VAT Thresholds: Do You Need to Register?

As a sole trader or small business owner, VAT registration isn't always something you choose outright — for most people, it becomes a requirement once turnover crosses a certain point. Knowing where that point is, what counts towards it, and where the less obvious triggers lie helps you avoid being caught out.

The current thresholds

In Ireland, you're generally required to register for VAT once your annual turnover exceeds:

• €85,000 for the supply of goods

• €42,500 for the supply of services

  
  

If your business supplies both goods and services, the goods threshold generally applies where at least 90% of your turnover comes from goods — otherwise, the lower services threshold is the one to watch.

What counts towards the threshold

The threshold is based on turnover over any rolling 12-month period, not just your calendar or tax year. That means it's possible to cross the threshold partway through a year, even if your annual figures alone wouldn't suggest it — a strong few months can tip you over sooner than expected.

It's also based on turnover, not profit. A high-turnover, low-margin business can find itself needing to register well before profit alone would suggest it.

The 30-day registration window

Crossing the threshold isn't something you can deal with whenever it's convenient. Revenue expects you to register within 30 days of exceeding the limit — or if realistically expecting to exceed it in the next 12 months.

Miss that window, and Revenue can backdate your VAT liability to the date you should have registered, charge interest on the shortfall, and apply a fixed penalty on top. It's a much cleaner process to register on time than to sort it out retroactively.

The "services trap" for mixed businesses

The 90% rule can catch out businesses that sell goods but also offer a related service — a flooring retailer who fits what they sell, or an appliance shop that delivers and installs, for example.

If that service element creeps above 10% of total turnover, the business loses access to the higher €85,000 goods threshold entirely and drops to the €42,500 services threshold instead — for the whole business, not just the service portion. It's worth keeping an eye on that mix if services are a growing part of what you offer.

The hidden trigger: services bought from abroad

One of the most commonly missed VAT triggers has nothing to do with your sales at all. If you buy business services from outside Ireland — running ads through Facebook or Google, or paying for software subscriptions billed from abroad — you're generally required to self-account for VAT on those purchases under what's known as the reverse charge mechanism.

In practice, this means that instead of the overseas supplier charging you VAT, the responsibility shifts to you as the Irish buyer: you calculate and declare the VAT on that purchase yourself, as though you were both the supplier and the customer, on your own VAT return.

There's no minimum threshold for this. Even a business with turnover well below €42,500 can have a VAT registration obligation purely because of services bought in from overseas.

Registering before you're required to

You can register for VAT voluntarily, even below the thresholds. This is worth considering if:

• Most of your clients are VAT-registered businesses themselves, who can reclaim the VAT you charge them

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• You have significant VAT on business costs (equipment, stock, services) that you'd like to reclaim

• You want to appear more established to certain clients or sectors where VAT registration is the norm

  
  

The trade-off is added administration — VAT returns, invoicing requirements, and record-keeping — so it's worth weighing the benefit against the extra work involved.

What happens once you're registered

Once registered, you'll need to:

• Charge VAT on your invoices at the appropriate rate — the standard rate is 23%, but several reduced rates apply depending on what you sell, and these do shift over time (for example, food, catering and hairdressing services move from 13.5% to 9% from July 2026)

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• File regular VAT returns, typically bi-monthly

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• Keep VAT-compliant records and invoices

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• Reclaim VAT on eligible business expenses

  
  

Getting the right rate applied consistently across your invoicing and accounting software takes more attention than it might seem — particularly if you sell a mix of goods or services taxed at different rates.

Not sure where you stand?

VAT compliance isn't just about crossing a number — it's about timing, mixed income streams, and cross-border rules that can apply well before you'd expect. If your turnover is approaching either threshold, or you're weighing up voluntary registration, let LedgerPlus Accountants review your numbers before it becomes an emergency. Get in touch and we can help you plan ahead safely.