Whether you must register for VAT.
VAT registration
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Headroom to threshold
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Your breakdown
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Two thresholds, and why they differ so much
Ireland does not have one VAT registration threshold, it has two, and getting them mixed up is the single most common error among new sole traders. For supplies of services the limit is €42,500 of turnover in any continuous 12-month period. For supplies of goods it is €85,000, exactly double. A consultant, a coach, a designer, or a tradesperson selling mostly labour crosses the line at €42,500. A shop or an online retailer selling physical products only crosses at €85,000. Where a business does both, the goods threshold applies only if at least 90% of turnover comes from goods, otherwise the lower services figure rules. The thresholds count turnover over any rolling 12 months, not a calendar year and not the tax year, which catches people who think they reset every January.
A services business at €50,000, just over the line
Take the calculator’s default: a service provider with €50,000 of turnover. That sits €7,500 above the €42,500 services threshold, so registration is no longer a choice. You must register with Revenue, charge VAT on your invoices, and file VAT3 returns, usually every two months. On most services that means adding the 23% standard rate on top of your fee. The table shows where the €50,000 lands.
The chart marks where the same business sits against both thresholds. It is over the services line but well under the goods line, which is why the type of supply matters so much.
When registering early actually pays
Below the threshold, registration is voluntary, and the decision is genuinely a judgement call rather than a formality. Registering lets you reclaim the VAT you are charged on your own costs, equipment, software, professional fees, and stock. For a business that buys a lot before it earns much, or one whose customers are themselves VAT-registered companies that simply reclaim the VAT you charge, voluntary registration can be a clear win. The flip side is real administrative weight and, for a business selling to consumers who cannot reclaim, a 23% price rise that you either absorb or pass on. My rule of thumb: if most of your customers are other businesses, register early without much agonising. If you sell to the public and your input costs are modest, stay unregistered until you are forced over the line.
The forward-looking test people forget
Registration is not only about turnover you have already booked. Revenue requires you to register if you reasonably expect to exceed the threshold in the next 12 months, even before you actually do. So a contractor who signs a single contract that will obviously push annual fees past €42,500 is supposed to register from the start of that activity, not wait for the invoices to add up. This catches founders who land a large client early. The common and costly mistake is the mirror image: trading well over the threshold for months without registering, then facing a bill for the VAT that should have been charged all along, which Revenue can pursue even if you never collected it from customers. This tool is built for the sole trader or small company owner sizing up where they stand, and for anyone deciding whether to register voluntarily before they have to.
Common questions
What happens if I register late for VAT in Ireland?
Revenue can backdate your registration to the date you should have registered and assess the VAT you ought to have charged from that point, plus interest and possibly penalties. Because you usually cannot go back and collect that VAT from customers after the fact, it comes straight out of your margin. If you realise you have gone over, register and regularise the position quickly rather than hoping it is missed, as the longer it runs the larger the exposure.
Can I deregister if my turnover falls back below the threshold?
Yes. If your turnover drops and you expect to stay below the relevant threshold, you can cancel your VAT registration with Revenue. Be aware that cancelling can trigger a clawback of VAT you previously reclaimed on assets you still hold, so it is not always cost-free. For a business hovering around the line, the steadier option is often to stay registered rather than flip in and out year to year.