Value-Added Tax (VAT) is a tax, which is payable on sales of goods or services within the territory of the Member States of the EU. The tax, in all cases, is ultimately payable by the final consumer of the good or service. Each party in the chain of supply (manufacturer, wholesaler and retailer) acts as a VAT collector.
They collect VAT from their customer and include that VAT in their VAT return to Revenue. When returning the VAT collected, they can reclaim as appropriate, VAT which has been charged to them by their suppliers.
For VAT purposes, the territory of the State includes its territorial sea. The territorial sea of the State extends to a limit of twelve nautical miles.
| 23% (standard rate) | 23% is the standard rate of VAT. All goods and services that do not fall into the reduced rate categories are charged at this rate. They include alcohol, audio-visual equipment, car parts and accessories, CDs, computers, consultancy services, cosmetics, detergents, diesel, fridges, furniture and furnishings, hardware, jewellery, lawnmowers, machinery, office equipment, pet food, petrol, paper, tobacco, toys, tools, bottled water, washing machines and most medicines (non-oral). |
| 13.5% (reduced rate) | 13.5% is a reduced rate of VAT for items including coal, heating oil, vet fees, building and building services, agricultural contracting services, short-term car hire, cleaning and maintenance services. |
| 9% | 9% is a second reduced rate. Gas and electricity were reduced to this rate from 1 May 2022 and extended to 31 October 2024 by Budget 2024. The VAT rate for the hospitality and tourism sector also decreased from 13.5% to 9%, for the period 1 November 2020 to 31 August 2023. This applied to various entertainment services such as admission to cinemas, theatres, museums, fairgrounds and amusement parks. VAT at 9% also applies to hairdressing and certain printed materials such as brochures, maps and programmes. |
| 4.8% | 4.8% is a reduced rate of VAT specifically for agriculture. It applies to livestock (excluding chickens), greyhounds and the hire of horses. |
| 0% | 0% (Zero) VAT rating includes all exports, tea, coffee, milk, bread, books, children’s clothes and shoes, vegetable seeds and fruit trees, fertilisers, large animal feed, oral medicine for humans and animals, disability aids such as wheelchairs, crutches and hearing aids. It was announced in Budget 2023 that the 0% rate would be extended from 1 January 2023 to newspapers (including digital editions), defibrillators, period products and non-oral medicines for Hormone Replacement Therapy (HRT) and nicotine replacement therapy. It was announced in Budget 2024 that the rate for ebooks and audio books would be reduced to 0% (from 9%) from 1 January 2024. |
| Exempt from VAT | You do not have to pay any VAT on financial, medical or educational services. You may also not pay VAT for live theatrical and musical performances (except those where food or drink is served during all or part of the performance). |
| Difference between exemption and zero-rating | If a business person supplies taxable goods or services, including zero-rated ones, they can claim VAT back from the government on their taxable business purchases. However, if someone only supplies exempt goods or services, they cannot reclaim VAT. |
Value-Added Tax (VAT) registration is obligatory when your turnover exceeds, or is likely to exceed, the VAT thresholds. The thresholds depend on your turnover in any continuous 12 month period. The threshold for intra-Community distance sales of goods and cross-border telecommunications, broadcasting and electronic (TBE) services relies on your turnover in a calendar year. If the turnover is less than a threshold limit, you may elect to register for VAT.
| Supply of Goods | €80,000 |
| Supply of Services | €40,000 |
The application of the second reduced VAT rate of 9% to gas and electricity supplies is extended for one year until 31 October 2024.
The VAT rate on the supply of electronic books and audio books will be reduced to 0%, with effect from 1 January 2024.
The VAT rate on the supply and installation of solar panels on school buildings will be reduced to 0%, with effect from 1 January 2024.
The flat-rate addition for farmers will be reduced from 5% to 4.8%, with effect from 1 January 2024.
With effect from 1 January 2024, the turnover thresholds beyond which suppliers are obliged to
register for VAT will rise:
For a supplier of goods, the new threshold will be €80,000, up from €75,000.
For a supplier of services (or mixed supplies), the new threshold will be €40,000, up from
€37,500.
Suppliers whose turnover is below the threshold amount may opt to register for VAT.