VAT is the most frequently mishandled tax in Irish SMEs — and the one where Revenue audit penalties bite hardest. The good news: once you understand thresholds, basis and the construction-specific rules, ongoing compliance is mostly mechanical.
What is the VAT registration threshold in Ireland for 2026?
The Irish VAT registration thresholds (as of January 2026) are €85,000 for the supply of goods and €42,500 for the supply of services in a rolling 12-month period. These were raised in Budget 2025 from €80,000 and €40,000 respectively. If you exceed — or are likely to exceed — the relevant threshold, you must register within 30 days. Distance-selling goods to private consumers in Ireland from elsewhere in the EU also triggers registration via the OSS scheme.
How do I register for VAT in Ireland?
Apply through Revenue Online Service (ROS) using Form TR1 (sole trader/partnership) or TR2 (company). You'll need PPS number(s), business start date, projected turnover, the address from which you trade and bank account details. Approval typically takes 7–14 days. Voluntary registration is allowed below the thresholds and can be sensible if you sell to other VAT-registered businesses or have significant input VAT to reclaim.
What is RCT and Reverse Charge VAT in construction?
RCT (Relevant Contracts Tax) is a withholding mechanism for construction, forestry and meat-processing. A principal contractor withholds 0%, 20% or 35% from payments to a subcontractor based on the subcontractor's tax compliance record, and remits it to Revenue. Reverse-charge VAT applies between principal and subcontractor on most construction services: the principal accounts for the VAT, the subcontractor invoices VAT-exclusive. The two regimes interact — and trip up most non-specialist accountants.
What can I claim VAT back on?
You can reclaim input VAT on goods and services purchased for use in your taxable business — stock, equipment, professional fees, business utilities, vehicle running costs (with caveats), software subscriptions and most overheads. You cannot reclaim VAT on: passenger cars (with limited diesel exceptions), entertainment of clients, petrol (diesel is reclaimable with restrictions), accommodation for clients, or any expense without a valid VAT invoice. Mixed business/personal use must be apportioned.
When are Irish VAT returns due?
The default cycle is bi-monthly: VAT3 returns are due by the 23rd of the month following the end of each two-month period (Jan–Feb due 23 March, etc.). Smaller traders can apply for four-monthly or annual returns. Larger traders may be moved to monthly returns. The Annual Return of Trading Details (RTD) summarises a full year and is due 23 days after your accounting year-end.
What's the difference between cash receipts and invoice-basis VAT?
Invoice basis (the default) means you account for VAT when an invoice is issued, regardless of whether the customer has paid. Cash receipts basis means you only account for VAT when payment is received — much better for cash flow if you have slow-paying customers. You can elect cash basis if turnover is under €2 million or if at least 90% of supplies are to non-VAT-registered persons.
Current Irish VAT rates (2026)
- Standard rate — 23%: most goods and services
- Reduced rate — 13.5%: hospitality (food, hotels), tourism, construction services, hairdressing, fuel
- Second reduced rate — 9%: newspapers, e-books, sporting facilities, gas/electricity (temporary)
- Livestock rate — 4.8%: livestock and greyhounds
- Zero rate — 0%: most food, children's clothing/footwear, oral medicines
- Exempt: financial services, education, medical, insurance
Confused about which rate applies to a specific product or service line? Send us a description and we'll confirm — we'd rather you ask than guess wrong.
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