What is VAT?

Value Added Tax (VAT) is a tax charged on most goods and services that VAT registered businesses sell to other businesses or consumers.

VAT registered businesses must pay the VAT charged on their goods or services to the Revenue, but this may be offset by the VAT incurred on goods or services they have purchased.

If you have a business and the goods or services you provide count as taxable supplies you must register for VAT if either:

•Your turnover for the previous 12 months has gone over the VAT threshold.

•You think your turnover will soon go over this limit.

You can also choose to register for VAT if you don't meet the criteria but you still want to.

Once registered for VAT, you have to charge VAT on any goods or services that you provide that are taxable.

 

VAT Schemes

The default VAT scheme for businesses with a taxable turnover above €37,500 for the supply of services and €75,000 for the supply of goods is the Standard VAT scheme. Depending on the turnover and sector of goods you trade in, there are other schemes available which are optional. You may find one of these schemes more beneficial to you, depending upon the specific circumstances of your business.

VAT accounting scheme thresholds

VAT accounting schemeThreshold to join schemeThreshold to leave scheme

 

Standard scheme

 

€37,500 for the supply of services

€75,000 for the supply of goods

 

 

Standard VAT

 

If you don't qualify for or choose to use one of the other schemes the Revenue assign you to the default VAT scheme, known as the Standard VAT scheme. On the Standard VAT scheme you can reclaim VAT at the point an invoice is received from your supplier, before you've actually paid the money. You are also liable for the VAT on sales to your customers at the point you send an invoice to your customer, before you've received the money from them.