VAT Threshold Ireland & Registration for VAT in Ireland

The 2024 Ireland budget plan came with VAT threshold changes for resident and non-resident businesses making taxable supplies and goods. The changes came into effect on January 1 and the aim of these amendments was to give small businesses the freedom to make their decision for voluntary businesses, especially when their turnover was close to the existing threshold.

Here is a complete guide on the updated VAT threshold Ireland and who is eligible to pay the value-added-tax. So dive right in for more.

Principal VAT Thresholds for Ireland

The value-added-tax registration in Ireland is obligatory and voluntary, depending on an entity’s turnover amount for a period of twelve months. For instance, if your turnover is less than the decided threshold limit, VAT registration becomes mandatory. Here is a breakdown of principal VAT thresholds followed in the country.

37,500 euros for people supplying services only.
40,000 euros for people supplying goods that are liable at the reduced or standard rates. Simply put, these services may have been manufactured using zero-rated materials by the government.
80,000 euros for people supplying both services and goods where 90% of the turnover is made from supplies other than zero-rated materials.
80,000 euros for people supplying goods.
10,000 euros for taxable people offering intra-community distance goods sales, cross-border TBE services, or making mail orders. The calculation of the threshold is done by calculating the supplier’s investment, total value of goods, and THE services to the customers across all the EU states (member). Please note that this threshold is only applied to individuals currently residing in one of the member states with a permanent address; or otherwise, they must register for conventional Irish VAT.
41,000 euros for people making acquisitions for other EU states (members).

Updated VAT Thresholds in 2024 Budget

With the 2024 budget plan, the Irish government announced an increase in the VAT registration threshold for businesses. This change helped small businesses whose turnover was close to the previously established threshold. For registration, the sales figure may be reduced by the VAT amount paid on the re-sale stock.

According to this announcement, the new VAT thresholds were as follows for businesses.

75,000 euros for goods, which was previously set to 37,500 euros.
80,000 euros for services, which was previously set to 40,000 euros.

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That said, resident businesses in the country are still free to voluntarily register for the value-added tax. For non-resident businesses making taxable supplies, VAT registration is mandatory.

How is Turnover Determined?

In order to determine whether they qualify to pay VAT, businesses calculate their turnover and compare it against the threshold amount. However, in some cases, you may not be required to register for value-added tax despite your turnover exceeding the threshold limit.

When it comes to registration, the turnover figure might be reduced by considering the VAT that is already bought on the stock a business bought for resale purposes. What’s ideal is that you must use his reduced turnover to determine whether you are eligible for VAT registration.

Finally, this adjusted figure will be used to calculate your turnover. Let us understand this through an example.

Sarah’s business received a turnover of 90,000 euros.
She used 11,220 euros VAT on the stock purchased for reselling.
Now, she can reduce her turnover by 11,220 euros when determining whether she has exceeded the threshold.
So, 90,000 euros minus 11,220 euros would be 78,780 euros.
If we look at the updated VAT threshold on services, which is 80,000 euros, Sarah is not obliged to register for VAT, though she may voluntarily opt for it.

Exemption from VAT Ireland

In Ireland, businesses might not have to register for VAT if they meet certain criteria. This may include having a turnover less than the decided threshold, conducting only VAT-exempt activities, or not being classified as a business.

However, to qualify for the VAT exemptions, the person or business must not be liable to pay reverse charges (a mechanism in which VAT responsibility comes down to the customer instead of the owner). They must also not pay VAT or intra-community acquisitions (purchasing goods from EU member states).

VAT Rates in Ireland

Aside from threshold, a country’s current VAT rates can also influence their payments. Here is a breakdown of VAT rates for Ireland.

23% standard VAT rate on all goods and services that do not fall in the reduced rate categories. Some of them include car parts, alcohol, car accessories, audio equipment, cosmetics, detergents, refrigerators, furniture, furnishings, furniture, machinery of all sorts, pet food, tobacco, petrol, and paper.
13.5% is the reduced VAT rate on some select items like coal, vet fees, contracting services, building services, cleaning and maintenance services, and short-term car rentals.
9% is another reduced rate VAT category. It applies to gas and electricity according to the 2024 budget plan. It was originally reduced from 13.5% to 9% in the tourism and hospitality sector for services like cinemas, museums, amusement parks, theaters, and more.
4.8% VAT is the reduced rate for agriculture. It applies to the gray houses, horses, and other livestock, excluding chickens.
Zero VAT rating applies to all sorts of dairies, books, coffee, children’s clothes, fruit trees, vegetable seeds, fertilizers, oral medicines, and animal feed. In the 2024 budget plan, it was announced that the VAT rate for ebooks and audiobooks would decrease from 9% to 0%.
A few service categories are also exempted from the VAT payments. This includes educational services, medicine, financial services, live music, and theatrical performances.

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Who Should Register for VAT?

If the turnover of your business for a period of 12 months exceeds the above-given threshold, you must register for VAT payments. In this case, non-established, non-resident businesses have the requirement of obligatory registration on taxable goods despite the threshold.

However, as discussed, businesses not exceeding the VAT threshold may also register voluntarily for the payments. They do this to recover the input VA, which is generally deductible. To be eligible for voluntary registration, the entity must be able to demonstrate that they are dealing with taxable supplies in the country or have a business that does so.

Register for VAT Ireland

The applications for VAT registration are made electronically through the online Irish Revenue Authority Services. For this, they have to sign up for an account on the myAccount portal and complete the required form and documents.

However, some applicants may not get access to the myAccount portal like no Irish residents, NGOs, unincorporated bodies, executors, and collection agents. For this, businesses are required to submit their paper application at the office of the Revenue Commissioner.

Moreover, when applying for registration, applicants must indicate whether they are selecting domestic-only or intra-EU VAT taxes. Usually, the documents required to register for the VAT include the TR1 form (individual, trusts, partnerships, and sole traders) or TR2 (limited companies), along with other relevant documents.

A firm is responsible for making VAT payments from the date it is required to be registered or elected to get registered, not from the date it applies for or gets its registration number. So, if taxable supplies are made in this period, the business does not have to make any payments. Also, once you have registered, the government gives you the right to reclaim the amount on deductible transactions.

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VAT Filing Frequency

Typically, the most common period for businesses for VAT returns is bi-monthly. That said, companies with constant repayments may be required to submit their contributions every month.

If your annual VAT liability remains between 3000 and 14000 euros, the payment period is four months.
If your annual VAT liability remains below 3000 euros, the period becomes six months.

Moreover, all businesses have to provide an annual return of trading details. It gives a detailed account of your VAT submissions throughout the year.

What is the difference between VAT exemption and zero-rating?

If a business is making taxable supplies or goods, including the zero-rated ones, they are free to reclaim their VAT payments from the government. However, in terms of goods and services exempted from VAT, they cannot reclaim the deductible money.

In essence, the VAT registration in Ireland is a two-tier process, for businesses with exceeding turnover than the decided threshold and vice versa. If you are a voluntary VAT business, get a consultation from a professional before deciding on registration. For any queries regarding VAT payments and calculations, you are free to contact the Irish Revenue Authority Services.