VAT threshold Ireland: when you must register and what rates apply

Published Tuesday 18 August 2026

Table of contents

• What is VAT and how does it work in Ireland?
• Current VAT registration thresholds in Ireland
• VAT rates in Ireland
• When you must register for VAT in Ireland
• Voluntary VAT registration
• VAT compliance obligations
• Simplify your VAT management with Xero
• FAQs on the VAT threshold in Ireland

Key takeaways

• The VAT registration threshold in Ireland is currently €85,000 for goods and €42,500 for services, following increases that took effect on 1 January 2025.
• Ireland applies several VAT rates, from 0% on essentials like basic food and children's clothing to the 23% standard rate, with a 9% rate for hospitality and hairdressing arriving on 1 July 2026.
• You must register for VAT within 30 days of exceeding the relevant threshold; late registration can result in backdated assessments, interest charges, and fines of up to €4,000.
• Voluntary VAT registration lets you reclaim input VAT on business purchases even if your turnover falls below the threshold, which can benefit capital-intensive startups and B2B service providers.

What is VAT and how does it work in Ireland?

Value Added Tax (VAT) is a consumption tax charged on most goods and services sold in Ireland. It's collected at each stage of the supply chain, from manufacturer to retailer. The final consumer bears the cost, but businesses act as collection agents on behalf of the state.

As a VAT-registered business, you charge VAT on your sales (output VAT). You also pay VAT on your business purchases (input VAT). The difference between the two is what you owe to, or can reclaim from, Revenue.

The Revenue Commissioners administer VAT in Ireland. They set the rules for registration, filing, and compliance. If you run a business that sells taxable goods or services, VAT will likely affect you at some point.

Current VAT registration thresholds in Ireland

The VAT registration threshold determines how much you can sell before you're required to register for and charge VAT. These thresholds were updated in Budget 2025, taking effect from 1 January 2025.

Thresholds for goods

If your business supplies goods primarily, you must register for VAT once your annual turnover reaches or is likely to reach €85,000. This threshold was previously €80,000. It applies to businesses that manufacture, import, or sell physical products.

Thresholds for services

For service-based businesses, the VAT registration threshold is €42,500. This was previously €40,000. It covers sole traders, freelancers, consultants, and any business where the primary supply is a service rather than a physical product.

EU distance selling and cross-border thresholds

If you sell goods to consumers in other EU member states, a separate distance selling threshold of €10,000 applies. Once your total cross-border sales to EU consumers exceed this amount, you must register for VAT in each destination country or use the One Stop Shop (OSS) scheme to simplify compliance.

For intra-Community acquisitions, the threshold is €41,000. If you acquire goods from other EU countries worth more than this amount in a 12-month period, you're required to account for Irish VAT on those acquisitions.

Non-established businesses

If your business is not established in Ireland but makes taxable supplies here, you must register for VAT regardless of your turnover. There is no minimum threshold for non-established traders. This applies whether you supply goods or services within the state.

How thresholds changed in 2025

The most significant recent change came in Budget 2025. The thresholds rose from €40,000 (services) and €80,000 (goods) to the current levels of €42,500 and €85,000, effective from 1 January 2025.

In 2025, Statutory Instrument No. 69/2025 also introduced a change in how turnover is assessed.

Rather than basing the calculation solely on past turnover, Revenue can now consider whether a business is likely to exceed the threshold based on projected or anticipated turnover.

This forward-looking assessment method means you should monitor your expected revenue, not just your historical figures.

VAT rates in Ireland

Ireland operates a multi-rate VAT system. The rate that applies depends on the type of goods or services you supply.

Standard rate (23%)

The standard VAT rate of 23% applies to most goods and services that don't qualify for a reduced or zero rate. This includes electronics, adult clothing, professional services, and most retail goods.

Reduced rate (13.5%)

The 13.5% reduced rate covers a range of goods and services, including:

• Building and construction services
• Certain energy products such as solid fuels
• Short-term car hire
• Cleaning and maintenance services
• Certain tourism-related services

Second reduced rate (9%)

The 9% rate was reintroduced for specific sectors. It currently applies to:

• Newspapers and periodicals, including digital editions
• Access to sporting facilities
• Electricity and natural gas supply, extended to 31 December 2030 under recent budget measures
• Heat pump installations
• Supply of new apartments under certain conditions

Livestock rate (4.8%)

A special VAT rate of 4.8% applies to livestock, including cattle, sheep, and horses. It also covers greyhounds and the hire of horses. This rate is specific to the agricultural sector.

Zero rate (0%)

A zero VAT rate applies to essential goods and certain exports. Zero-rated items include:

• Exports of goods outside the EU
• Most basic foodstuffs such as bread, milk, meat, fruit, and vegetables
• Children's clothing and footwear
• Books and e-books
• Oral medicines and certain medical devices

You still charge VAT at 0%, which means you can reclaim input VAT on related purchases even though the output VAT is nil.

2026 rate changes

From 1 July 2026, VAT on restaurant and catering services and hairdressing services will move from the 13.5% reduced rate to the 9% second reduced rate.

This was announced in Budget 2026 as part of ongoing support for the hospitality sector. Note that hotel and short-term rental accommodation is not included in this reduction.

If you operate in these industries, you'll need to update your invoicing and accounting systems ahead of the changeover date.

When you must register for VAT in Ireland

VAT registration is mandatory once certain conditions are met. Knowing the triggers helps you avoid penalties and stay compliant.

Mandatory registration triggers

You must register for VAT if any of the following apply:

• Your turnover exceeds or is likely to exceed €85,000 for goods or €42,500 for services in any continuous 12-month period.
• You make intra-Community acquisitions exceeding €41,000.
• You make distance sales to Irish consumers exceeding the €10,000 EU-wide threshold.
• You're a non-established trader making taxable supplies in Ireland.

How to calculate your turnover

Your VAT-relevant turnover includes all taxable supplies of goods or services you make in the course of business. When calculating whether you've reached the threshold, keep these points in mind:

• Include the total value of taxable sales, excluding VAT itself.
• Exclude exempt supplies, such as certain financial and medical services.
• Exclude sales of capital assets that aren't part of your regular trading activity.
• If you buy and resell stock, you can deduct the VAT-inclusive cost of that stock from your turnover calculation for threshold purposes.

This deduction for resale stock is particularly relevant for retailers and traders who buy goods specifically for resale.

Timeline for registration

You must apply to register for VAT within 30 days of exceeding the relevant threshold. You can register through the Revenue Online Service (ROS) by completing a TR1 form (or TR2 for companies).

Revenue may also register you proactively if they believe your turnover is likely to exceed the threshold.

Late registration doesn't remove your obligation. You may be required to account for VAT from the date you should have registered, not from the date you actually did.

Voluntary VAT registration

You don't have to wait until you hit the threshold. Voluntary VAT registration is available to any business making taxable supplies, regardless of turnover.

Benefits of voluntary registration

There are several reasons you might choose to register before reaching the threshold:

• Reclaim input VAT on business purchases, equipment, and setup costs
• Present a more credible image to B2B clients who expect VAT invoices
• Prepare for growth without a disruptive mid-year switch
• Recover startup costs sooner, improving early-stage cash flow

For capital-intensive businesses or those with significant upfront investment, voluntary registration can deliver a meaningful financial advantage.

Drawbacks of voluntary registration

Voluntary registration also comes with obligations you should weigh carefully:

• You must charge VAT on all taxable sales, which can increase prices for non-VAT-registered customers.
• You're required to file VAT returns on a regular schedule, adding to your admin workload.
• You must maintain detailed records of all transactions for a minimum of six years.

If most of your customers are consumers rather than VAT-registered businesses, the added cost on your prices may outweigh the benefits of reclaiming input VAT.

VAT compliance obligations

Once registered, whether by requirement or by choice, you take on a set of ongoing responsibilities.

Filing VAT returns

The standard VAT return period in Ireland is bi-monthly (every two months). You file returns through the Revenue Online Service (ROS), and payment is due by the 23 of the month following the end of each return period.

Alternative filing frequencies are available in some cases:

• Four-monthly or six-monthly returns for smaller businesses
• Annual returns with advance payments for qualifying businesses
• Monthly returns for businesses that consistently receive VAT refunds

Record-keeping requirements

You must keep detailed records of all sales, purchases, imports, and exports. These records should include:

• Copies of all invoices issued and received
• Credit notes and debit notes
• Records of goods imported or exported
• Details of any intra-Community transactions
• Annual accounts and supporting documentation

All records must be retained for at least six years and be available for inspection by Revenue.

Penalties for non-compliance

Revenue takes VAT compliance seriously. Failing to register, file, or pay on time can lead to significant consequences:

• Backdated VAT assessments covering the period from when you should have been registered.
• Interest charges on late payments, currently approximately 10% per year (0.0274% per day).
• Fixed penalties of up to €4,000 for failure to file or register.
• Tax-geared penalties of up to 100% of the VAT owed in cases of deliberate non-compliance or fraud.

Simplify your VAT management with Xero

Keeping track of VAT rates, thresholds, and filing deadlines takes time, especially when the rules keep changing. Xero accounting software helps you stay on top of your VAT obligations without the manual effort.

With Xero, you can automate VAT calculations on your invoices, track input and output VAT in real time, and generate VAT returns that are ready to file. If rates change or your business crosses a threshold, your records stay accurate and up to date.

Whether you're newly registered or managing complex multi-rate transactions, Xero brings your VAT data together in one place so you can file with confidence.

Ready to spend less time on VAT admin? Get one month free and see how Xero can help you manage your VAT with less effort.

FAQs on the VAT threshold in Ireland

Here are answers to common questions about VAT registration and thresholds in Ireland.

What is the VAT threshold in Ireland for 2025?

The VAT registration threshold is €85,000 for businesses that primarily supply goods and €42,500 for those that primarily supply services. These thresholds took effect on 1 January 2025.

Do I need to register for VAT if I only sell services?

Yes, if your annual turnover from taxable services exceeds or is likely to exceed €42,500. Revenue can also assess your projected turnover when deciding whether you need to register.

What happens if I exceed the VAT threshold?

You must apply to register for VAT within 30 days. Revenue may backdate your registration and require you to account for VAT from the date you should have registered, along with interest and potential penalties.

Can I register for VAT voluntarily?

Yes. Any business making taxable supplies can register voluntarily, regardless of turnover. This lets you reclaim input VAT on business purchases, which is particularly useful for startups with high upfront costs.

How often do I need to file VAT returns?

The standard filing frequency is bi-monthly, with payment due by the 23 of the following month. Some businesses may qualify for four-monthly, six-monthly, or annual returns depending on their circumstances.

What are the penalties for not registering for VAT?

Revenue can impose backdated VAT assessments, interest at approximately 10% per year, fixed penalties of up to €4,000, and tax-geared penalties of up to 100% of the VAT due in serious cases.

Does the VAT threshold apply to online businesses?

Yes. The same thresholds apply whether you sell online or in person. For cross-border sales to EU consumers, a separate €10,000 distance selling threshold applies. Exceeding it triggers registration in destination countries or use of the One Stop Shop (OSS) scheme.

What is the EU SME scheme for VAT?

The EU SME scheme, introduced in 2025, allows small businesses in one EU member state to benefit from VAT exemptions in other member states. Your total EU-wide turnover must stay below €100,000 to qualify, which can reduce compliance burdens for small cross-border traders.