“Should I register for VAT, even if I’m under the threshold?”
This is another question I hear a lot. The answer, as always, depends on your business, but here’s a plain-English overview to help you weigh it up.
In Ireland, you only have to register for VAT if your turnover exceeds:
€42,500 – Services, €85,000 – Goods (click for more)
€42,500 – If you supply manufactured goods made from zero-rated materials
€85,000 – Both goods and services, but 90%+ of your turnover comes from goods
€41,000 – For acquisitions of goods or services from other EU Member States
€10,000 – If making distance sales and Telecommunications, broadcasting and electronic (TBE)
services to other EU Member States
When Revenue assesses whether you’re required to register for VAT, they look at your turnover over the past 12 months (rolling) not just the current calendar year.
The VAT threshold exists to support smaller businesses and those just starting out. It means you can get your footing without the admin (and cash flow) pressure of VAT reporting and keep your prices low.
Even if you’re below the VAT threshold, you can register electively. The usual motivator for this is to reclaim VAT on purchases. If your clients are mostly VAT registered businesses, they likely don’t mind being charged VAT because they can reclaim it on their end. However, if you’re selling mostly to private individuals (B2C), it’s a different story. In that case, adding VAT means either raising your prices (which could make you less competitive) or absorbing the VAT yourself, which directly erodes your profit margin.
So it’s important to think carefully about who your customers are and whether your pricing can support VAT being added on top.
If you’ve voluntarily registered for VAT and later decide to cancel that election, Revenue can apply a look-back period of up to 3 years to review any VAT previously reclaimed.
If your VAT refunds exceeded your liabilities, you can be required to repay the excess. This mechanism is set out in Section 8 of the VAT Consolidation Act 2010, and it’s a provision that’s often overlooked by smaller businesses.
VAT registration is a compliance obligation — not a tactic for short-term gain. Revenue are too cute for that!
If You’re Skimming — Read This Bit
If your customers are VAT-registered businesses, voluntary registration may make sense — especially in rare cases where you have a lot of purchases at 23% and sell at 13.5%. But unless your business isn’t profitable, you’ll usually have more VAT to pay than reclaim, so expect to be paying Revenue, not the other way around.
If your customers are private individuals, it’s usually better to stay under the threshold for as long as you can.
Thanks for reading and if you need tailored advice, you know where to find me.
Lisa
Lisa Lokasto 
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