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VAT (Value Added Tax) is a consumption tax added to the price of most goods and services sold in Ireland. If your business turnover exceeds €40,000 a year for services or €80,000 for goods, you must register for VAT with Revenue, charge the correct rate (23%, 13.5%, 9% or 0%) on your sales, and file regular VAT returns.
What is VAT and how does it work?
VAT is charged at each stage of the supply chain, but it is ultimately paid by the end consumer. As a VAT-registered business you collect VAT on your sales (output VAT) and reclaim the VAT you paid on business purchases (input VAT), then pay the difference to Revenue. A business that is not registered for VAT cannot charge VAT on its sales, but it also cannot reclaim the VAT it pays on purchases — so that VAT becomes a real cost.
VAT rates in Ireland
| Rate | Applies to | Examples |
|---|---|---|
| 23% (standard) | Most goods and services | Electronics, professional services, most retail |
| 13.5% (reduced) | Many services and some goods | Hospitality, accommodation, construction, hairdressing, domestic electricity and gas |
| 9% (second reduced) | Newspapers and digital publications | Newspapers, periodicals, e-books and audiobooks |
| 0% (zero rate) | Essential items | Most food, children's clothing and shoes, printed books, oral medicines, exports |
Hospitality previously enjoyed a temporary 9% VAT rate, but this returned to the standard reduced rate of 13.5% in September 2023. A specialist 4.8% flat-rate addition also applies to certain farmers, but this is a niche area most businesses will not encounter.
Do you need to register for VAT?
You must register for VAT once your turnover exceeds the registration thresholds in any continuous 12-month period:
- €40,000 for the supply of services
- €80,000 for the supply of goods
If you expect to cross these limits in the next 12 months, register promptly rather than waiting until the year-end. Some businesses register voluntarily below the thresholds — for example, to reclaim VAT on significant purchases or to trade with other EU businesses.
How to register for VAT
You register for VAT through Revenue Online Service (ROS). You will be issued a VAT number in the format IE followed by 8 or 9 digits, and this number must appear on all of your invoices. You can complete VAT registration yourself, or have your accountant handle it and make sure you are set up for the right accounting basis and filing frequency.
Cash receipts basis vs invoice basis
When you register you choose how to account for VAT. Most small businesses with turnover under €2,000,000 (or where 90% or more of sales are to unregistered customers) use the cash receipts basis, meaning you pay VAT to Revenue only when your customer actually pays you. On the invoice (accruals) basis you pay VAT when you issue the invoice, even if you have not been paid yet.
VAT returns and record keeping
Most businesses file a VAT return every two months (bi-monthly) through ROS, with payment due at the same time. Businesses below certain thresholds can opt for a four-monthly or annual return, while those regularly in a repayment position can file monthly. You must keep full records of all sales and purchases for at least 6 years.
Special cases: intra-EU trade, RCT and exemptions
- Intra-EU sales: business-to-business sales to a VAT-registered customer in another EU country are generally 0% if you hold their valid VAT number (verify it on VIES); selling to consumers across borders may be covered by the OSS scheme.
- Exempt vs zero-rated: exempt businesses charge no VAT and cannot reclaim input VAT (for example some financial, medical and education services); zero-rated businesses charge 0% but can still reclaim input VAT.
- Reverse charge: in construction and some other sectors the buyer accounts for VAT instead of the seller, which is linked to Relevant Contracts Tax (RCT).
- Property, margin schemes for second-hand goods and travel-agent schemes all have their own specific VAT rules.
7 key points to remember
- VAT is a tax on consumption, collected by businesses but ultimately paid by the end consumer.
- The current rates are 23%, 13.5%, 9% and 0%, depending on what you sell.
- You must register once services exceed €40,000 or goods exceed €80,000 in any 12 months.
- Register through Revenue Online Service (ROS) and show your VAT number on every invoice.
- The cash receipts basis lets you pay VAT only when customers pay you (turnover under €2,000,000).
- File bi-monthly returns on time and keep records for at least 6 years.
- Exempt and zero-rated are different — only standard-rated and zero-rated businesses can reclaim input VAT.
Frequently asked questions
When do I need to register for VAT in Ireland?
You must register when your turnover from services exceeds €40,000, or from goods exceeds €80,000, in any continuous 12-month period. You can also register voluntarily below these limits.
What are the VAT rates in Ireland?
The current rates are 23% (standard), 13.5% (reduced, including hospitality and construction), 9% (newspapers and digital publications) and 0% (most food, children's clothing, printed books and oral medicines).
What is the difference between VAT exempt and zero-rated?
Zero-rated goods and services are charged at 0% but the business can still reclaim VAT on its own purchases. Exempt goods and services are not charged VAT and the business cannot reclaim VAT on related purchases.
Can I reclaim VAT on purchases?
Yes. If you are VAT-registered you can generally reclaim VAT on goods and services used for your taxable business, subject to the rules — for example, VAT is usually not recoverable on hospitality and entertainment or on petrol for cars.
VAT mistakes are common and can be costly. If you need help with VAT registration, returns or planning, contact Bradán Accountants — we will keep you compliant and make sure you are not paying more VAT than you should.
Sources
- Revenue.ie – VAT (Value Added Tax)
- Revenue.ie – VAT rates and registration thresholds
- Citizens Information – Value Added Tax
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