Who should register for VAT?

Updated on July 19, 2022

Overview

The VAT registration rules are discussed in this section. It goes on to explain:

who has to be a VAT registrant

Limits of the value-added tax

deciding to join the VAT system

when it is possible to impose a lettings tax.

As a rule, if you are an accountable individual, you must file for VAT.

A person can’t register for VAT if all of their activities are exempt or non-taxable.

A person who engages in tax-exempt or non-taxable business operations may, under certain conditions, be required to file a VAT return.

other Member States’ products

or

services from other countries.

Registration of a new business

New enterprises that haven’t yet provided any taxable goods or services might claim VAT back on their initial costs.

If you want to do so, you must register for VAT.

Prior to the start of business, you will be able to claim VAT on purchases.

VAT registration is not required for farmers and fishermen, as well as small-scale traders with yearly revenues below the VAT threshold.

They can, however, choose to register for VAT.

See ‘Further instructions’ for information on how to register for the following events.

To safeguard their members’ interests in gas and oil exploration, some student unions have formed trade organizations.

Next: What are the VAT thresholds?

What are the VAT thresholds?

When your revenue exceeds or is anticipated to surpass the VAT thresholds, you must register for Value-Added Tax (VAT).

The thresholds are determined by the amount of money you’ve made over the course of a year.

To qualify for intra-Community distance sales of goods or TBE services, you must have a calendar year’s turnover of at least $1 million.

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You may choose to register for VAT even if your revenue falls below a predetermined level.

The following are the most important cutoffs:

In the event of individuals merely providing services, the cap is €37,500.
€10,000 for taxable individuals that sell products and cross-border TBE services via mail order or intra-Community distance sales.

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.

When the supplier is established and has a permanent address, or normally resides in a single Member State, the threshold is not applicable To avoid this, the provider must be registered for Irish VAT in the case of such sales. For further information, visit the webpages for intra-community distance sales of goods and electronically delivered services.
€41,000 for EU citizens who purchase goods and services from outside the EU.
€75,000 will be given to people who supply goods.
Persons who supply both goods and services and whose goods supply accounts for 90% or more of their total revenue are eligible for €75,000. Even though all goods and services are included in the turnover, this does not mean that 90% of the goods sold are included.
The 90% number does not include goods that you: sold at normal or reduced rates; made or produced from zero rated materials; or resold at a reduced price.
While not residing in the state, an individual must register and keep track of their VAT if they provide any of the following services:

products and services that are taxable to ‘taxable customers’ in the state
This holds true regardless of how much money is being made.

How is your turnover determined?

You may have exceeded the threshold limit in your turnover figure.

There is a possibility that registering for VAT is not mandatory.

VAT paid on resale stock can be deducted from the turnover figure for tax reasons.

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To see if you qualify for VAT, you should utilize this lower turnover amount.

As previously mentioned, you must utilize this adjusted turnover figure to determine your VAT registration threshold.

Example
Michael’s business generates an annual revenue of €80,000.

He has paid €11,220 in VAT on the merchandise he purchased for resale.

When assessing if Michael has crossed the barrier, he can subtract €11,220 from his turnover amount.

After subtracting €11,220 from €80,000, the final result is €68,780.

He is not required to register because his adjusted turnover is less than the registration threshold of €75,000.

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

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 taxed
Banks and other financial institutions are exempt from this rule.
Local, state, and semi-state agencies and organizations
Agriculturists, fishermen, or trainers of race horses.
Then then, if they get taxable services from outside the state or within the EU, they may have to register and account for VAT.

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

Certain non-taxable individuals and exempt individuals are required to register and account for VAT. A good example of this would be if they purchase or are planning to purchase items from another EU member state. When the value of the items exceeds or is projected to surpass €41,000 in a year, you must register.

A flat-rate farmer or fisherman may be compelled to register to receive such commodities, if the threshold is met. As long as they don’t engage in commercial farming or fishing, they can keep their unregistered status.

If you’re a non-taxable or exempt individual, you can’t use your VAT refund.

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

If they obtain taxable services from outside the EU, even those who are exempt from VAT are required to register and account for it. It doesn’t matter how valuable the services are.

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Farmers, fishermen, and race-horse trainers who receive services at a flat charge are required to register. For farming and fishing, they can keep their unregistered status.

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

Paying VAT on services from abroad

It is your responsibility to pay the applicable Irish VAT rate on all invoiced amounts in your monthly VAT return. 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.
Is it possible to retroactively register to vote?
No. If you choose to register for VAT, you must do so as of the date of your choice.

VAT registration entails new responsibilities
You must follow the same steps to register for VAT regardless of whether you “choose” to do so or are “obligated” to do so.

Next: Option to tax lettings

Option to tax lettings

V.A.T. is not charged 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.

In order to tax a letting, you must register and pay VAT on the rents collected from those properties.

The following items are exempt from being taxed:

A rental of a house or apartment
A rental arrangement in which the tenant’s deductibility is less than 90% when the parties are related.