Value Added Tax (VAT)

You must register for Value Added Tax (VAT) if your annual turnover is more than (or is likely to be more than) €75,000 for supply of goods or €37,500 for supply of services.

As a trader you pay VAT on goods and services acquired for the business and charge VAT on goods and services supplied by the business. The difference between the VAT charged by you and the VAT you were charged must be paid to Revenue. If the amount of VAT paid by you exceeds the VAT charged by you, Revenue will repay the excess. This ensures that VAT is paid by the customer and not by the business.

If you are registered for VAT, Revenue will send you a form VAT 3 which must be returned with the payment not later than a specified date. Normally, VAT returns are made every 2 months. However, special arrangements can be made for small businesses to pay at less frequent intervals.

A taxable person

A taxable person is any person who independently carries on a business in the European Union (EU) or elsewhere. It includes persons who are exempt from Value-Added Tax (VAT) as well as flat-rate (unregistered) farmers.

An accountable person

A person who is required to charge VAT in the State is referred to as an accountable person. An accountable person is a taxable person (for example, an individual, partnership, company) who:

• supplies taxable goods or services in the State and
• who is, or is required to be, registered for VAT

Generally, you must register for VAT if you are an accountable person and you exceed or are likely to exceed the relevant VAT thresholds.

If you are setting up a business but you are yet to supply taxable goods or services, you should register for VAT as soon as it is clear that you will become an accountable person.

Farmers, sea fishermen and traders whose turnover is below the VAT thresholds are not generally obliged to register for VAT but may do so if they wish.

VAT thresholds

Value-Added Tax (VAT) registration is obligatory when the VAT thresholds are exceeded or are likely to be exceeded in any 12 month period. If you are below the thresholds you may elect to register for VAT.

The principal thresholds are as follows:

• €37,500 - supplying services only
• €37,500 - supplying goods liable at the reduced or standard rates which they have manufactured or produced from zero rated materials
• €35,000 - making mail-order or distance sales into the State
• €41,000 - making acquisitions from other European Union Member States
• €75,000 - supplying goods
• €75,000 - supplying both goods and services where 90% or more of the turnover is derived from supplies of goods

A non-established person supplying taxable goods or services in the State is obliged to register and account for VAT irrespective of the level of turnover.

Exempt persons

Exempt persons and non-taxable entities that acquire, or are likely to acquire, more than €41,000 worth of goods from other Member States in any 12 month period are obliged to register and account for Value-Added Tax (VAT) in respect of the acquisitions from other European Union Member States.

You may not reclaim VAT if you are an exempt or non-taxable person.