Tax Registration with Revenue: CT & VAT
If you are running a business in Ireland, you need to register for tax with the Revenue Commissioners. Tax registration is the process of informing the Revenue about your business activities and the types of taxes you are liable for. By registering for tax, you can comply with your tax obligations and avoid penalties and interest charges.Failure to register for tax can result in penalties, fines, and legal action.
Here is a comprehensive guide on tax registration with revenue in Ireland, specifically for CT and VAT. This guide will cover everything you need to know about tax registration. By the end of this guide, you will have a thorough understanding of tax registration in Ireland and how it applies to your business
What is Tax Registration?
- Tax registration is the act of notifying the Revenue about your business and the taxes you are required to pay.
- Tax registration is mandatory for all businesses that operate in Ireland, regardless of their size, structure, or legal status.
- Tax registration allows the Revenue to identify your business, issue you a tax reference number, and send you tax returns and notices.
- Tax Compliance: Tax registration is not the same as tax compliance. Tax compliance is the act of filing your tax returns and paying your tax liabilities on time.
- Tax registration is the first step towards tax compliance, but it does not guarantee that you are fulfilling your tax obligations. You still need to keep accurate records, calculate your tax liabilities, and file your tax returns on time.
Why is Tax Registration Important?
Tax registration is important for several reasons:
- Tax registration is a legal requirement for all businesses that operate in Ireland. If you fail to register for tax, you may face penalties, interest charges, and prosecution.
- Tax registration enables you to claim tax reliefs, credits, and refunds that you are entitled to. For example, if you register for VAT, you can claim back the VAT you paid on your business purchases.
- Tax registration helps you to avoid tax audits and disputes. If you register for tax, you can demonstrate that you are aware of your tax obligations and that you are willing to comply with them. This can reduce the risk of being audited by the Revenue or being involved in a tax dispute.
How to Register for Tax?
Registering for tax in Ireland is a systematic process. It begins with acquiring a Personal Public Service Number (PPSN) or a Tax Reference Number. Subsequently, you can register for taxes using the Revenue Online Service (ROS) portal. Here’s a simple breakdown of the steps involved:
1. Determine Your Tax Obligations:
The types of taxes you need to register for depending on your business activities, income, and expenses. The most common types of taxes for businesses are corporation tax (CT), value-added tax (VAT), pay-as-you-earn (PAYE), and relevant contracts tax (RCT).
2. Obtain a tax reference number:
A tax reference number is a unique identifier that the Revenue assigns to your business. You need a tax reference number to register for tax, file your tax returns, and communicate with the Revenue. You can obtain a tax reference number by applying for a business name, registering a company, or registering as a sole trader or a partnership.
3. Register for tax via ROS:
You can register for tax online through the ROS or by filling out a form TR1 or TR2 and sending it to the Revenue. You can register for tax before or after you start your business, but you should do it as soon as possible to avoid missing any deadlines or payments.
Types of Taxes
The types of taxes you need to register for depending on your business activities, income, and expenses. The most common types of taxes for businesses are:
Corporation tax (CT):
This is the tax you pay on the profits of your company. The standard rate of CT is 12.5% for trading income and 25% for non-trading income. You need to register for CT if:
- you are a company incorporated in Ireland or a company that is managed and controlled in Ireland.
- you are a foreign company that has a branch or a permanent establishment in Ireland.
Value-added tax (VAT):
This is the tax you charge on the sale of goods and services in Ireland. The standard rate of VAT is 23%, but there are reduced rates for certain goods and services. You need to register for VAT if:
- your annual turnover exceeds or is likely to exceed certain thresholds. The thresholds vary depending on the type of goods and services you sell. For example, the threshold for the supply of goods is €75,000 and the threshold for the supply of services is €37,500.
- your turnover is below the thresholds, but you need to prove that you are carrying on a genuine business activity.
Pay as you earn (PAYE):
This is the tax you deduct from the wages and salaries of your employees. The rate of PAYE depends on the income and personal circumstances of your employees. You need to register for PAYE if:
- you have employees or if you are an employee of your own company.
- you are a sole trader or a partner and you pay yourself a salary or a pension.
Relevant contracts tax (RCT):
This is the tax you deduct from payments you make to contractors for construction, forestry, or meat processing services. The rate of RCT depends on the tax compliance status of the contractor. You need to register for RCT if:
- you are a principal contractor, which means that you are a person who pays contractors for these services.
- you are a subcontractor, which means that you are a person who provides these services to a principal contractor.
Tax Registration &Filing Deadlines
The tax registration deadlines vary depending on the types of taxes you need to register for. The general deadlines are:
Corporation tax (CT):
You need to register for CT within eight months of starting your business or within eight months of becoming liable for CT, whichever is later.
You also need to file your first CT return and pay your first CT liability within nine months and 23 days of the end of your accounting period.
Value-added tax (VAT):
You need to register for VAT within 30 days of exceeding or expecting to exceed the VAT thresholds.
You also need to file your first VAT return and pay your first VAT liability within 19 days of the end of your VAT period. The VAT period is usually two months, but it can be different depending on your turnover and business activity.
Pay as you earn (PAYE):
You need to register for PAYE before you make your first payment to your employees or yourself.
You also need to file your first PAYE return and pay your first PAYE liability within 14 days of the end of the month in which you made the payment.
Relevant contracts tax (RCT):
You need to register for RCT before you make your first payment to a contractor or before you receive your first payment from a principal contractor.
You also need to file your first RCT return and pay your first RCT liability within 23 days of the end of the month in which you made or received the payment.
Tax Registration Fees
There are no fees for registering for tax with the Revenue. However, you may incur other costs associated with tax registration, such as:
- Professional fees: You may need to hire an accountant, a tax advisor, or a company formation agent to help you with your tax registration and compliance.
- Bank fees: You may need to open a bank account for your business and pay fees for transactions, statements, and overdrafts.
- Software fees: You may need to use software to manage your accounting, invoicing, and tax filing. You may need to pay fees for the software license, subscription, or support.
Get Started with us Today!
If you need help with your tax registration and compliance, you can rely on Peak Accounting Solutions, a leading Irish company formation service provider. We can help you with:
- Choosing the best business structure for your startup
- Registering your business name, company, or partnership
- Obtaining your tax reference number and registering for tax
- Filing your tax returns and paying your tax liabilities
- Claiming your tax reliefs, credits, and refunds
- Managing your accounting, bookkeeping, and payroll
- Advising you on tax planning and optimization
To get started, contact us! You can also request a free consultation and a quote for your tax registration and compliance needs. We will be happy to assist you and answer any questions you may have.
Frequently Asked Questions
1.How do I know if I need to register for tax?
You need to register for tax if you are carrying on a business activity in Ireland and you are liable for any of the types of taxes mentioned above. You can consult your tax advisor to determine your tax liability and registration requirements.
2. How long does it take to register for tax?
It depends on the method and the type of tax you are registering for. If you register for tax online through the ROS, you can receive your confirmation and tax registration certificate within a few days. If you register for tax by post, it may take longer, depending on the processing time of the Revenue. You should register for tax as soon as possible to avoid missing any deadlines or payments.
3. Can I register for tax for more than one type of tax at the same time?
Yes, you can register for tax for more than one type of tax at the same time. You can use the same form TR1 or TR2 to register for CT, VAT, PAYE, and RCT. You just need to tick the boxes for the types of taxes you want to register for and provide the relevant information.
4. Can I cancel or change my tax registration?
Yes, you can cancel or change your tax registration if your business circumstances change. For example, if you stop trading, change your business name, or change your business activity, you may need to cancel or change your tax registration. You can do so online through the ROS or by filling out a form TR1 or TR2 and sending it to the Revenue. You should inform the Revenue as soon as possible to avoid any penalties or interest charges.
5. What are the penalties for not registering for tax or registering late?
If you fail to register for tax or register late, you may face penalties, interest charges, and prosecution. The penalties and interest charges depend on the type and amount of tax you are liable for and the duration of your non-compliance. The prosecution can result in fines or imprisonment. You can avoid these consequences by registering for tax on time and complying with your tax obligations.