We get many questions from startups about VAT registration in Ireland. Our VAT service includes guidance on what rate to charge and how to charge it, VAT returns and compliance. But are you still unsure if you need to register for VAT?
Here Tamar Heffernan, one of our Certified Public Accountants answers our most common questions:
What Is VAT?
VAT stands for Value Added Tax. It is a tax that is added on to the value of goods or 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 via businesses that have registered for VAT.
There are two reasons to complete VAT registration. Firstly, because the business has reached the VAT threshold. Secondly, because the business voluntarily registered. These businesses charge VAT on the services or goods they are selling and that VAT is then paid to Revenue. A VAT registered business can also claim back VAT on expenses.
Who Can Register For VAT?
Any business that is based in Ireland or is providing a service or goods to Irish customers can register for VAT. When you apply to Revenue for a VAT number, you will need to show that you have the need for one. During the VAT registration process, Revenue will want to see is evidence that you are trading in Ireland. Examples of this evidence include invoices to Irish clients, receipts for expenses in Ireland, employees that are based in Ireland or offices in Ireland.
How Do I Get A VAT Number In Ireland?
To get a VAT number, you must send an application for a VAT number to Revenue. They will accept or reject the application. Some of the reasons for your application being rejected include:
- You’re not hiring employees in Ireland
- There are no customers in Ireland
- You are not trading with any suppliers in Ireland
Reasons for your application being accepted are:
- It is clear that your business is based in Ireland and;
- It is clear that you are trading in Ireland
How Long Does The Application For VAT Number Take?
The VAT application can take up to 28 business days from when it’s on Revenue’s desk, so it’s important to apply early. If you are not sure how to apply, we can apply for you. We are happy to provide you with a quotation for this service. Get in touch to inquire about becoming a client.
When Do I Have To Register For VAT?
When you reach the VAT threshold, you will have to register for VAT. The VAT threshold will depend on the nature of your business.
The Main VAT Thresholds Are:
€37,500 For Services
€75,000 For Goods
Revenue provides a complete list of all the VAT thresholds in Ireland.
You should register for VAT when it’s likely that you will reach the VAT threshold within 12 months.
If you’re unsure whether you will reach the threshold, you can ask one of our accountants during our next Startup Webinar.
Why Would I Volunteer To Register For VAT?
Some businesses choose to register before they reach the VAT threshold. There can be good reasons to do this.
For example, if you are VAT registered and you have business expenses, you can claim back the VAT you have paid on these purchases. Something to be aware of is that once you are registered for VAT you will also have to charge VAT on your sales so you should consider that when deciding to register early. You will also have to file VAT returns with Revenue once you are VAT registered. This is normally done bi-monthly and must be filled even if there are NIL (0) returns.
What Does It Mean To Reach The VAT Threshold?
The VAT threshold is based on turnover minus the VAT spent on purchases. Here’s an example to make it a bit clearer.
If your business is supplying services, and the turnover is likely to reach more than €37,500 in the next 12 months, you should register for VAT. However, if your turnover is going to reach €45,000 but the VAT spent on expenses that year is going to reach €9,000, you do not have to register for VAT yet. That is because your turnover €45,000 minus the VAT spent on purchases €9,000 is €36,000 and therefore below the VAT threshold.
How Long Does It Take To Get A VAT Number In Ireland?
Once Revenue has your VAT application, it can take 28 working days before you have your VAT number, and that is without any inquiry. This can feel like a very long time when you are trying to start your business.
What Revenue needs to establish is that your business needs an Irish VAT number. Sometimes Revenue will have questions in relation to your trade that they want you to answer before they give you a VAT number. In that case, it’s important that you get back to them as quickly as possible. You are usually given 30 days to reply to any inquiry.
Does Accountant Online Help With VAT Registration?
Yes, we offer VAT registration for our accountancy clients. When you’re a client for accountancy services, we can start registering your business for VAT for €145 + VAT. Our VAT services include VAT registration, preparing and filing of VAT returns, on-going advice and support.