VAT for the self-employed in Ireland: thresholds and when to register

Who has to register

Revenue calls anyone who supplies taxable goods or services an accountable person, and generally you must register for Value-Added Tax (VAT) if you are one.

Registration becomes obligatory once your turnover exceeds, or looks likely to exceed, the threshold that applies to you. Turnover here means everything you invoice, before any costs come off.

The thresholds

Revenue publishes the VAT thresholds in full, and two of them cover most trades:

• €42,500 for supplying services.

• €85,000 for supplying goods.

Two more catch specific situations, and both are easy to read past:

• €42,500 if you supply goods taxed at a positive rate that you made yourself from zero-rated materials. A baker turning zero-rated flour into cakes sits here, on the lower threshold, despite selling goods.

• €85,000 if you supply both goods and services and at least 90% of turnover comes from goods.

Selling across borders has its own figure. A €10,000 threshold applies to intra-Community distance sales of goods and cross-border telecommunications, broadcasting and electronic services into the State. That one is counted across every European Union member state you sell into, added together, so it arrives quickly.

The calendar-year test, and the forward-looking part

Two parts of the rule catch people out.

• The test runs on the calendar year. This changed in January 2025: turnover used to be measured over any rolling 12 months, now it is counted per calendar year. The look-back matters too: if your turnover passed the threshold last calendar year, the obligation is already there, even if this year looks quieter.

• It looks forward. The wording is "exceeds, or is likely to exceed". If you sign a contract in March that will take you past the threshold by November, the obligation arrives as soon as that becomes likely, ahead of the money landing. Waiting for the bank balance to confirm what the contract already told you is how people end up registering late.

Registering when you do not have to

You can elect to register below the threshold, and whether it helps depends on who your customers are.

• It usually helps when you sell to VAT-registered businesses. They reclaim the VAT you charge, so your price is unchanged from their point of view, and you start reclaiming VAT on your own costs. For anyone buying equipment, software, tools or stock, that is money back.

• It usually hurts when you sell to consumers. They cannot reclaim anything, so charging VAT either raises your price or eats your margin. A graphic designer charging a consumer €400 for a job either goes to €492 or absorbs the difference, and neither is comfortable.

There is a second use for it. If you have set up but not yet supplied anything, Revenue notes you can reclaim VAT on start-up costs, but only if you register. Fit-out, equipment and professional fees spent before your first invoice are recoverable, and only through registration.

The backdating rule worth knowing before you apply

The date your registration starts is not always the date you choose, and the rule splits by which kind of registration you are making.

Revenue's guidelines for VAT registration set out both. Where turnover has already exceeded the threshold, registration can be backdated to an earlier date. Where you are electing to register below the threshold, it can only take effect from the start of the VAT period in which you apply, and cannot be backdated before that.

So if you spent €8,000 on equipment in February and apply to elect in July, the February VAT is out of reach. Anyone planning a large purchase before trading starts should register first and buy second.

What changes once you are registered

Four things follow, and the first one catches most new registrations.

• You are holding money for Revenue. The VAT you add to invoices belongs to them. Invoice €10,000 plus VAT at the standard rate and €2,300 of what lands in your account was never yours, which is the cash flow mistake newly registered sole traders make most often, because the bill arrives after the money has been spent.

• You charge the rate that matches what you sell. Ireland has a standard rate plus several reduced rates and a zero rate, and which applies turns on the specific good or service rather than your trade. Rates also move: catering and hairdressing dropped from 13.5% to 9% on 1 July 2026. Check the rate that applies to your own supplies.

• You reclaim VAT on business purchases. Input VAT, meaning the VAT you have paid to suppliers, comes off what you owe. You need a valid VAT invoice for each claim.

• You file returns and keep records. Returns go through the Revenue Online Service (ROS) on a cycle Revenue sets when you register, along with an annual summary of your purchases and sales by rate.

Zero-rated and exempt behave differently

Both mean no VAT on your invoice, and they behave differently.

• Zero-rated supplies are taxable at 0%. You charge nothing, and you still reclaim VAT on your costs.

• Exempt activities are outside the VAT system. You charge nothing, and you generally cannot reclaim VAT on costs either. Insurance, most health and welfare services, and education fall here.

If your work is exempt, registration is usually not available to you at all, which also means no recovery on your equipment.

Insurance for sole traders in Ireland

Insify offers business insurance for self-employed people and sole traders in Ireland:

• Public liability insurance is for claims that your work injured someone or damaged their property.

• Professional indemnity insurance is for claims that your advice or your service cost a client money.

You arrange cover online and can share proof of it with a client who asks.

Insify is an insurance intermediary. This article is general information about Irish VAT and is not tax, legal or financial advice. Thresholds, rates and rules change, so check the Revenue pages linked above for the current position. What a policy covers, along with its limits, conditions and exclusions, is set out in the policy documentation, which you should read before taking out cover.