If you are running a business in Ireland or selling goods or services to Irish customers, you may need to register for VAT in Ireland. VAT stands for value-added tax, which is a type of consumption tax that is added to the price of goods and services. VAT is collected by businesses on behalf of the government and paid to the Revenue Commissioners, the Irish tax authority.
In this blog post, we will explain what VAT is, why you need to register for it in Ireland, what are the VAT rates and thresholds, how to file and pay your VAT returns, and what are the benefits and challenges of VAT registration in Ireland. We will also show you how Peak Accounting Solutions, a leading Irish company formation service provider, can help you with VAT registration and compliance in Ireland.
What is VAT?
VAT is a tax that is charged on most goods and services that are sold or supplied in Ireland or imported from outside the European Union (EU).
VAT is also charged on some goods and services that are exported from Ireland to other EU countries. The standard rate of VAT in Ireland is 23%, but there are also reduced rates of 13.5%, 9%, 4.8%, and 0% for certain goods and services. Some goods and services are exempt from VAT, such as education, health, financial, and insurance services.
why do you need to register for VAT in Ireland?
You need to register for VAT in Ireland if you are:
- A person or entity that carries on a taxable activity in Ireland, such as selling goods or services, leasing or hiring goods, or providing professional services.
- A person or entity that is established outside Ireland but supplies goods or services to customers in Ireland, such as online sellers, distance sellers, or electronic service providers.
- A person or entity that is established in Ireland but supplies goods or services to customers in other EU countries, such as intra-community suppliers or acquirers.
By registering for VAT in Ireland, you will be able to:
- Charge VAT on your sales and issue VAT invoices to your customers.
- Claim VAT credits on your purchases and expenses that are related to your taxable activity.
- File VAT returns and pay VAT to the Revenue Commissioners on a periodic basis.
- Comply with the Irish and EU VAT rules and regulations.
When&Who should register for VAT in Ireland?
Not all businesses need to register for VAT in Ireland. There are certain thresholds and criteria that determine whether you need to register for VAT or not.
The main factors that affect your VAT registration obligation are:
- The type of goods or services that you supply.
- The place of supply of your goods or services.
- The value of your turnover or sales.
Depending on these factors, you may need to register for VAT in Ireland under one of the following categories:
- Domestic VAT registration:
This applies to businesses that supply goods or services within Ireland only. You need to register for VAT if your annual turnover exceeds €37,500 for services or €75,000 for goods. You can also register for VAT voluntarily if your turnover is below these thresholds, but you must remain registered for at least two years.
- Intra-EU VAT registration:
This applies to businesses that supply goods or services to or from other EU countries. You need to register for VAT if you are involved in any of the following transactions:
1. Distance Sales to EU Customers (B2C)
If you’re selling goods to non-VAT registered customers in other EU countries (distance sales), you must register for VAT if sales exceed €35,000, or the destination country’s threshold if it’s lower. Voluntary registration in the destination country is possible for sales below these thresholds.
2. Acquiring Goods from EU Suppliers (B2B)
For businesses acquiring goods from VAT-registered suppliers in other EU countries, VAT registration is mandatory when annual purchases exceed €41,000.
3. Supplying Services to Non-VAT EU Customers (B2C)
When providing services to non-VAT registered EU customers, registration in the customer’s country is required, except for MOSS-eligible services (like electronic, telecommunication, broadcasting), where you can register in one EU country and cover all EU customers.
4. Supplying Services to VAT-Registered EU Customers (B2B)
For services provided to VAT-registered customers in other EU countries, VAT registration in the customer’s country is not needed as they handle VAT via reverse charge. However, if you’re based or have a fixed establishment in Ireland, you must register for VAT in Ireland.
- Non-EU VAT registration:
This applies to businesses that supply goods or services to or from countries outside the EU. You need to register for VAT if you are involved in any of the following transactions:
1. Exporting Goods Outside the EU
- No VAT Registration Needed for Exports Only: If your business solely exports goods from Ireland, VAT registration isn’t required since exports are zero-rated.
- VAT Registration for Mixed Transactions: However, if you also supply goods or services within Ireland or the EU, or import goods into Ireland from non-EU countries, you must register for VAT.
2. Importing Goods from Non-EU Countries
- Mandatory VAT Registration for Imports: When importing goods into Ireland from outside the EU, VAT registration is compulsory, as VAT is applied at the point of entry.
- Deferred VAT Payment Option: Businesses can opt for a deferred payment authorization, allowing them to defer VAT payments on imports until their VAT return is filed.
3. Providing Services to Non-EU Customers (B2C)
- No VAT Registration for Exclusively Non-EU B2C Services: Supplying services only to non-EU customers doesn’t necessitate VAT registration, as these services are outside the VAT scope.
- VAT Registration for Mixed Services: VAT registration in Ireland is required if you also provide services within Ireland or the EU, or receive services from non-EU countries.
4. Providing Services to VAT-Registered Non-EU Customers (B2B)
- Exclusion from VAT for B2B Services to Non-EU: Providing services to VAT-registered customers outside the EU doesn’t require VAT registration, as these services are VAT-exempt.
- VAT Registration for Mixed Business Activities: If your business includes service provision within Ireland or the EU, or receiving services from non-EU countries, VAT registration is necessary.
How to register for VAT in Ireland?
Registering for VAT in Ireland involves the following steps:
1. Tax Registration Form Completion:
Fill out the tax registration form available online through Revenue Online Service (ROS) for businesses in Ireland. For businesses outside Ireland, use the paper form.
2. Provide Proof of Trade:
Show evidence of your business activities in Ireland, such as invoices or contracts, as part of the registration process.
3. Evaluation by Revenue Authorities:
Your application, along with the trade evidence, will be reviewed by Revenue to determine if it meets the VAT registration criteria.
4. Notification of Decision:
Revenue will either approve or reject your VAT registration. If approved, you’ll receive a VAT number.
5. Handling Rejection:
If your application is rejected, address the highlighted issues, gather the necessary documents, and reapply after resolving these concerns.
6. Maintain VAT Compliance:
Once registered, ensure you understand and comply with all VAT obligations, including regular VAT returns and payments.
What do you need to apply for a VAT number in Ireland?
To apply for a VAT number in Ireland, you need to provide specific information and documents as part of the registration process. The key requirements include:
1. Business Details:
Provide comprehensive information about your business, including the legal name, trading name (if applicable), business address, and contact details.
2. Business Structure:
Specify the type of business structure, such as sole trader, partnership, or limited company. Each structure has different documentation requirements.
3. Tax Information:
Provide your tax reference number. For individuals, this is typically your PPSN (Personal Public Service Number), and for companies, it’s the CRO (Companies Registration Office) number.
4. Bank Account Details:
You’ll need to provide details of your business bank account, including the account number and sort code.
5. Description of Business Activities:
A clear description of your business activities is necessary to determine the applicable VAT rate and liability.
6. Projected Turnover:
Provide an estimate of your annual turnover. This is important for determining whether you are above the VAT registration thresholds.
7. Proof of Trading:
Revenue may require evidence of trading or intention to trade, such as invoices, business contracts, or lease agreements.
8. Additional Information for Non-EU Applicants:
If you’re applying from outside the EU, additional documentation such as proof of establishment may be required.
9. Electronic Registration:
Registration is typically done electronically through Revenue’s Online Service (ROS). Ensure you have access to ROS and the necessary digital credentials to complete the registration.
10. Professional Assistance:
It can be beneficial to seek assistance from an accountant or a tax professional, especially if your VAT obligations are complex.
Once you have gathered all the required information and documents, you can proceed with the VAT registration process through ROS. The processing time can vary, so it’s advisable to apply well in advance of when you need the VAT number for your business transactions.
What are the VAT rates and thresholds in Ireland?
The VAT rates and thresholds in Ireland vary depending on the type of goods or services that you supply and the place of supply of your goods or services. The main VAT rates and thresholds in Ireland are:
Standard rate:
This is the general rate of VAT that applies to most goods and services that are supplied in Ireland or imported from outside the EU. The standard rate of VAT in Ireland is 23%.
Reduced rates:
These are lower rates of VAT that apply to certain goods and services that are supplied in Ireland or imported from outside the EU. The reduced rates of VAT in Ireland are:
- 13.5%: This rate applies to items such as fuel, electricity, gas, catering, accommodation, hairdressing, cleaning, repairs, and renovations.
- 9%: This rate applies to items such as newspapers, magazines, books, e-books, sporting facilities, cinemas, theatres, museums, and amusement parks.
- 4.8%: This rate applies to items such as livestock, greyhounds, and the hire of horses.
- 0%: This rate applies to items such as food, children’s clothing, footwear, oral medicines, medical equipment, and exports.
- Exempt: There are goods and services that are not subject to VAT in Ireland or in the EU. Exempt goods and services include education, health, financial, and insurance services.
What are the benefits and challenges of VAT registration in Ireland?
VAT registration in Ireland can have both benefits and challenges for your business.
Benefits:
Some of the benefits of VAT registration in Ireland are:
- You can claim VAT credits on your purchases and expenses that are related to your taxable activity, which can reduce your costs and increase your profits.
- You can enhance your reputation and credibility as a business, as VAT registration shows that you are compliant with the Irish and EU tax laws and regulations.
- You can expand your market and customer base, as VAT registration allows you to sell goods or services to customers in Ireland and other EU countries.
Challenges:
Some of the challenges of VAT registration in Ireland are:
- You have to charge VAT on your sales and issue VAT invoices to your customers, which can increase your prices and affect your competitiveness.
- You have to file and pay your VAT returns on a periodic basis, which can increase your administrative and financial burden and risk of errors and penalties.
- You have to comply with the Irish and EU VAT rules and regulations, which can be complex and change frequently.
How do you file and pay your VAT returns in Ireland?
Once you are registered for VAT in Ireland, you need to file and pay your VAT returns on a periodic basis(Bimonthly, Quarterly, Annually). A VAT return is a document that shows the amount of VAT that you have charged on your sales and the amount of VAT that you have paid on your purchases and expenses.
To file and pay your VAT returns in Ireland, you need to follow these steps:
- Calculate VAT Liability:
Determine VAT on sales and paid on purchases/expenses for the period. Maintain records of invoices and receipts, applying appropriate VAT rates and rules.
- Complete VAT Return Form:
Fill in the VAT return with details like VAT registration number, period, sales and purchases values, VAT charged and paid, and net VAT amount. Use ROS online, paper forms, accounting software, or a tax agent.
- Submit VAT Return:
Submit the return to Revenue Commissioners by the 19th day of the month after the period ends (e.g., March 19th for Jan-Feb period). Use ROS online or post, and obtain a confirmation and reference number.
- Pay VAT Liability:
Pay any owed VAT by the same deadline as the return submission. Make payments via ROS, direct debit, bank transfer, cheque, or cash, and receive confirmation and a reference number.
How can Peak Accounting Solutions help you with VAT registration and compliance in Ireland?
Peak Accounting Solutions is a leading Irish company formation service provider that can help you with VAT registration and compliance in Ireland. We have a team of experienced and qualified accountants and tax experts who can assist you with:
- Applying for VAT registration in Ireland.
- Choosing the best type of VAT registration for your business, such as domestic, intra-EU, or non-EU VAT registration.
- Calculating and filing your VAT returns.
- Choosing the best frequency and method of filing and paying your VAT returns, such as monthly, bi-monthly, quarterly, or annually, and online, direct debit, bank transfer, cheque, or cash.
- Claiming and verifying your VAT credits on your purchases and expenses that are related to your taxable activity.
- Complying with the Irish and EU VAT rules and regulations, such as the VAT rates, thresholds, exemptions, place of supply, reverse charge, MOSS, and distance sales.
- Advising and updating you on the latest changes and developments in the Irish and EU VAT laws and regulations, such as the Brexit implications, the e-commerce VAT package, and the VAT quick fixes.
We can also help you with other aspects of Irish company formation, such as:
We have a high success rate and a low fee structure, and we offer a free consultation and a money-back guarantee. Contact Peak Accounting Solutions today for your VAT registration and compliance needs in Ireland!
Frequently Asked Questions
Q: How long does it take to register for VAT in Ireland?
Obtaining a VAT number in Ireland usually takes around 28 working days post-application, assuming no additional information is requested by Revenue. If Revenue needs more details about your trade activities, they typically allow 30 days for a response. Promptly addressing these requests and providing complete, accurate information in your application can help avoid delays.
Q: How do I cancel or deregister my VAT registration in Ireland?
You can cancel or deregister your VAT registration in Ireland if you stop carrying on a taxable activity in Ireland or if your turnover falls below the VAT registration thresholds. To cancel or deregister your VAT registration in Ireland, you need to follow these steps:
- Step 1: Notify the Revenue Commissioners.
- Step 2: Complete your final VAT return.
- Step 3: Pay or claim your final VAT liability.
- Step 4: Receive your VAT cancellation or deregistration confirmation.
Can Non-Resident Businesses Register for VAT in Ireland?
Yes, non-resident businesses can register for VAT in Ireland. There’s no minimum threshold for non-resident businesses, meaning they need to register for VAT as soon as they start supplying goods or services in Ireland.
Q: What are the penalties and interest for late or incorrect VAT returns or payments in Ireland?
If you fail to file or pay your VAT returns or payments on time or correctly in Ireland, you may face penalties and interest from the Revenue Commissioners. Some of the penalties and interest that you may face are:
- Late filing penalty: The late filing penalty is €100 for each month or part of a month that your VAT return is late, up to a maximum of €4,000 per year.
- Late payment penalty: The late payment penalty is 10% of the amount of VAT that you owe, plus interest at the daily rate of 0.0219%, up to a maximum of 100% of the amount of VAT that you owe.
- Incorrect return penalty: The incorrect return penalty is a percentage of the amount of VAT that you understate or overstate, depending on the nature and extent of your error. The percentage ranges from 3% to 100%.
- Surcharge: This is a penalty that applies if you fail to file a VAT return or pay a VAT liability that is due as a result of a VAT audit or inspection. The surcharge is 10% of the amount of VAT that is due, up to a maximum of €4,000.
Q: How do I claim a VAT refund in Ireland?
You can claim a VAT refund in Ireland if you have paid more VAT than you have charged on your sales and purchases for the relevant period.
Get Expert VAT Assistance with Peak Accounting Solutions!
Need help with VAT registration and compliance in Ireland? Contact Peak Accounting Solutions! Our experienced team offers comprehensive services for all your VAT needs, ensuring you comply with Irish and EU regulations. We cater to both local and international businesses with affordable, reliable solutions. Contact us today for a free consultation – email, or online. Let us handle your VAT concerns efficiently!
