How to Charge VAT as a Sole Trader in Ireland

10 February 2026

VAT can feel like a minefield when you're starting out as a sole trader. The rules are straightforward once you understand them, but getting something wrong can lead to penalties from Revenue. This guide covers everything you need to know about charging VAT as a sole trader in Ireland, from registration thresholds to filing returns.

Do You Need to Register for VAT?

Not every sole trader needs to register for VAT. You are required to register when your turnover exceeds, or is likely to exceed, the relevant threshold in any continuous 12-month period. The current thresholds are:

€37,500 for businesses that supply services (plumbers, electricians, consultants, etc.)
€75,000 for businesses that supply goods (retailers, manufacturers, etc.)

If your business supplies both goods and services, the lower threshold of €37,500 applies unless at least 90% of your turnover comes from goods. It is important to note that the threshold looks at your total turnover, not your profit. If you are a plumber turning over €40,000 a year, you must register even if your take-home profit is well below the threshold.

You can also register voluntarily even if your turnover is below the threshold. This can be useful if most of your customers are VAT-registered businesses, since they can reclaim the VAT you charge. It also lets you reclaim VAT on your own business purchases, which can be significant if you are buying materials, tools, or a van.

How to Register for VAT

VAT registration is done through Revenue's Online Service (ROS) at ros.ie. You will need your PPSN, a ROS digital certificate, and details about your business activities. The process involves completing a TR1 form online.

Once registered, Revenue will issue you a VAT number with the prefix IE followed by seven digits and one or two letters (e.g., IE1234567T). This number must appear on all your invoices and any correspondence where VAT is relevant. Registration typically takes a few weeks, though it can be faster if your application is straightforward.

Which VAT Rate Do You Charge?

Ireland has several VAT rates, but as a tradesperson you will mostly deal with two:

23% (standard rate) — applies to most goods and services, including labour charges for plumbing, electrical work, carpentry, and general maintenance
13.5% (reduced rate) — applies to certain construction services, property maintenance, and the supply and installation of goods where the value of the goods does not exceed two-thirds of the total charge

The two-thirds rule is particularly relevant for tradespeople. If you supply and fit materials as part of a job, and the cost of the materials is more than two-thirds of the total price (excluding VAT), then the entire supply can be treated as a supply of goods at 23%. If the materials are less than two-thirds of the total, the entire job may be subject to the 13.5% rate. For example, if you charge €1,000 for a job and the materials cost €400 (less than two-thirds), you would charge 13.5% on the full amount. If the materials cost €700 (more than two-thirds), you would charge 23%.

In practice, most trade jobs where you are providing a service (labour plus some materials) will fall under the 13.5% rate. If in doubt, check with your accountant or Revenue.

What to Include on a VAT Invoice

When you are VAT-registered, Revenue requires your invoices to include specific information. Missing any of these can cause problems during a Revenue audit. Every VAT invoice must show:

Your full name (or business name) and address
Your VAT registration number
The customer's name and address
A unique, sequential invoice number
The date the invoice was issued
The date the goods or services were supplied (if different from the invoice date)
A clear description of the goods or services provided
The quantity and unit price of goods (where applicable)
The net amount (before VAT) for each VAT rate
The VAT rate applied
The amount of VAT charged at each rate
The gross total (including VAT)

If you're using invoicing software like Workcanon, these fields are built into every invoice automatically. You fill in the job details and the software handles the calculations, formatting, and sequential numbering.

Filing VAT Returns

Most sole traders file VAT returns on a bi-monthly basis through ROS. Each return covers a two-month period (January/February, March/April, and so on) and is due by the 23rd of the month following the period end. For example, the return for January and February is due by 23 March.

On each return you report two key figures:

T1 — the total VAT you charged on your sales during the period
T2 — the total VAT you paid on your business purchases during the period

If T1 is greater than T2, you owe the difference to Revenue. If T2 is greater (because you spent more on VAT-able purchases than you collected), Revenue owes you a refund.

If your annual VAT liability is under €3,000, you may qualify for annual filing instead of bi-monthly returns. This simplifies things considerably, but you still need to keep accurate records throughout the year. You can apply for this through ROS.

Common Mistakes to Avoid

Several mistakes come up again and again for sole traders dealing with VAT:

Not registering on time. If your turnover crosses the threshold and you do not register, Revenue can backdate the registration and you will owe VAT you never collected.
Charging the wrong rate. Applying 23% when the job qualifies for 13.5% means your customer pays more than they should. Applying 13.5% when you should charge 23% means you pocket less or owe Revenue the difference.
Incomplete invoices. Missing a VAT number, date of supply, or breakdown by rate can lead to penalties during an audit.
Not keeping receipts. You can only reclaim VAT on purchases if you have a valid VAT invoice from the supplier. No receipt, no reclaim.
Mixing personal and business expenses. You cannot reclaim VAT on personal purchases, even if they go through your business account.

Key Takeaways

Register for VAT when your turnover exceeds €37,500 (services) or €75,000 (goods) in any 12-month period
Register through ROS at ros.ie using the TR1 form
Most trade services are charged at 13.5%, but check the two-thirds rule for jobs involving materials
Every VAT invoice must include your VAT number, sequential number, dates, and a breakdown of net, VAT, and gross amounts
File bi-monthly VAT returns through ROS by the 23rd of the following month
Keep all receipts and invoices for at least six years