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Irish VAT rates and VAT compliance

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Irish VAT Rates

As per Revenue Ireland, Following VAT Rates are currently applicable.

Date effective from

1 March 2021

Standard rate (%)

23

Reduced Rate (%)

13.5

Second Reduced Rate (%)

9

Livestock Rate (%)

4.8

Flat-rate compensation percentage for Farmers (%)

5.6

There are 2 Main Rates. One is Standard which is 23% and reduced rate is 13.5% which are widely used.

CRITERIA FOR VAT IN IRELAND

Not every business requires to be registered for Vat. However, if a business reaches a certain threshold annually, it must register for Vat and must charge vat on sales unless on products or services that are exempt from VAT.

If a business or company has a Turnover (Sales) over €37,500 for the sale of services or €75,000 for the sale of goods then the business must register for VAT.

However, businesses can choose to voluntarily register for VAT.

The advantage to voluntarily register a business for VAT?

  • You can claim input credit i.e VAT on purchases for products and services.
  • We recommend discussing this with us if you chose to take this route.

Downside of Voluntary registration of VAT

The disadvantage of this is there will be a compliance burden such as preparing bi-monthly or semi-annual VAT returns that the business is required to be prepared and filed.

How to register for VAT in IRELAND?

In order to be registered for VAT, a business must apply to revenue by filling the relevant form. Your accountant can register you without much form filling or dealing with technical jargon.

Upon application with revenue, they assess the application if a VAT number must be issued. Revenue is reluctant to issue VAT numbers to any business as VAT numbers may be misused. They can accept or reject the application after asking additional questions and information.

Matters to note before applying for VAT Number.

Revenue requires a proof that:

  • The business has trading activity in Ireland
  • You have invoices from Irish suppliers and customers
  • The business owner/Director lives here
  • You have a physical office in Ireland, a Virtual Office will not be accepted

Possible reasons for refusal of VAT applications:

  • You’re not hiring employees in Ireland
  • No customers in Ireland
  • You are not trading with any suppliers in Ireland
  • The Directors are not based in Ireland

TIMELINE TO GET A VAT NUMBER IN IRELAND

Upon the receipt of the application, revenue assess the applicant. Please note it is not the company but the underlying director whose profile or history is checked in order to establish if VAT number must be issued. There are other factors also which determines how quickly VAT number can be issued. With a person with revenue history there is a greater likelihood that VAT number can be issued in 2/3 working days.  However, in some cases it could take upto 6 weeks.

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