This guide is for businesses that sell to customers in the European Union and it covers the basics of VAT and VAT "One Stop Shop" VAT.
Key Takeaways
Irish VAT Thresholds: €85,000 for goods and €42,500 for services within a 12-month period.
Registration Timing: Register with Revenue once you approach thresholds to avoid retroactive liability, but don't register prematurely and create unnecessary administrative burden.
Cross-Border Sales: Different rules apply for B2B vs B2C sales across EU borders, with a €10,000 annual threshold for B2C sales before destination-based VAT rates apply.
VAT One Stop Shop: Simplifies compliance for businesses selling to consumers across multiple EU countries through a single registration and return.
Record-Keeping: Maintain evidence of customer status and location for at least six years to ensure compliance with Revenue requirements.
Return Filing: Irish VAT returns are typically filed quarterly through ROS, with penalties for late filing.
Register for VAT when your taxable turnover approaches the relevant threshold (€85,000 for goods, €42,500 for services) within any 12-month period. You can also register voluntarily before reaching these thresholds if it benefits your business, such as when you need to reclaim VAT on significant business expenses.
Can I reclaim VAT on expenses before I'm VAT registered?
No. You can only reclaim VAT on business purchases made after your VAT registration date. This is why timing your registration carefully matters – register too late and you miss out on input VAT recovery.
How do I determine if I need to charge VAT to an EU business customer?
If your EU business customer provides a valid VAT number (which you should verify through the VIES portal), you generally don't charge VAT. Instead, document the sale as exempt under the reverse charge mechanism, noting "VAT reverse charge" on your invoice.
What happens if I exceed the €10,000 threshold for B2C sales to other EU countries?
Once you exceed the €10,000 threshold, you must either register for VAT in each customer's country or register for the VAT One Stop Shop (OSS) through the Irish Revenue. The OSS allows you to file a single quarterly return covering all EU sales.
How often do I need to file VAT returns in Ireland?
Most Irish businesses file VAT returns quarterly. However, depending on your circumstances, you may be approved for monthly or bi-monthly returns. New businesses typically start with quarterly filing periods.
What evidence do I need to keep for B2C digital sales?
You should keep at least two pieces of non-contradictory evidence of your customer's location, such as billing address, IP address, bank location, or country of card issue. This evidence must be stored for six years under Irish tax law.
Can I de-register for VAT if my turnover falls below the threshold?
Yes. If your turnover falls below the registration threshold and you expect it to remain there, you can apply to cancel your VAT registration. However, you may need to repay some VAT previously reclaimed on capital items.
