VAT is an indirect consumption tax you need to pay the Irish government if you have clients or consumers in Ireland. The Irish government charges a standard VAT rate of 23%, and reduced rates of 13.5% and 9%, based on the category of goods and services you provide. You can find VAT-related information and updates for Ireland on the Revenue Commissioners website. Revenue Commissioners is the government tax authority responsible for administering and collecting taxes and VAT in Ireland.
If you are a freelancer in Ireland or looking to extend your freelancing services to Ireland, you should understand how Irish VAT works and this simplified guide will tell you everything you need to know - so, let’s get started!
The Revenue Commissioners imposes three different VAT rates, and you should apply the rates applicable to the goods and services you provide
Additionally, the Revenue Commissioners also charge a rate of 4.8% on Livestock and a flat-rate 5.6% compensation for farmers.
If you provide tax-exempt services in Ireland to non-taxable clients, you don't need to register for VAT. However, if you are providing taxable services, you should be aware of the range of VAT registration thresholds.
If you have paid some amount of VAT on the stock of items that you bought for resale, you may use this amount to reduce your annual turnover. If your reduced turnover no longer meets the threshold for VAT registration, you aren’t liable to register for VAT in Ireland.
However, even if you don’t meet the thresholds in any circumstances mentioned above, you can still voluntarily register for VAT. Additionally, you can check the Revenue Commissioners website for other potential scenarios that determine when you might need to register for VAT.
As a solopreneur, you must have a Personal Public Service Number (PPSN) before registering for VAT in Ireland. Your Tax Reference Number (TRN) will be the same as your PPSN once you register for taxes. You can then register for VAT and manage your account through Revenue's eRegistration service, using Revenue Online Service (ROS).
Note that you must have a permanent residency in Ireland to be eligible for eRegistration. If you are not eligible for eRegistration, then you must complete Form TR1 to register for VAT. Additionally, paper applications for VAT registration will be returned to you or your tax agent. If you cannot access ROS, the Revenue office will only accept a hard copy of the TR1 form under exceptional circumstances.
If you are an ex-pat freelancer conducting economic activities in Ireland, you should submit the TR1 (FT) form by post to Business Taxes Registrations at the Office of the Revenue Commissioners.
Your VAT registration is active starting from when your local tax district sends you a note agreeing upon your VAT status. If any information in the application you submitted for VAT registration is incorrect or changed, you should notify the Revenue office within 30 days.
Another option is to register for VAT using Mini One-Stop Shop (MOSS), an EU-wide tax system that allows you to consolidate all of your EU VAT in one single tax return. This scheme is optional but beneficial if you have customers in multiple EU countries. MOSS allows you to avoid registering in each Member State of consumption. Even if you’re based outside the EU, you can register with MOSS in Ireland or other EU countries. To learn more, click here.
Alternatively, you can hire an accountant (or agency) to handle your VAT returns and dealings with the tax office. Xolo provides services like Xolo Go and Xolo Leap, which help with precisely this and any other VAT concerns you may have.
Once you are a VAT registered freelancer, you have to charge the appropriate VAT amount from your clients and maintain a record of all transactions. You should regularly file VAT returns and make required payments to the office of Revenue Commissioners every two months. In Ireland, you are required to submit tax returns and payments electronically or will have to pay a fine of €1520 on every transaction if you fail to do so.
Furthermore, you should also make sure to maintain a running total, including recent transactions, in your VAT account. You have to pay the difference between the VAT you charge and the VAT you were charged. If the amount you paid exceeds the amount you charged, Revenue Commissioners will pay the excess amount back to you.
VAT invoices are the EU’s version of tax receipts. You must ensure that all your VAT invoices are accurate and properly formatted to display the following details:
You must also make sure to maintain copies of the following records for at least 6-10 years:
It’s easy to lose or damage documents when you’re dealing with so many different aspects of your freelance business. Xolo can ensure that your records are stored, organised, and maintained in our system for as long as you need, so they’re easily accessible, and you don’t have to worry about misplacing them.
As a freelancer, you will generally need to report VAT every two months. However, there are some exceptions:
With Xolo Go, you can easily freelance and invoice your clients, even without a registered company or LLC.
Simply put, we do the hefty work for you so that you can enjoy the freedom of freelancing. So connect with us immediately, and we’ll help you get your one-person business up and running in Ireland in no time!