Value Added Tax (VAT) is a consumption tax charged on most goods and services sold in Ireland. If you run a business, understanding VAT is essential — from knowing when you must register, to charging the correct rates, to filing your returns on time. Getting it wrong can lead to penalties and interest charges from Revenue.
Irish VAT Rates for 2025
Ireland has several VAT rates that apply to different categories of goods and services:
- Standard rate: 23% — applies to most goods and services.
- Reduced rate: 13.5% — applies to certain goods and services including building and construction, energy supply, restaurant meals, and some tourism services.
- Second reduced rate: 9% — applies to newspapers, electronic publications, and certain sporting facilities.
- Livestock rate: 4.8% — applies to the supply of livestock.
- Flat-rate addition: 5.5% — applies to unregistered farmers who supply agricultural produce.
- Zero rate: 0% — applies to essential items including most food, children's clothing and footwear, oral medicines, and exports.
- Exempt: Certain services are VAT-exempt, including financial services, insurance, education, and medical services.
When Must You Register for VAT?
You must register for VAT if your turnover exceeds or is likely to exceed:
- €75,000 for the supply of goods
- €37,500 for the supply of services
These thresholds are based on annual turnover. If your turnover is below these limits, you can choose to register voluntarily. Voluntary registration can be beneficial if you sell primarily to VAT-registered businesses (who can reclaim the VAT) or if you incur significant VAT on your business purchases.
How to Register for VAT
You can register for VAT through Revenue's Online Service (ROS). You will need your tax registration number and your business details. Registration typically takes a few days to process. Once registered, you will receive a VAT registration number that must appear on all your invoices.
Filing VAT Returns
VAT returns are generally filed bi-monthly (every two months) through ROS. The due date is the 19th of the month following the end of each VAT period. For example, the January/February return is due by 19 March.
Each return shows:
- VAT charged on sales (output VAT)
- VAT paid on business purchases (input VAT)
- The difference — either a payment to Revenue or a refund due to you
You can also apply for annual VAT returns if your annual VAT liability is less than €3,000.
Reclaiming VAT on Business Expenses
As a VAT-registered business, you can reclaim VAT on legitimate business expenses. This includes VAT on stock, equipment, professional services, and other business costs. However, there are restrictions on reclaiming VAT on certain items including food and drink, entertainment, motor vehicles (with some exceptions), and petrol.
Common VAT Mistakes
- Charging the wrong rate: Different goods and services attract different VAT rates. Check which rate applies to your products.
- Late filing: Late returns attract interest and penalties. Set up reminders for filing deadlines.
- Not keeping proper records: You must keep all invoices, receipts, and VAT records for at least 6 years.
- Failing to register on time: If your turnover exceeds the threshold, you must register immediately. Backdated registrations can result in penalties.
- Reclaiming VAT on non-deductible items: Entertainment, petrol, and certain other categories are specifically excluded from VAT recovery.
VAT on Imports and Exports
Goods exported from Ireland are generally zero-rated for VAT, meaning you charge 0% VAT but can still reclaim input VAT on related costs. Goods imported into Ireland from outside the EU are subject to VAT at the point of import, along with any applicable customs duties.
For trade within the EU, the reverse charge mechanism applies for B2B transactions, meaning the buyer accounts for VAT in their own country rather than the seller charging Irish VAT.
Final Thoughts
VAT is a significant part of running a business in Ireland. Getting your rates right, registering at the right time, filing returns promptly, and keeping good records will keep you on the right side of Revenue. If your business is approaching the registration thresholds, start planning now so the transition to being VAT-registered is smooth.