Who should register for VAT?

Updated on May 16, 2022

Overview

This section deals with the rules relating to Value-Added Tax (VAT) registration. The following is what it explains:

who is required to register for VAT purposes?

VAT thresholds

making the decision to join the VAT register

When lettings can be taxed.

Generally, you must register for VAT if you are an accountable person.

VAT registration is not required for those engaged in exempt or non-taxable activity. However, a person carrying on exempt activities or non taxable activities may have to register for VAT in certain situations, for example:

acquiring goods from other Member States

or

receiving services from abroad.

Registration of a new business

If you have started up a firm but have yet to supply taxable goods or services, you may reclaim VAT on your start-up costs. However, to do so you are necessary to register for VAT.

This will enable you to claim credit for VAT on purchases made before trading begins.

Traders whose turnover is below the VAT criteria, farmers and sea fishers are not normally forced to register for VAT. They may, however, chose to register for VAT.

Check ‘Further guidance’ for registration details in respect of:

certain student unions

trade protection associations

gas and oil exploration firms.

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.

Based on your annual turnover, you are eligible for intra-Community distance sales of goods and cross-border TBE services if you meet the following criteria:

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

The following are the main thresholds:

In the event of individuals merely providing services, the cap is €37,500.
For taxable individuals bringing in goods and TBE services from outside the country via mail-order or intra-community distance transactions, the state offers a $10,000 tax credit. Total intra-Community distance distance sales of goods and TBE services to customers in all EU Member States are taken into consideration for determining the threshold. 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. Details about intercommunity distance sales of commodities and electronic services are available on the respective web pages.
€41,000 is the maximum amount that can be charged to buyers coming from outside the EU.
€75,000 will be given to people who supply 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 90% figure does not include goods which you: sold at the standard or reduced rates and manufactured or produced from zero rated materials.
Supplying goods or services in the United States necessitates a person to register and account for VAT.

taxable goods to ‘taxable customers’ in the State or services to ‘taxable customers’ in the State.
This applies irrespective of the level of turnover.

How is your turnover determined?

It’s possible that your revenue will go beyond the cutoff point. VAT registration may not be required of you.

For tax purposes, the amount of VAT paid on resale goods can be deducted from the turnover figure. To see if you qualify for VAT, you should utilise this lower turnover amount.

In order to determine your turnover for VAT registration, this modified turnover value is used.

Example
Michael’s business generates €80,000 in revenue per year.

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.

€68,780 – €11,220 = €80,000.

He is not required to register because the adjusted turnover falls below the €75,000 threshold.

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

For the most part, the following people don’t need to register for VAT in the state:

Businesses that are not VAT registered
As an example, banks are exempt.
Local governments, state agencies, and semi-state bodies are examples of public bodies.
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 under specific circumstances. Buying or planning to buy goods from another EU member state is one example of this. When the value of the items exceeds or is projected to surpass €41,000 in any 12-month period, you must register with the tax authorities.

Depending on the threshold, flat-rate farmers, fishers, and race-horse trainers may be needed to register for the receipt of such commodities. 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 claim your VAT back.

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

People who are exempt from paying VAT if they get taxable services from outside the EU are required to register and account for the tax. Regardless of the value of the services provided, this obligation exists.

In order to receive flat-rate services from farmers, fisherman, and race-horse trainers, they must register. 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 claim your VAT back.

Paying VAT on services from abroad

Taxes on invoiced amounts must be paid to Revenue at the appropriate Irish VAT rate in your monthly VAT report. You may also be eligible for a VAT refund.

You can avoid paying VAT in another EU country by providing the supplier with your VAT number.

Who may elect to register for VAT?

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

The VAT thresholds are not exceeded by farmers, fisherman, or other small-scale business owners.

Can you back date your election to register?

It’s not possible to register for VAT if you haven’t done so yet.

Obligations after VAT registration

If you ‘opt’ to register for VAT, the procedures are the same as if you were ‘obligated.’

Option to tax lettings

The letting of a property is exempt from Value-Added Tax (VAT). However, as a landlord you can opt to tax the letting of certain properties. But, if you own multiple properties you can limit the option to tax a letting to one property or specified properties.

If you opt to tax a letting, you will have to register and pay VAT on the rents from those properties.

You cannot opt to tax the following:

  • A letting of residential property
  • A letting between connected persons, where the tenant has less than 90% deductibility.