VAT Registration in Ireland: All You Need to Know for Your Business

VAT Registration in Ireland

By Shannon Power, 4th October 2024

Starting a new business in Ireland comes with many responsibilities, and one of the most important tasks is ensuring your business is correctly registered for all the required taxes. Among these, Value Added Tax (VAT) registration is a key requirement for many businesses. While the process might seem daunting initially, VAT registration in Ireland is simpler than expected. In this guide, we’ll walk you through the essentials of VAT, including when and how to register, so you can focus on growing your business with confidence.

What is Value Added Tax (VAT)?

Value Added Tax (VAT) is essentially a tax on the sale of goods and services in Ireland. It is added to the price of the product or service, and while the consumer ultimately pays the tax, businesses are responsible for collecting it on behalf of the government. The collected VAT is then reported and remitted to the Revenue Commissioners through regular VAT Returns. The most common period for filing VAT Returns in Ireland is bi-monthly, meaning it must be filed every two months. Other frequencies of filing VAT returns are monthly, quarterly, or annually, but the company must apply for it to revenue and meet certain criteria.

The standard VAT rate for most goods and services in Ireland is 23%, while a reduced rate of 13.5% applies to items like fuels, construction services, and take-out food. VAT registration in Ireland is mandatory only if your business meets specific turnover thresholds.

Current VAT Thresholds:

  • €40,000 for service providers
  • €80,000 for suppliers of goods, or for businesses supplying both goods and services where goods account for 90% or more of the turnover

If your turnover exceeds these thresholds, you must register for VAT within 30 days to avoid penalties. However, even if your business does not currently exceed these limits, voluntary registration is worth considering. Registering early allows you to charge VAT on your sales and reclaim input VAT on business purchases, which can improve your cash flow.

How to Register for VAT

Businesses can apply for a VAT number through the Revenue Online Service (ROS) by completing one of the following forms, depending on your business structure:

TR1 Form – For Sole Traders, Trusts, and Partnerships

TR2 Form – For Companies

Or you can appoint a qualified agent to assist you with this registration process. If you require assistance, please do not hesitate to contact a member of our team through our online contact form!

Before you can register, you must also provide a valid reason for needing a VAT number. You would need to prove to Revenue that:

  • The business is actively trading in Ireland, either by selling goods or services or purchasing them from Irish suppliers.
  • You have invoices from Irish suppliers and customers.
  • The business owner or one of the directors is an Irish director
  • You have a physical office in Ireland

Once your application has been submitted and all information is in order, the usual wait time to receive your VAT number is 7-10 working days.

Two-Tier VAT Registration Process

In 2019, Ireland introduced a two-tier VAT registration system: ‘domestic-only’ VAT registration for trading within Ireland and non-EU countries, and ‘intra-EU’ VAT registration for those trading with EU businesses. While the ‘domestic-only’ process is streamlined, the ‘intra-EU’ process requires additional documentation and verification.

To qualify for ‘intra-EU’ VAT registration, businesses must provide evidence of trade or an intention to trade with other EU member states, such as:

  • Invoices
  • Leases
  • Contracts
  • Detailed business plans
  • Other supporting documents

Intention to Trade Application

If a business hasn’t yet begun trading but wants to prepare for tax compliance, it can apply for VAT registration through an ‘Intention to Trade’ application. This option allows businesses to get ahead, provided they can present substantial evidence of future trade activity, proving they will become an accountable person.

Acceptable evidence includes:

  • Leases
  • Contracts
  • Tools of the trade

Conclusion

Navigating VAT registration in Ireland may seem complex at first, but with a clear understanding of the process and the right preparation, it becomes a manageable task. Whether you’re a sole trader, partnership, or company, ensuring your business is VAT-compliant is crucial for avoiding penalties and taking advantage of the benefits. By understanding the thresholds, the two-tier system, and the options available—such as the ‘Intention to Trade’ application—you can streamline your VAT registration and focus on what matters most: growing your business.

If you require any assistance with filing for VAT, or any other Tax Registration applications, Company Bureau can walk you through the whole process, step-by-step. Give us a call at +353(0)1 6461625 or complete our online contact form.

Disclaimer This article is for guidance purposes only. It does not constitute legal or professional advice. No liability is accepted by Company Bureau for any action taken or not taken in reliance on the information set out in this article. Professional or legal advice should be obtained before taking or refraining from any action as a result of this article. Any and all information is subject to change.