What Is VAT?

We often get questions from startups about VAT; what is a VAT number, how can I register and do I need to register for VAT? But let’s start at the beginning and explain what VAT is.

VAT stands for Value Added Tax. It is a tax that is added on to the value of goods and services at every stage of production or distribution. As a consumer, most of the goods or services that we purchase have VAT included in the price. VAT is collected by Revenue through businesses who have registered for VAT.

There are two reasons to register for VAT. Firstly, because your business has reached the VAT threshold. Secondly, you may want to voluntarily register.

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So, How Do I Register For VAT?

Any business that is based in Ireland or is providing a service or goods to Irish customers can register for VAT.

To receive a VAT number in Ireland you will need to register for VAT with Irish Revenue. During the VAT registration process, Revenue will want to see evidence that you are trading in Ireland. Revenue will then decide whether to accept or reject your application.

Reasons Why Revenue Might Accept Your Application:

  • It is clear that your business is based in Ireland and;
  • It is clear that you are trading in Ireland;
  • You have evidence to prove you are based in Ireland;
  • You have a physical office in Ireland, a Virtual Office will not be accepted.

Reasons Why Revenue Might Reject Your Application:

  • You’re not hiring employees in Ireland,
  • You have no customers in Ireland,
  • You are not trading with any suppliers in Ireland.
What Can Count As Evidence Of Trade

What Can Count As Evidence Of Trade

  • Invoices To Clients
  • Receipts For Expenses In Ireland
  • Employees In Ireland
  • Physical Offices In Ireland (A Virtual Office Will Not Be Accepted)

How Long Does It Take To Receive A VAT Number?

Once Revenue has your VAT application, it can take 28 working days before you have your VAT number, and this is without any enquiries.

Revenue may need you to answer questions about your trade before you receive your VAT number.
Revenue will often give you 30 days to reply to an enquiry, but it's important to reply to them as soon as possible.

VAT Thresholds

You do not need to register for VAT as soon as you have incorporated your company, however, you can voluntarily register. You are only required to register for VAT when you reach the VAT threshold for your business.

The two main thresholds for VAT are;

€37,500 For Services

€75,000 For Goods

Revenue has a complete list of all VAT thresholds on their website.

Voluntarily Register For VAT

If you want to register for VAT before you reach the threshold, you can voluntarily register.

Once you have registered, you will need to file VAT returns with Revenue.

Why Voluntarily Register?

Why Voluntarily Register?

  • If you are VAT registered and have business expenses, you can claim back the VAT you have paid on your purchases.
  • You can add VAT onto your products or services from the beginning instead of having to change your prices or add VAT later on.

VAT Returns

When you are VAT registered, you must file your VAT returns by the 19th day of the month following the end of each taxable period.

The taxable period is a two-month period (bi-monthly) that starts on the first day of January.

If you file via ROS, you will have until the 23rd of the month to file.

If you do not file your VAT returns or under-declare your VAT, you can incur fines and penalties.

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