Registering for tax in Ireland
If you recently set up a business in Ireland, the next thing on your to-do list is to register for tax. Both Sole Traders and Limited Companies in Ireland need to register and pay tax to the Irish Revenue Commissioners (Revenue) through Revenue’s Online System (ROS).
The four main taxes to be aware of are Corporation Tax for Limited Companies, Income Tax, Value Added Tax (VAT), and Employers Taxes – Pay As You Earn (PAYE).
Tax registration in Ireland can be a long process, and it can be complicated if you don’t know what to expect or how to prepare. But don’t worry; this guide will take you through how to register for tax in Ireland and the filing obligations once you are registered.
If at any point you need one-to-one advice, get in touch with our Client Services team – we’re here to help!
Tax registration in Ireland - what tax to register for?
Corporation tax registration - Limited Companies
Limited Companies register for Corporation Tax through a Tax Registration Form (TR2), and must submit it to Revenue before they start trading or invoicing clients. Usually, new companies will outsource this task to an accountant, like Accountant Online, so they can be assured that the tax registration is done correctly.
It’s good to note that your company number is not your tax number. Once you have successfully registered for tax, the Limited Company will be issued a separate tax number. (This is something to be aware of if you are changing from Sole Trader to Limited Company in Ireland).
Rates of Corporation Tax
In Ireland, there is a relatively low Corporation Tax rate compared to other European countries. In most instances, companies in Ireland will pay this tax at a rate of 12.5%.
The low rate of Corporation Tax applies to companies who are incorporated in Ireland and are centrally controlled and managed in Ireland. This may mean that they have activities in the state, hire employees (including directors) here, rent warehouses or office space, have invoices from suppliers or customers in Ireland, and/or make strategic decisions in Ireland. Check out our guide on corporation tax in Ireland for more information.
For more information on the 12.5% rate of Corporation Tax in Ireland, check out our comprehensive guide or talk to our Client Services Team about your situation. We’re always here to help.
Corporation Tax Return
Once you have set up your Limited Company with the CRO and registered for Corporation Tax, you need to keep note of your Corporation Tax Return deadline. All filings can be paid and filed electronically through your company’s ROS account.
In Ireland, your Corporation Tax return is due to be filed nine months after your company’s financial year-end. For instance, many of our clients have a year-end date in December making their Corporation Tax Return due in September the following year. This is an important deadline for Limited Companies which could lead to fines and penalties if missed.
This means that it is important that you know when your accounting period and financial year-end is, and that you are preparing to file this return before it falls due.
If you’re unsure of your tax obligations after tax registration in Ireland, you should consider outsourcing to an accountant who can take care of your company’s statutory compliance requirements. This will give you the freedom to focus on other aspects of your business while also giving you peace of mind that you’re not missing any important deadlines.
We’re always happy to talk to you about the services you need, so talk to us today and we can send you a quote for our services.
Sole Traders don’t pay Corporation Tax – the equivalent of Corporation Tax for Limited Companies is Income Tax. The advantage of setting up a Limited Company is that they generally only pay 12.5% Corporation Tax on their profits, whereas a Sole Trader will need to pay taxes of up to 55% on all their profits. (Please note that Limited Companies still need to pay tax on the money they take out of the company). Read our Limited Company Tax guide for more information.
Sole Traders register for Income Tax when they register as self-employed with Revenue, they must pay Income Tax on all the profits after expenses, and they must file an Income Tax return at the end of the year.
Tax registration in Ireland for Sole Traders is straightforward if you have existing access to Revenue’s myAccount or ROS. Your tax number will be the same as your Personal Public Access Number (PPSN).
Businesses in Ireland file their tax returns on a self-assessment basis. There are different tax deadlines for Sole Traders and Limited Companies but the important thing to note is that these filings are for the previous year. There can be different deadlines for each business so speaking to a professional accountant can help clear up any doubts.
As well as paying the tax you owe for the previous year, you are also required to pay preliminary tax for the upcoming year. And this is on top of the current tax liability.
Preliminary tax can be tricky, especially when you consider that late payments will incur interest on top. Having an accountant to look after your tax returns is a good way to ensure that your tax returns are done properly. Contact our Client Services Team to receive a quotation for accounting and compliance services.
Preliminary tax for Sole Traders
This is an estimate of your Income Tax, PRSI, and USC that you expect to pay for a tax year. There are different rules you can do to estimate your preliminary tax as a Sole Trader:
- 90% of the tax due that year
- 100% of the tax due from last year
- 105% of the tax due for the tax year preceding the immediately previous tax year
Preliminary tax for Limited Companies
This is an estimate of the Corporation Tax due for the upcoming accounting period. Please note that Startup companies don't have to pay preliminary tax for their first accounting period if their Corporation Tax liability is less than €200,000 in their first year. There are different rules you can do to estimate your preliminary tax as a Limited Company:
- 100% of the Corporation Tax liability for the previous accounting period
- 90% of the Corporation Tax liability for the current period
Please note that the preliminary tax payment cannot be lower than any of these calculations.
Value Added Tax (VAT) Ireland
VAT registration in Ireland is both mandatory and a voluntary tax for both Sole Traders and Limited Companies.
Firstly, VAT generally only becomes mandatory when your business reaches a turnover of €37,500 or above for the sale of services and/or €75,000 or above for the sale of goods over the course of 12 months. This is a rolling 12 months, and not according to the calendar. In other words, at any stage your business gets close to any of these thresholds, you should register for VAT.
Secondly, a business may voluntarily choose to register for VAT. In certain cases, a business may choose to register for VAT because they deal with a lot of suppliers and clients who are also VAT registered and therefore, they want to claim back the VAT paid.
Revenue sets out the rates of VAT that are to be charged on the services or goods your business provides to its customers. You can only charge VAT once you are VAT registered and you claim back VAT through a VAT return, which is usually filed every two months.
It’s very common for Revenue to ask for proof that you require a VAT number as part of their tax registration process. Therefore, it’s important to show evidence of trade in Ireland to be eligible for a VAT number. This can include invoices to suppliers or customers in Ireland.
In general, VAT returns are filed with Irish Revenue every two months and they outline the amount of VAT you have charged out to your customers and the amount of VAT you have been charged over that period.
There are two ways to file VAT returns:
- Paper filings are filed using a VAT3 form. The VAT3 form is sent to you by Revenue and must be sent back to the Collector-General on the date specified on the document. In general, this needs to be completed by the 19th day of the taxable month.
- Electronic filings are filed using ROS and this needs to be completed by the 23rd day of the taxable month.
As you can see, it can be confusing to file VAT returns every two months for your business if you are unfamiliar with the requirements. Having an accountant that will look after all your VAT obligations will give you peace of mind that your business has correctly filed its returns with Irish Revenue.
Employer taxes - Pay As You Earn (PAYE)
Before you hire your first employee, you need to register for employers PAYE tax. Sole Traders and Limited Companies need to register for this tax if it is considering employing people. This includes directors who wish to pay themselves a salary from their Limited Company. You may be wondering: Can a sole trader have employees? The short answer is yes.
You can register for PAYE on ROS or outsource this to a professional company. You may consider outsourcing because when you employ staff, you are also required to run a payroll system and use Revenue’s online PAYE modernisation system.
When you are an employer, you are required to calculate all the appropriate taxes to deduct from your employees’ wages. You collect all this tax on behalf of the Collector-General in Revenue and then you pay them this sum of tax on a quarterly or monthly basis.
There are many payroll specialists in Ireland and you may consider hiring a professional to help you with your payroll duties. For more information, talk to our Client Services Services Team about your needs and we’re happy to help.
Tax registration for new Irish Limited Companies
Are you a newly registered Limited Company in search of tax registration? We have a unique Startup Offer for accountancy services for new Limited Companies for just €175 per month + VAT. We can advise you as to when to register for tax and liaise with Revenue on your behalf during the application process. If you are not registered, check out our company registration service for Ireland.
If you have any questions about the tax registration process in Ireland or you need help filing a tax return, talk to one of our Client Services team who is always happy to help you. Call us on +353 1 095 9364 or email firstname.lastname@example.org now.
Larissa is a Fellow Chartered Accountant (FCA) and is the Founder and 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, Northern Ireland and the UK.
Larissa has been shortlisted for the Image ‘Businesswoman of the Year Award’ in 2017 and 2018 and awarded ‘Accountant of the Year’ in 2018. Larissa volunteers as a role model for LEO Donegal’s ‘Ambition’ programme and is a Lead Entrepreneur for ‘ACORNS’ and ‘Going For Growth’ which are development programmes designed to support ambitious female entrepreneurs, and for ‘Back For Business’, a development programme assisting returned emigrants or those planning to return to Ireland to start and develop a business. Accountant Online has won many awards, including ‘Best Small Practice’ in 2017, ‘Best Medium Practice’ in 2018, and in 2020, ‘Medium Practice of the Year’ and ‘Practice of the Year’.