Advice needed on VAT for sole trader.


New Member
I'm a sole trader providing services to the general public. I am not currently registered for VAT. I had been below the VAT threshold of €37.5k, but trade has increased in the last 6 months and I am confused about the VAT threshold with respect to the Revenue's statement:

"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."

For the past 12 months (May 2019 - May 2020) I have not exceeded the threshold. However, if my next 6 months is the same as the past 6 months I will exceed it.

So, I have some questions:

Does the above mean I need to register and charge VAT shortly before I reach the threshold and then return VAT from that point? Or am I required to register and return VAT now? When is it best to register? If I register now, will I be liable for VAT for the past 6 months (even though I hadn't registered / charged VAT)?

Secondly, as I supply services directly to customers, an increase of 23% is really significant and I am concerned this will reduce trade a lot. If I register and charge VAT and then it turns out I don't reach the threshold, where do I stand? Do I need to refund customers the VAT or just submit return to Revenue anyway?

The information on Revenue and Citizens Information is really not specific so any advice would be hugely appreciated.
Thank you very much!


Frequent Poster
This is something that most self employed/ small businesses reach at some stage. If you run your business accounts on an annual basis i.e. Jan-Dec, then apply to register for VAT on the same basis. You make one annual return early in the year for the previous year. This minimises the paperwork. That's what I do and it's not too onerous once you have the appropriate book keeping software that will apply VAT at the correct rate and produce the figures you need for submission.

Basically you become a tax collector for the Revenue so you must remember to set aside the VAT you collect from customers as it's not yours and you need to pay it over in due course. (Certain elected politicians seem to have 'got away' with this though!).

AFAIK the procedure is if you exceed the threshold this year, you can't collect VAT retrospectively, but you inform Revenue and register for 2021.

Remember you can write off VAT you pay on invoices against that which you collect. As regards your customers and effect on them, it depends if they are registered for VAT, state bodies or the public. For the first two, it makes no difference. For members of the public, that's just how it is - the end consumer ultimately pays VAT.


Frequent Poster
As per what Compass said, except I find it easier to submit every 2 months. My accountant showed me what to do at the start, and I've looked after it ever since - one less cost to incur paying an accountant to do something that's easy enough to do yourself via a spreadsheet (if the business is smallish).


Frequent Poster
Once you expect to breach the threshold, you have to register. Effectively once you're bringing in over €3k a month and expect to continue to do that, you should register. Once you've registered, you must charge VAT to your customers and you must pass that on to revenue.


Frequent Poster
If you are registered you can and you must charge VAT.

While you are not registered you cannot and must not charge VAT.

You should contact revenue and apply to become registered now as you expect to reach the threshold.

You must charge VAT from the date you become registered, i.e. receive your registration from Revenue.

If your costs are mostly your own time (there is no reclaim on wages) this may have a huge impact on your business. You become 23% more expensive to your (non VAT registered) customers overnight.

Many traders simply stop working for a month or so each year so that they do not go over the threshold.