Who should register for VAT?

Updated on May 18, 2022

Overview

This section explains how to register for VAT (Value Added Tax). It goes on to explain:

Individuals who have taxable income

Value-added tax (VAT) thresholds

deciding to become a VAT registered business

When lettings can be taxed.

An accountable person, in general, is required to register for VAT.

VAT registration is not required for those engaged in exempt or non-taxable activity. However, a person who engages in tax-exempt or non-taxable activities may be required to register for VAT in the following circumstances:

the acquisition of products from outside the United States

or

Registration of a new business

It’s possible to get VAT back on your startup costs even if you haven’t yet supplied any taxable goods or services after starting a firm. You must, however, register for VAT in order to do so.

This will allow you to claim back VAT on purchases made prior to the start of business.

VAT registration is not required for small businesses, such as farmers and fisherman, whose turnover falls below the threshold. However, they have the option of registering for VAT.

For details on how to register for the following events, see ‘Further guidance.’

Gas and oil exploration firms benefit from the support of some student unions.

Next: What are the VAT thresholds?

What are the VAT thresholds?

In order to register for VAT, you must have a turnover in excess of the VAT thresholds. The thresholds are based on the amount of money you make in a year-long period.

You must have a certain amount of revenue in a calendar year in order to qualify for intra-Community distance sales of products and cross-border TBE services.

You can register for VAT if your turnover falls below a certain threshold.

The following are the main thresholds:

In the event of individuals merely providing services, the cap is €37,500.
If you’re a taxable person that sells products or services via mail-order, you’ll have to pay €10,000. For this purpose, the total value of intra-Community distance sales of goods and cross-border TBE services provided to customers in all EU Member States (or “deemed suppliers”) is taken into consideration. As long as the supplier is based out of only one EU country, they are exempt from the threshold. To avoid this, the provider must be registered for Irish VAT in the case of such supplies. For more information, check out the intra-Community distance sales of commodities and the Electronically supplied services pages.
€41,000 for EU citizens who purchase goods and services from outside the EU.
It costs €75,000 to be a supplier of goods.
As long as 90% or more of the company’s revenue comes from selling items, it is eligible for a €75,000 grant. Even though all goods and services are included in the turnover, this does not mean that 90% of the goods sold are included.
The ninety percent percentage does not include items offered at ordinary or reduced prices or made or produced using zero-rated materials, among other things.
While not residing in the state, an individual must register and keep track of their VAT if they provide any of the following services:

taxable goods or services to ‘taxable clients’ in the State.
Regardless of the company’s turnover, this rule holds true.

How is your turnover determined?

Your turnover figure may surpass the threshold limit. However, you may not be compelled to register for VAT.

For registration reasons, the turnover figure may be decreased by the amount of VAT paid on stock bought for re-sale. You should use this decreased turnover figure to assess if you may register for VAT.

This adjusted turnover figure is used only for the purposes of determining your turnover for registration for VAT.

Example

Michael has an annual turnover of €80,000.

He has incurred VAT on his stock purchased for re-sale in the amount of €11,220.

Michael can cut his turnover amount by the €11,220 when calculating if he has met the requirement.

€80,000 minus €11,220 equals €68,780.

As the adjusted turnover is below the registration limit of €75,000, he is not compelled to register.

Persons required to register solely because of goods or services acquired from abroad

The following people are usually exempt from Value-Added Tax (VAT) registration in the state:

Businesses that aren’t registered for VAT
Banks and other financial institutions are exempt from this rule.
Local, state, and semi-state agencies and organisations
Breeders of racehorses, fisherman, or farmers.
They may, however, be required to register and account for VAT if they get taxable services from outside the state or through intra-community acquisitions and have to register and account for it.

Exempt persons and certain non-taxable persons acquiring goods within the EU

In some cases, exempt and non-taxable persons must register and account for VAT. Buying or planning to buy goods from another EU member state is one example of this. In every 12-month period, you must register your goods if they exceed or are expected to surpass €41,000 in total value.

Depending on the threshold, flat-rate farmers, fishers, and race-horse trainers may be needed to register for the receipt of such commodities. Because of their farming or fishing operations, they can maintain their unregistered status

Exempt or non-taxable individuals cannot seek their VAT back.

Exempt persons and certain non-taxable persons receiving taxable services from abroad

If they obtain taxable services from overseas, exempt people and certain non-taxable persons must register and account for VAT. Even if those services are worthless, you still have to fulfil this commitment.

Farmers, fishermen, and race-horse trainers who receive services at a flat charge are required to register. Because of their farming or fishing operations, they can maintain their unregistered status

Exempt or non-taxable individuals cannot seek their VAT back.

Paying VAT on services from abroad

VAT on the invoiced amounts must be paid to Revenue at the relevant Irish VAT rate, which must be reported on a regular basis. At the same time, you may be able to claim back the VAT.

You can avoid paying VAT in another Member State by providing the provider with your VAT number.

Next: Who may elect to register for VAT?

Who may elect to register for VAT?

VAT registration is optional for the following taxpaying entities based in the state:

Farmers and fisherman’s businesses that aren’t VAT exempt.

Can you back date your election to register?

In order to register for VAT, you must do so as of today.

Obligations after VAT registration

When registering for VAT, the process is exactly the same as when you are ‘obligated’ to register for VAT.

Next: Option to tax lettings

Option to tax lettings

V.A.T. is not imposed on the rental of a property (VAT). Taxing the renting of particular properties as a landlord is an option. It is possible to limit the choice of taxing rentals to just one or a few homes, though.

As a landlord, you must register and pay VAT on the rents you collect from your properties.

The following items are exempt from being taxed:

A rental of a house or apartment
A rental arrangement in which the tenant’s tax liability is reduced by less than 90%.