Guide To VAT (Value Added Tax) in Ireland

by Deirdre O Meara
calculating vat in ireland

Just like how business operations can vary from corporation to corporation, rules regarding VAT can vary throughout Europe. If you’re looking to familiarize yourself with VAT in Ireland, keep reading. 

What is VAT and How to Calculate It

First and foremost, what is VAT? And how does it get calculated? VAT, also known as Value Added Tax is a type of basic tax that’s added to most goods and services throughout Ireland. This type of indirect tax is paid by consumers. 

Basically, VAT works on a tiered system, meaning that the more expensive a good or service is, the more tax will be added. In order to calculate VAT, you’ll have to multiply the original price by 1.23. This is because the standard VAT rate in Ireland is 23%. The standard rate of VAT covers most goods and services, including but not limited to: 

  • Furniture
  • Cars and other types of motor vehicles
  • Solicitor and consultancy services

There is also a reduced VAT rate, which applies to things such as fuel and repair services, cleaning and maintenance, tour guides, construction, electricity, and short-term hires. However, there is also a second reduced VAT rate which applies to newspapers and periodicals, excluding those used for marketing purposes. 

As of publication and through February of 2023, this second reduced rate will also apply to hairdressing services, hotel lettings, restaurant supplies, and amusement services (to name a few). Certain oral medications, books, clothing for children aged 11 years and younger, and eligible food and beverages may have zero VAT. 

Last but not least, there is the livestock VAT, which applies to all livestock, including horses that are used for agricultural production or foodstuffs.

If you’re a consumer in Ireland, it’s a good idea to acquaint yourself with the different types of VAT we mentioned above, as well as the current VAT rates in Ireland. 

VAT Rates in Ireland

Now that we’ve briefly discussed the different VAT types, let’s look at the current VAT rates in the Emerald Isle. 

As previously mentioned, the current standard VAT rate that will apply to most goods and services throughout Ireland is 23%. However, keep in mind the following VAT rates, as well: 

  • First reduced rate: 13.5%. 
  • Second reduced rate: 9%
  • The reduced VAT rate for livestock: 4.8%

Remember the formula we mentioned earlier? Well, you’ll use the same thing to calculate these other VAT rates. For the first reduced rate, multiply your original price by 1.135. For the second reduced rate, multiply your original price by 1.09. For the super-reduced rate on livestock, multiply your original price by 1.048. 

Registering for VAT

As a business owner, it’s critical that you understand how to register for VAT. If you don’t meet certain thresholds, you’re not obligated to register for a VAT, but you can still register if you wish to do so. If you sell over €75,000 in goods or €37,500 in services over the course of 12 months, then it becomes mandatory to register for VAT. Registering for VAT can be done by filling out a TR1 or TR2 form online. A TR1 form is for partnerships, sole traders, individuals, or trust. If you have a limited company, you’ll have to fill out the TR2 form instead.

Your VAT will go into effect on a date decided on by you and your local tax district after your application has been submitted. If you need to change any information on the application you submitted, you have 30 days to do so. If your VAT registration expires, you have the option to re-register for it. Once you have VAT status, you have to file your payments and tax returns electronically.

VAT Thresholds

When it comes to having to register for VAT, there are a number of ways in which your business can qualify. If you clear a certain amount of money in 12 months in certain situations, you are obligated to register for VAT. These situations include:

  • The previously mentioned selling over €75,000 in goods or €37,500 in services.
  • €10,000 in mail-order, cross-border TBE services, or intra-community distance sales of goods.
  • €75,000 in both services and goods, where the goods make up 90% or more of the turnover.
  • €41,000 for making acquisitions from other members of the EU.

If you don’t meet any of these requirements, registering for a VAT is not mandatory, but you can still register for one if you wish to do so.

Adding VAT To Your Sales

Calculating VAT isn’t the easiest task. Having a VAT calculator can help. While there’s plenty out there on the web, we highly recommend you check out My VAT Calculator. It makes it easy to figure out not only the amount of VAT you should be charging, but your total amount will be once it’s been added to the price. If you’re still looking for a little help with balancing the books, we have a list of top-rated accountants who can help you with your financial needs.

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