Who should register for VAT?

Updated on April 14, 2022

Overview

The VAT registration rules are discussed in this section. The following is what it explains:

who has to be a VAT registrant

Value-added tax (VAT) thresholds

making the decision to join the VAT register

taxing lettings is an option.

If you’re a “accountable person,” you’ll need to register for VAT.

A person who only engages in activities that are exempt from VAT or that are not taxable is not allowed to do so. However, a person who engages in tax-exempt or non-taxable activities may be required to register for VAT in the following circumstances:

other Member States’ products

or

the use of outside assistance.

Registration of a new business

As long as you’ve started a business, you can claim back VAT on your start-up expenses. VAT registration is essential, however, in order to do so.

Prior to the start of business, you can claim VAT on purchases.

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.’

Trade protection organisations and gas and oil exploration firms are members of some student unions.

What are the VAT thresholds?

In order to register for VAT, you must have a turnover in excess of the VAT thresholds. You must meet the thresholds based on your year-to-date sales over the previous 12 months.

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.

It’s possible to opt out of VAT registration if your business’s revenue is below a predetermined threshold.

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. The entire value of intra-Community distance sales of goods and cross-border TBE services to clients in all EU Member States is taken into account for determining the threshold. As long as the provider is based out of only one EU country, the criterion does not apply to them. To avoid this, the provider must be registered for Irish VAT in the case of such transactions. If you have any further questions, please visit the intra-Community distance sales of goods and the Electronically supplied services webpages.
€41,000 is the maximum amount that can be charged to buyers coming from outside the European Union.
€75,000 will be given to people who supply goods.
€75,000 is available to those who provide both goods and services, with the supply of items accounting for at least 90% of total revenue. However, the 90 percent turnover does not necessarily encompass all of the goods and services sold.
Only goods that are offered at standard or discounted rates and manufactured using zero rated materials are included in the 90% statistic.
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 and services to ‘taxable clients’ in the state.
Regardless of the company’s turnover, this rule holds true.

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.

The amount of VAT paid on stock purchased for resale can be deducted from the turnover figure for tax purposes. You should check to see if you can register for VAT using this lower turnover figure.

In order to calculate your VAT registration turnover, you must utilise this adjusted turnover figure.

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

€68,780 – €11,220 = €80,000.

In this case, he does not have to register because his adjusted turnover falls below the registration threshold of €75,000.

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

In most states, the following people are exempt from registering for Value-Added Tax (VAT):

Businesses that aren’t registered for VAT
The banking industry is one such exception.
Local, state, and semi-state agencies and organisations
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. Such circumstances include those in which they purchase or are expected to purchase goods from other EU countries. 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.

It is possible that flat-rate fishers and racehorse trainers will be compelled to register if they receive items of this nature. As long as they don’t engage in commercial farming or fishing, they can keep 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. Regardless of the value of the services provided, this obligation exists.

Farmers, fishermen, and race-horse trainers who receive services at a flat charge are required to register. As long as they don’t engage in commercial farming or fishing, they can keep their unregistered status.

Exempt or non-taxable individuals cannot seek their 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 at the same time.

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

Who may elect to register for VAT?

Value-added tax (VAT) registration is available to the following establishments in the state:

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

Can you back date your election to register?

No. You can only elect to register for VAT from a current date.

Obligations after VAT registration

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

Option to tax lettings

VAT is not charged on the letting of a house or other real estate asset (VAT). Taxing the renting of particular properties as a landlord is an option. However, if you own many homes, you can only tax lettings at a single address.

You must register and pay VAT on the rented properties if you choose to tax them.

The following items are exempt from being taxed:

An agreement to rent out a home
A rental arrangement in which the tenant’s deductibility is less than 90% when the parties are related.