What are the VAT thresholds?
Value-Added Tax (VAT) registration is obligatory when your annual turnover exceeds or is likely to exceed the VAT thresholds. The threshold in relation to distance selling is based on your turnover in a calendar year. In all other cases, the threshold is based on your turnover in any continuous 12 month period.
If you are below the thresholds you may elect to register for VAT.
The principal thresholds are as follows:
- €37,500 in the case of persons supplying services only.
- €35,000 for taxable persons making mail-order or distance sales into the State.
- €41,000 for persons making acquisitions from other European Union Member States.
- €75,000 for persons supplying goods.
- €75,000 for persons supplying both goods and services where 90% or more of the turnover is derived from supplies of goods. However, while all goods and services are included in total turnover, the 90% figure does not necessarily include all goods sold. The 90% does not include goods sold at the standard or reduced rates which those persons have manufactured or produced from zero rated materials.
- A person who, while not established in the state, supplies taxable goods or services in the State, is obliged to register and account for VAT. This applies irrespective of the level of turnover.
How is your turnover determined?
The VAT registration threshold is based on your turnover.
Where you purchase stock for resale, you may reduce your actual turnover by the amount of VAT borne on those purchases. This reduction is only for the purpose of determining your turnover for registration purposes.
- Example Michael has an annual turnover of €80,000. He has incurred VAT on his stock purchased for re-sale in the amount of €11,220. Michael can reduce his turnover figure by the €11,220 when determining whether he has breached the threshold. €80,000 minus €11,220 equals €68,780. As the adjusted turnover is below the registration limit of €75,000, he is not obliged to register.