Are you a business owner navigating the Irish tax landscape and looking to understand VAT registration in Ireland? In this comprehensive guide, we’ll walk you through getting a VAT number, ensuring you have the knowledge to register for VAT and fulfil your financial obligations successfully.
It’s important to note that once you complete VAT registration in Ireland, you must charge it on the products and services you sell. You must also account for VAT in your VAT Returns and pay the tax to Revenue, usually every two months.
We strongly advise contacting an accountant for tailored advice. Our Client Services Team is here to guide you through our service options, ensuring that you receive expert support and guidance for a smooth Irish VAT registration process.
What is Value Added Tax (VAT)?
VAT, or Value Added Tax, is a sales tax added to the price of goods and services at every stage of production or distribution. If you’re a business owner, it’s important to know that you may need to collect this tax from your customers, usually added to the price of your product or service, and then pass it on to the government through a VAT Return.
When to register for VAT in Ireland?
Before obtaining a VAT number, it’s crucial to determine if your business requires one. VAT registration isn’t generally necessary for starting a new business in Ireland except under specific conditions. Your business must meet certain criteria before applying VAT to your products or services.
Keep in mind that both Sole Traders and Limited Companies can qualify for VAT registration. If you are determining whether your business should register for VAT, we recommend you speak to an accountant because registering for VAT can add administrative burden to your business.
How to register for VAT in Ireland?
- Complete a tax registration form: Fill out the appropriate tax registration form. You can do this online through Revenue Online Service (ROS) if your business is set up in Ireland. There is a paper form if your business is established outside of Ireland.
- Evidence of trade: As part of the registration process, you must provide proof that your business is engaged in trade with Ireland. This could include invoices, contracts, or other documentation demonstrating your business activities within the country.
- Assessment by Revenue: The Revenue authorities will review your provided information and evidence. They will assess whether your application meets the criteria for VAT registration based on your trade activities and other relevant factors.
- Acceptance or rejection: Revenue will decide to either accept or reject your VAT registration application. If approved, you will be issued a VAT number.
- If rejected: If your application is denied, don’t be discouraged. You can gather any additional or missing documents and address the issues Revenue raises. Once you’ve resolved the concerns, you can resubmit your application later.
- Ongoing compliance: Once you have your VAT number, it’s essential to understand and fulfil your VAT obligations, including the timely filing of 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 typically need to provide the following:
- Proof of requirement
- Trading activity in Ireland
- Invoices from Irish suppliers and customers
- Information on the directors’ residence
- Physical office address
- Supporting documents could include contracts, business plans, bank statements, and other relevant records.
How long does it take to get an Irish VAT number?
After Revenue receives your application, obtaining an Irish VAT number typically takes around 28 working days. This timeframe applies when there are no additional inquiries or requests for more information from Revenue.
Revenue might require further clarification or evidence regarding your trade activities before issuing your VAT number. Revenue usually grants you a 30-day window to respond if such issues arise. We recommend promptly addressing these requests to avoid delays in processing your application.
To ensure a smooth and timely process, provide accurate and complete information in your initial application and promptly respond to any enquiries from Revenue. Remember that the exact duration may vary based on individual circumstances and any interactions with Revenue during the application review.
Reasons why Revenue might reject your application
- Lack of local employees
- Absence of customers in Ireland
- No trade with Irish suppliers
- Directors location
- Incomplete or inaccurate information
- Failure to address enquiries
If Revenue rejects your application, you can address the identified issues, gather necessary documentation, and resubmit your application for reconsideration. Seeking professional guidance and ensuring accurate and comprehensive documentation can help prevent potential rejection.
Should I register for VAT in Ireland? (Mandatory VAT registration)
There are certain instances when VAT registration is mandatory.
VAT registration threshold
If your business’s sales of goods or services exceed the VAT registration thresholds (€37,500 for services or €75,000 for goods within 12 months), VAT registration becomes mandatory. If your sales are below these thresholds, you can register voluntarily.
If you engage in cross-border trade within the EU or receive services from outside Ireland, VAT registration might be necessary due to Intra-Community Acquisitions (ICA) and receipt of services criteria.
Should I register for VAT in Ireland? (Non-mandatory VAT registration)
Whether to register for VAT depends on your specific business circumstances and factors. We recommend that you seek professional advice for tailored guidance on your circumstances.
Here are some instances you may voluntarily register for VAT:
Claiming VAT back
Registering for VAT allows you to reclaim VAT paid on business-related expenses, which can improve your cash flow. It can also lend a professional image to your business, especially if dealing with other VAT-registered businesses. However, VAT registration comes with administrative responsibilities, including record-keeping, filing VAT returns, and collecting VAT from customers. Consider if your business is prepared to handle these additional tasks.
Customer and supplier perception
Some businesses may think that being VAT-registered might instil confidence in customers and partners, as it can signify that your business has reached a certain level of turnover and credibility. However, it’s essential to take a well-rounded approach before making this decision and be mindful of the potential financial implications, especially for smaller businesses. Consider whether the benefits of enhanced credibility outweigh the additional costs.
Frequently Asked Questions
How to charge VAT?
Charging VAT involves adding a specified percentage to the price of your goods or services and then remitting that collected VAT to the tax authorities. Charging VAT accurately is crucial for maintaining legal and financial compliance. If you need support with your VAT obligations, contact our team today to ensure a smooth VAT process for your business.
How to cancel VAT registration?
If you wish to cancel your VAT registration, notify the Irish Revenue Commissioners as soon as possible.
You can cancel VAT registration if your trade ceases, your turnover drops below the threshold, your application was submitted incorrectly, or your business changes.
Please note that cancelling your VAT registration may result in VAT liability. You must pay Revenue any excess of VAT refunded to you over the tax period. This applies to any excess of VAT refunded from the time you elected to register for VAT or during the three years before cancellation.
What are the VAT rates in Ireland?
In Ireland, the standard rate of VAT for services is 23%, and there are other percentages you should be aware of depending on what you are selling. There are different rules on how to charge VAT depending on what you are selling, to whom and where affect how your business charges VAT. Please get in touch with us for more information on how we can help you determine your VAT needs.
What are VAT returns?
A VAT Return summarises the amount of VAT you have collected from your sales and the VAT you have claimed on your purchases during a specific period. You must file your VAT Returns to Revenue by the 19th day of the month following the end of each taxable period or by the 23rd day if you file via ROS (Revenue Online Service).
You can incur fines and penalties if you do not file your VAT returns or under-declare your VAT.
Larissa is a Fellow Chartered Accountant (FCA) and is the CEO of Accountant Online, which specialises in company formation, company secretarial, annual accounting services, bookkeeping, tax, and payroll services for micro and small companies in Ireland and the UK.