VAT and sales only occasionally above €85k?

[Louis]

What does a painter with a very volatile income do regarding VAT?

Average sales are around €40k but if their exhibition in September sells well, they could have sales of €100k in 2026.

With no exhibition planned for 2027, their income could be down to €20k.

There is no advantage in registering for VAT as the inputs are so small. But 13.5% of €100k would be a big hit.

Can they defer income? For example, agree in September to sell a work for €20k, but hold off the actual sale and cash receipt to January?

And what does a 12 month period mean in the following context:

As of 2025/2026, Irish artists must register for VAT if their turnover exceeds €85,000 for goods (e.g., selling paintings) or €42,500 for services (e.g., workshops, consultations) within a 12-month period.

If they prepare accounts on a calendar year basis and the income is less than €85k are they ok? It's possible for example that they could have nothing from Jan to June 2026. €50k from July to December 2026. €50k from January to June 2027 and nothing from July to December 2027.

So they have €100k within the 12-month period July 2026 to June 2027.

 

[Ciru75]

And what does a 12 month period mean in the following context:

As of 2025/2026, Irish artists must register for VAT if their turnover exceeds €85,000 for goods (e.g., selling paintings) or €42,500 for services (e.g., workshops, consultations) within a 12-month period.

If they prepare accounts on a calendar year basis and the income is less than €85k are they ok? It's possible for example that they could have nothing from Jan to June 2026. €50k from July to December 2026. €50k from January to June 2027 and nothing from July to December 2027.

So they have €100k within the 12-month period July 2026 to June 2027.

The registration rules from this year are that you have to register if your turnover in the calendar year (or the previous calendar year) is over the threshold. Before it used to be once you expected your turnover over a 12-month period to be over the threshold.

How you prepare your accounts doesn't matter. In your example, the 2026 turnover is 50k and the 2027 turnover is 50k so if you're supplying goods, you're under the threshold for both years.

 

[Louis]

Thanks Ciru

So if you are doing €40k a year, but then in 2026, it hits €100k, and drops to €40k in 2027, you have to register for VAT in 2026 and then deregister.

Is there no "take a three year view" approach? So in the above case, the total revenue is €180k , with an average of €60k.

I had not seen your reply and checked Google AI and it's all about penalties and fire and brimstone if you don't register. In practice, Does Revenue worry about someone going over the limit temporarily? The tax return would show that they exceeded the €85k limit so would that trigger the VAT people to come knocking?

 

[peemac]

The limit is an EU limit and Ireland applies it at the maximum limit, so unlikely for any changes.

No issue in "planning" sales. Even vat registered companies can calculate their vat on an "income received" basis - eg, I sell €20k of product today and invoice it today, but get paid on July 1st, it will be applied to my July/Aug return. - In the old days, companies would hold off lodging cheques until 1st of the month as could ease cashflow if things were tight and the 1st was the start of a vat period.

So whilst there's no "averaging" rule, you can create it yourself with a little planning.

 

[Louis]

Thanks peemac

I was wondering about that. So if they have sales of €100k in 2026, they ask €20k of their customers not to pay them until 2027 so their cash received is €80k below the €85k threshold.

That seems like good planning and not tax evasion?

They will probably have one or two big sales to good supporters who could be relied upon to pay in the New Year.

 

[peemac]

So if they have sales of €100k in 2026, they ask €20k of their customers not to pay them until 2027 so their cash received is €80k below the €85k threshold.

Yep and its neither evasion nor even slightly "grey". Its normal to account for income based on receipt of that income.

But I'd max the threshold and plan 84k income to ensure the max buffer for the following year. When you are regularly close to the limit, it best to maximise it each year.

 

[Ciru75]

So if you are doing €40k a year, but then in 2026, it hits €100k, and drops to €40k in 2027, you have to register for VAT in 2026 and then deregister.

My understanding is that you'd have to be registered for 2026 and 2027 and then you could deregister in 2028.