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How to Get a VAT Number in Ireland

28 May by Coffey & Co.

Once registered for VAT in Ireland, businesses are assigned a unique VAT number that’s included in all VAT-related documentation and communication. This number not only validates a business as a registered trader but also instils confidence in business relationships by indicating compliance with Irish tax obligations. Keeping up-to-date with VAT regulations and maintaining accurate records is a critical part of managing a business’s VAT affairs effectively.

Need help with VAT? See our VAT services page or contact us.

Who Needs a VAT Number in Ireland

In Ireland, obtaining a VAT (Value-Added Tax) number is an important step for businesses engaging in taxable goods and services. Who is required to register, though?

  • Sole traders, partnerships, and companies involved in supply of goods or services that exceed or are likely to exceed the VAT thresholds are obliged to register for VAT.
  • The VAT registration thresholds are distinct based on the type of business. For instance, a threshold of €40,000 applies to businesses providing services, whereas a threshold of €80,000 applies to those supplying goods.
  • It is mandatory for non-EU businesses trading in Ireland to register for VAT, irrespective of the turnover.
  • Foreign businesses that engage in taxable supplies within Ireland but lack an establishment in the state also need to secure a VAT number.

Registering for VAT in Ireland is not exclusively tied to surpassing these thresholds. Voluntary registration is possible for businesses that have not reached these limits if they discern a benefit in being VAT-registered, such as reclaiming VAT on business expenses.

Remember, if a business carries out only VAT-exempt activities, it should not register for VAT. Moreover, holding a VAT number comes with administrative responsibilities, such as filing VAT returns and maintaining VAT records, which you should consider before registering voluntarily.

When You Need to Register for VAT

In Ireland, the requirement to register for VAT (Value-Added Tax) is contingent upon specific conditions related to your business activities. Here’s what determines the necessity to register:

Thresholds: A business must register for VAT if its annual turnover exceeds or is likely to exceed the following thresholds:

  • €80,000 for the sale of goods
  • €40,000 for the supply of services

Voluntary Registration: Even if a business doesn’t exceed these thresholds, it can opt to register voluntarily. This might be done to reclaim VAT on start-up costs or to present the business as a VAT-registered entity, which can be appealing to other businesses.

Accountable Persons: An individual is considered an ‘accountable person’ if they are supplying goods or services and are an independent entity. If their turnover is under the thresholds but they still supply taxable goods or services, they may need to register.

Other Criteria: Below are some instances which might necessitate registration, irrespective of the threshold:

  1. If a business is not established in Ireland but supplies goods or services to the country, they need to register for VAT.
  2. If an individual receives services from abroad for business purposes, they may need to register and account for VAT (reverse-charge).

Different rules may apply in specific situations, such as when dealing with property transactions or if you’re a non-resident supplier without an establishment in Ireland. It’s advisable to consult with Revenue, your accountant or a tax advisor for tailored VAT guidance.

What You Need to Register for VAT in Ireland

To register for VAT in Ireland, a business must be established within the state. The process begins with the Revenue Online Service (ROS), where you can submit the necessary forms.

For Individuals and Sole Traders:

  • They should complete the TR1 form.
  • A Personal Public Service (PPS) number or Identified Person Number (IPN) is required.

For Companies:

  • The appropriate form is TR2.
  • A company will file with its Tax Registration Number (TRN).

General Requirements:

  • Proof of business establishment in Ireland.
  • Valid email address to create a ROS account.
  • Information about the business activity, including the expected turnover, to justify the need for VAT registration.

Registration Steps:

  1. Create a ROS account, if not already done.
  2. Fill in the correct registration form (TR1 or TR2), depending on the business structure.
  3. Submit the form electronically via the ROS system.
  4. Await confirmation; the local tax district office will indicate when the VAT registration takes effect.

Monthly Obligations Post-Registration:

  • A VAT-registered entity must compliantly file VAT returns bi-monthly.

What you should know before you apply for a VAT number

When registering for a Value-Added Tax (VAT) number in Ireland, one must be aware of specific prerequisites and conditions that determine the eligibility and need for VAT registration.

  • Necessity of VAT Registration: A business must have a concrete reason that necessitates a VAT number. This usually pertains to the type of business, its annual turnover, or trade within and outside of Ireland.
  • Type of Business: The business should be carrying out taxable supplies of goods or services, or receiving services from abroad for which it must account for Irish VAT.
  • Establishment: To apply for VAT registration, a business must be established within the state or carrying out taxable supplies in Ireland.

Before the initiation of the application, you must collate several key documents:

  1. Proof of identity (Personal or Business)
  2. Proof of business establishment in Ireland
  3. Details about the nature of the business and its trading activities
  4. Projected turnover figures to determine the VAT threshold applicability

You should also familiarize yourself with the various categories of VAT registration as they pertain to different business structures and specialisms, such as farmers, non-established traders, and state bodies. Each category might involve additional specific requirements or documents.

Since the application involves fiscal responsibilities, accuracy and thoroughness in completing registration forms and supplying necessary documentation are crucial. Being well-informed and prepared can streamline the process, leading to a smoother VAT registration experience.

Reasons Why Your VAT Application Might be Rejected

Several reasons could lead to the rejection of an application for a VAT number in Ireland. The applicant should know these common pitfalls to ensure a smoother registration process.

  • Lack of Economic Activity: If the Revenue Commissioners (ROS) are not satisfied that genuine economic activity is being carried out, the VAT application may be declined.
  • Presence of Employees: A business without employees in Ireland can signal a lack of substantial economic presence, leading to possible rejection.
  • Irish Customer Base: Companies must demonstrate they have or intend to have customers in Ireland. Failure to do so may result in a rejected application.

An applicant should also be mindful of the following:

  • Incomplete Documentation: All required documents must be accurately completed and provided. Missing or incorrect information can delay or invalidate the application.
  • Timing of the Application: If the application is submitted outside of the taxable period or does not accurately predict the start of economic activity, it may be rejected.
  • Business’s Legal Status: The legal structure of a business can affect its eligibility for a VAT number.

Lastly, communication with the relevant authorities is crucial. If the Revenue rejects an application, substantiating the business’s activities with additional documentation or clarifying any misunderstandings may remedy the situation. Rejection is not the end, and persistence in addressing the Revenue’s concerns is recommended.

How long before I get my VAT number?

After a business submits its registration form to acquire a VAT number in Ireland, the waiting period is typically about 7-10 working days. However, they should be aware that this is an average timeframe, and the process could be shorter or longer depending on a few factors:

  • The volume of applications the Revenue Office is currently handling.
  • Any additional queries or clarifications required by the Revenue regarding the application.

If a business requires VAT registration for dealing with intra-EU transactions, opting for the ‘intra-EU’ VAT registration may streamline the process. In contrast, a ‘domestic-only’ registration suffices for companies trading solely within Ireland, which could potentially expedite the registration thanks to the Two-Tier VAT registration system implemented since June 2019.

Businesses must note that while the wait time for the VAT number can vary, its effectiveness starts from the date mentioned on the registration form. Under specific circumstances, it can be backdated with an agreement from the Revenue Office. The effective date, however, will not precede the start of the taxable period in which the application was made for businesses that elect to register.

In summary, businesses should plan for a minimum wait of one to two weeks but also prepare for potential delays. If the process takes longer than the anticipated period, it is recommended that businesses stay in touch with the revenue office for updates.

Applied for a VAT number – what’s next?

After an individual or business applies for a VAT number in Ireland, there is a standard wait for processing. If required, the Revenue Commissioners will review the application and supporting documentation. The duration of this review can vary, but applicants can typically expect a response within 14 to 28 days.

During this waiting period, it’s important to monitor your emails and post for any correspondence from Revenue. They may request additional information to support your application. Prompt responses to such inquiries can help avoid unnecessary delays.

Once Registered:

  • The applicant will receive a VAT number from Revenue.
  • They should start issuing VAT invoices with their VAT number.
  • They must charge VAT at the appropriate rates on their taxable sales.

Ongoing Obligations:

  • File VAT Returns: Regularly, according to the periods assigned by Revenue, which could be bi-monthly, quarterly, or annually.
  • Record Keeping: Maintain accurate and up-to-date records of all VAT-related transactions.

Note: Even if the applicant has no VAT to pay or reclaim, they must still file a return.

Helpful Reminders:

  • Sign up for eReminder notifications through ROS to keep track of VAT return deadlines.
  • Consider using the Direct Debit scheme for ease of payments.

Applicants should also be aware that once they receive their VAT number, Revenue will check their compliance. Hence, maintaining transparency and accuracy in VAT-related affairs is crucial.

Benefits of VAT Registration

Registering for VAT (Value-Added Tax) in Ireland offers several advantages for small and large businesses. One of the fundamental benefits is the professional image it provides. When a company is VAT registered, it can foster a sense of trust and credibility with suppliers and clients. They often perceive the business as financially stable and well-established, which can be particularly beneficial for new businesses trying to establish themselves in the market.

A VAT-registered business can also reclaim the VAT they’ve paid on goods and services purchased for their business. This can include everything from office supplies to business-related equipment. However, remember that you can only reclaim VAT if it directly relates to the sale of your own VAT-taxable goods and services.

Here are the key benefits outlined:

  • Credibility: Businesses are often perceived as more reputable if VAT registered.
  • VAT Reclaim: Businesses can deduct the VAT paid on eligible business expenses from the VAT they charge to customers.
  • Pricing Strategy: VAT registration allows for more flexible pricing strategies. Prices can be set to reflect VAT inclusion, which might appeal more to B2B transactions.
  • Access to VAT Refunds: Certain businesses, especially export-oriented ones, might be eligible for VAT refunds, leading to potential savings.

Small businesses also have a special scheme called the VAT Cash Accounting Scheme. This scheme allows them to account for VAT based on cash received and paid, which can help with cash flow management.

VAT Rates in Ireland

The standard Value-Added Tax (VAT) rate is 23% as of current records. This applies to most goods and services, ensuring consumers understand the likely charge added to their purchases. However, certain items benefit from special VAT treatment under Irish tax law, such as reduced rates and zero rates.

The reduced VAT rates are segmented as follows:

  • 13.5%: This rate covers items such as fuel, electricity, certain construction services, and veterinary fees.
  • 9%: A special reduced rate for tourist-related activities and certain publications.
  • 4.8%: This rate is specifically for agriculture and livestock.

Furthermore, a 0% rate applies to essential goods and services. Below is a list of items that fall under this category:

  • Books and educational materials
  • Children’s clothing
  • Food and drink (excluding alcohol, sweets, and certain beverages)

Businesses must recognise which VAT rate applies to their products or services. Compliance with the correct VAT rate is essential—any error can result in legal issues and financial penalties.

Businesses must charge the identified VAT rate and remit it to the Revenue Commissioners. The process of VAT collection and remittance forms an integral aspect of the Irish fiscal landscape, supporting public expenditure and services.

Recording VAT

Once a business is registered for VAT in Ireland, they must maintain accurate records of all VAT-related transactions. These records are the foundation for completing VAT returns, which must be submitted to the Revenue Commissioners.

VAT Sales and Purchases:

  • Sales Invoices: Businesses should record all sales invoices issued, ensuring that each includes the VAT rate applied and the total VAT amount charged.
  • Purchase Invoices: For purchases, all supplier invoices should be kept on file with clear indications of the VAT paid.

VAT Account: A VAT account is a summary of the VAT due on sales (output VAT) and the VAT reclaimable on purchases (input VAT). Businesses should:

  • Clearly separate the output and input VAT in their records.
  • Regularly update their VAT account to reflect current transactions.

Record Keeping:

  • All records must be kept for at least 6 years.
  • Maintain digital or physical copies of all VAT invoices and receipts.
  • Ensure that all records are easily accessible for potential audits.

Documentation:

  • VAT Return Forms: Businesses must periodically complete VAT3 return forms, summarising their output and input VAT.
  • Electronic Records: Businesses can use Revenues’ Online Service (ROS) to manage VAT records and submit returns electronically.