This section deals with the rules relating to Value-Added Tax (VAT) registration. It explains the following:
- who must register for VAT
- VAT thresholds
- electing to register for VAT
- when you can opt to tax lettings.
Generally, you must register for VAT if you are an accountable person.
A person carrying out only exempt activities or non taxable activities may not register for VAT. However, a person carrying on exempt activities or non taxable activities may have to register for VAT in certain situations, for example:
- acquiring goods from other Member States
- or
- receiving services from abroad.
Registration of a new business
If you have set up a business but have yet to supply taxable goods or services, you may reclaim VAT on your start-up costs. However, to do so you are required to register for VAT.
This will enable you to obtain credit for VAT on purchases made before trading begins.
Traders whose turnover is below the VAT thresholds, farmers and sea fishers are not generally obliged to register for VAT. They may, however, elect to register for VAT.
What are the VAT thresholds?
Value-Added Tax (VAT) registration is obligatory when your turnover exceeds, or is likely to exceed, the VAT thresholds. The thresholds depend on your turnover in any continuous 12-month period.
The threshold for intra-Community distance sales of goods and cross-border telecommunications, broadcasting and electronic (TBE) services relies on your turnover in a calendar year.
If the turnover is less than a threshold limit, you may elect to register for VAT.
The principal thresholds are as follows:
- €42,500 in the case of persons supplying services only.
- €42,500 for persons supplying goods liable at the reduced or standard rates which they have manufactured or produced from zero rated materials.
- €85,000 for persons supplying both goods and services where 90% or more of the turnover is from the supplies of goods other than goods referred to above.
- €85,000 for persons supplying goods.
- €10,000 for taxable persons making mail-order or intra-Community distance sales of goods and cross-border TBE services into the State. The threshold is calculated by taking account of the suppliers, or deemed suppliers, total value of intra-Community distance sales of goods and cross-border TBE services to customers in all European Union (EU) Member States. The threshold only applies where the supplier is established and has their permanent address, or usually resides, in only one Member State. Otherwise the supplier must register for Irish VAT in respect of such supplies. See the intra-Community distance sales of goods and the Electronically supplied services webpages for further information.
- €41,000 for persons making acquisitions from other EU Member States.
A person, while not established in the State, needs to register and account for VAT if that person supplies:
- taxable goods to ‘taxable customers’ in the State
- or
- services to ‘taxable customers’ in the State.
Who may elect to register for VAT?
The following taxable persons established in the State may elect to register for Value-Added Tax (VAT):
- Farmers
- Fishers
- Businesses who do not exceed the VAT thresholds.
Can you back date your election to register?
No. You can only elect to register for VAT from a current date.
Obligations after VAT registration
The procedures for ‘electing’ to register for VAT are the same as if you were ‘obliged’ to register for VAT.
Option to tax lettings
The letting of a property is exempt from Value-Added Tax (VAT). However, as a landlord you can opt to tax the letting of certain properties. But, if you own multiple properties you can limit the option to tax a letting to one property or specified properties.
If you opt to tax a letting, you will have to register and pay VAT on the rents from those properties.
You cannot opt to tax:
- a letting of residential property
- or
- a letting between connected persons, where the tenant has less than 90% deductibility.
Courtesyhttps://https://revenue.ie