VAT is a tax that is charged on the sale of goods and services so everyone who pays for these, pays for VAT. It is included in the total cost of most goods and services that we use daily however if you purchase goods such as computers, electricity or professional services you’ll see how much VAT and at which rate you are being charged.
There are five different rates of VAT charged on goods and services.
- The standard VAT rate is 23% which is charged on all goods and services that don’t fall into the reduced rate of VAT categories
- The reduced rate is 13.5 % which is charged on specific items such as fuel, electricity, and building
- A second reduced rate is 9% which is applied to tourism related activities
- The special rate is 4.8% which is a reduced rate specifically for agriculture
- The zero rate of 0% covers a lot of goods and services such as exports, tea, coffee and children’s clothes
Does it apply to my business?
Your business is obliged to register for VAT if it generates revenue of €75,000 for selling goods or €37,500 for offering services in a 12 month period. Every two months, when you are VAT registered your business will have to provide Revenue with a record that shows all VAT that has been charged to others and paid out to your suppliers. Depending on your businesses VAT liabilities you may only be required to submit returns every quarter or bi-annually.
Your business may register voluntarily even if your turnover hasn’t exceeded €75,000 or €37,500 in a given 12 month period. You will be able to claim back VAT on your expenses and it is also quite a good option if your businesses customers are also registered for VAT.
If you’re still unsure about whether you are required to register for VAT or want to learn more about it then check out our guide covering all things VAT related.
