to register for VAT if I'm under the threshold?

  No - below the threshold, VAT registration is voluntary. Some businesses register anyway to reclaim VAT on their costs or to trade with VAT-registered customers, but there is no obligation until your turnover crosses, or is likely to cross, the relevant threshold.
• When does VAT registration become obligatory in Ireland?

  When your taxable turnover in a 12-month period exceeds the relevant threshold, or when it is likely to exceed it in the next 12 months - you are expected to register in anticipation. Certain cross-border situations can require registration regardless of turnover.