Do You Need to Register for VAT in Ireland? A Plain-English Guide

AccountantDirectory.ie

If you're running a business or thinking of starting one, at some point you'll have to work out whether you need to register for VAT. Get it wrong and you're either charging VAT you don't need to, or you're liable for VAT you didn't collect, plus interest, once Revenue catches it. This guide explains how the thresholds work and where people commonly trip up.

Thresholds and rates below are current as of the time of writing per revenue.ie, but Revenue does revise them, so confirm the live figures there (or with an accountant) before you rely on this for a registration decision.

When registration is mandatory

Registration becomes compulsory once your turnover, on a rolling 12-month basis, crosses one of two thresholds:

  • €85,000 if 90% or more of your turnover is from the supply of goods you manufactured or produced from zero-rated materials
  • €42,500 for everything else, i.e. most services businesses, and any mixed goods/services business that doesn't meet the 90% goods test

There's also a €10,000 threshold specifically for mail-order, distance sales, and cross-border digital (telecoms/broadcasting/electronic) services sold to consumers in other EU states.

A few things catch people out:

  • It's rolling 12 months, not a calendar or tax year. A busy few months can push you over even if your annual total looks fine on paper.
  • You must register before you cross the threshold, not after. If you have reasonable grounds to believe you'll exceed it in the next 12 months, Revenue expects you to register ahead of that, not retroactively once you notice.
  • The 90% goods test is stricter than it sounds. A retailer who also installs or fits what they sell (think a flooring shop that also fits the floor) needs that fitting revenue to stay under 10% of turnover to qualify for the higher €85,000 threshold. Cross that and you're assessed on the €42,500 services threshold instead.
  • Zero-rated supplies still count toward the threshold. Most food and children's clothing is zero-rated, not exempt, so it counts as taxable turnover for this purpose. Genuinely exempt supplies (certain medical and financial services, for example) don't count.

Voluntary registration

You can register for VAT even if you're under the threshold. This is common when:

  • you're a new business with significant start-up costs and want to reclaim the VAT on them
  • your customers are VAT-registered businesses who'd rather deal with a VAT-registered supplier
  • you want the credibility of a VAT number for B2B sales

The trade-off: once registered, you must charge VAT on your sales and file returns (typically bi-monthly), whether or not you're near the threshold. If you later deregister, Revenue can look back and claw back VAT you reclaimed if it turns out you reclaimed more than you paid over the life of the registration, so don't register voluntarily without thinking through the exit too.

How to actually register

Registration is done through Revenue's Online Service (ROS), using a TR1 form (individuals, sole traders, partnerships) or TR2 (companies). Processing is typically quick once submitted correctly, Revenue publishes current turnaround times on ROS.

Worth getting a second opinion if...

  • you're near either threshold and unsure which one applies to your business (mixed goods/services is the classic grey area)
  • you supply across EU borders, or sell digitally to consumers in other EU states
  • you're deciding whether voluntary registration helps or hurts your specific cash flow and customer base
  • you've realised you should have registered already, in which case get advice before contacting Revenue, not after

The bottom line

The thresholds are simple in principle; the edge cases (mixed trading, EU sales, voluntary registration exit costs) are where it's easy to get wrong. If you're close to a threshold or your business doesn't fit neatly into "goods" or "services," it's worth a short conversation with an accountant rather than guessing.

Not sure which side of the line you're on? Find an accountant near you who can look at your actual turnover and structure, not just the general rule.

This article is general information based on Revenue.ie guidance at the time of writing. It isn't tax advice for your specific circumstances. VAT thresholds and rates are set by Revenue and can change; always confirm current figures at revenue.ie.