VAT Rates Guide for Irish Tradespeople

Why VAT Is Confusing for Tradespeople

Most businesses charge one VAT rate. Tradespeople? You might charge two or three different rates on a single job — and get it wrong, and Revenue will want to have a word.

The good news is that once you understand the rules, they're actually logical. The bad news is that almost nobody explains them in plain English. Until now.

Irish VAT Rates: The Basics

Ireland has several VAT rates, but as a tradesperson, you'll mainly deal with three:

| Rate | Applies To | |------|------------| | 13.5% (reduced rate) | Construction services, repair, and maintenance of buildings | | 23% (standard rate) | Professional services, most goods, supply-only items | | 0% (zero rate) | Certain exports and specific exempt supplies |

13.5% — The Construction Rate

This is the rate most tradespeople charge most of the time. It applies to:

• Building, extending, or renovating residential and commercial properties
• Plumbing, electrical, and heating installation and repair
• Plastering, painting, decorating
• Roofing repairs and replacement
• Tiling, flooring installation
• Kitchen and bathroom fitting
• Landscaping and groundwork (where connected to a building)
• Window and door installation

The key requirement: the service must involve work on an immovable property (a building or structure attached to the land).

23% — The Standard Rate

This applies to:

• Supply of goods only (selling materials without installation)
• Professional or consultancy services (design, surveying, project management)
• Movable goods and equipment (selling a boiler without fitting it)
• Hire of equipment
• Services not connected to immovable property (e.g., repairing a piece of machinery in your workshop)

When Both Rates Apply on One Job

Here's where it gets tricky. Imagine you're a plumber doing a bathroom renovation:

• Labour + installation of fixtures: 13.5%
• Selling the customer a towel rail they'll hang themselves: 23%
• Design consultation fee: 23%

On the same job, different elements can attract different rates. This is why proper invoicing matters.

The Two-Thirds Rule

The two-thirds rule is one of the most important (and most misunderstood) VAT rules for tradespeople.

How It Works

When you supply both materials and labour on a job, the VAT rate depends on the proportion:

• If labour is more than two-thirds of the total value → the entire supply is taxed at 13.5% (the service rate)
• If materials are more than one-third of the total value → materials are taxed at 23% and labour at 13.5% (you must split them on the invoice)

Example 1: Labour-Heavy Job

Rewiring a house:

• Materials: €800 (28% of total)
• Labour: €2,100 (72% of total)
• Total: €2,900

Labour is more than two-thirds. Charge 13.5% on the full €2,900 = €391.50 VAT.

Example 2: Materials-Heavy Job

Supplying and fitting a high-end kitchen:

• Materials: €8,000 (57% of total)
• Labour: €6,000 (43% of total)
• Total: €14,000

Materials exceed one-third. You must split the invoice:

• Materials: €8,000 + 23% = €9,840
• Labour: €6,000 + 13.5% = €6,810
• Total with VAT: €16,650

Compare this to applying 13.5% to everything (€15,890). The difference is €760 — that's not a rounding error, it's a potential Revenue audit.

Practical Tip

For most standard trade jobs (repairs, installations, maintenance), labour will exceed two-thirds and you can charge 13.5% on everything. It's the big-ticket material jobs — kitchens, bathrooms with expensive fittings, bespoke joinery — where you need to watch the two-thirds split.

VAT Registration Threshold

When Must You Register?

You must register for VAT if your turnover exceeds (or is likely to exceed):

• €42,500 for services (most trade work)
• €85,000 for goods (supply-only businesses)

These are the 2026 thresholds. Revenue updates them periodically, so check revenue.ie for the latest figures.

When Should You Register Voluntarily?

Even if you're below the threshold, voluntary registration can make sense if:

• Most of your customers are VAT-registered businesses — they can reclaim the VAT, so it doesn't increase their costs
• You want to reclaim VAT on your purchases — tools, van, fuel, materials
• You're growing and will hit the threshold soon — better to set up systems now

When Voluntary Registration Might NOT Make Sense

• Most of your customers are homeowners — they can't reclaim VAT, so your prices effectively increase by 13.5%
• Your expenses are low — not much VAT to reclaim
• The admin burden isn't worth it — though modern software makes this much easier

Reverse Charge VAT for Construction

What Is Reverse Charge?

Reverse charge VAT (also called domestic reverse charge) applies to business-to-business (B2B) construction services in Ireland.

Instead of the subcontractor charging VAT and the principal contractor paying it, the principal contractor accounts for the VAT themselves. The subcontractor's invoice shows "VAT on this supply to be accounted for by the principal contractor" instead of a VAT amount.

When Does It Apply?

Reverse charge applies when all of the following are true:

1. The supply is a construction service (as defined for RCT purposes)
2. Both parties are VAT-registered
3. The customer is a principal contractor for RCT purposes
4. The service is supplied in Ireland

How to Invoice Under Reverse Charge

Your invoice must include:

• Your VAT number
• The customer's VAT number
• The notation: "VAT on this supply to be accounted for by the principal contractor under the reverse charge mechanism"
• The net amount (no VAT added)

Example

You're an electrician. A main contractor hires you for a commercial fit-out.

Your invoice:

First fix electrical — Unit 4, Industrial Estate Net amount: €3,500 VAT: Reverse charge — to be accounted for by principal contractor Total due: €3,500

The main contractor then accounts for €472.50 (13.5% of €3,500) in their own VAT return — both as output VAT and input VAT — so it's a wash for them.

Why Does This Matter?

If you apply reverse charge correctly, you don't charge VAT to the contractor. If you charge VAT when you shouldn't, the contractor may refuse to pay it (rightly so), and you've complicated both your VAT returns.

Handling VAT on Quotes and Invoices

On Quotes

Always state whether your quoted price includes or excludes VAT. Best practice:

Bathroom renovation: €4,500 + VAT (13.5%) = €5,107.50

If you're quoting homeowners who aren't VAT-registered, consider showing the VAT-inclusive price prominently — that's the number they care about.

On Invoices

Every VAT invoice must include:

• Your name, address, and VAT registration number
• The customer's name and address
• A unique sequential invoice number
• The date of issue
• A description of goods/services supplied
• The quantity and unit price
• The VAT rate(s) applied
• The VAT amount
• The total amount including VAT

Common Invoice Mistakes

1. Not showing VAT separately — Revenue requires it
2. Using the wrong rate — 23% instead of 13.5% or vice versa
3. Forgetting reverse charge notation — on B2B construction invoices
4. Not splitting materials and labour — when the two-thirds rule requires it
5. Missing invoice numbers — they must be sequential with no gaps

Filing VAT Returns

How Often?

Most tradespeople file VAT returns bi-monthly (every two months). You can apply for annual filing if your liability is under €3,000.

Filing Periods

| Period | Due Date | |--------|----------| | Jan–Feb | 19 March | | Mar–Apr | 19 May | | May–Jun | 19 July | | Jul–Aug | 19 September | | Sep–Oct | 19 November | | Nov–Dec | 19 January |

ROS filers get an extension to the 23rd of the month.

What You Need

• Total output VAT (what you charged customers)
• Total input VAT (what you paid on business expenses)
• The difference is what you owe Revenue (or what Revenue owes you)

How TradeTime Makes VAT Simple

VAT shouldn't require an accounting degree. TradeTime handles the complexity so you don't have to:

• Automatically applies the correct VAT rate based on the type of work
• Calculates the two-thirds rule and splits invoices when needed
• Supports reverse charge invoices with the correct legal notation
• Generates VAT-compliant invoices with all required fields
• Tracks your VAT liability in real time — no surprises at filing time

Whether you're quoting a homeowner at 13.5% or invoicing a contractor under reverse charge, TradeTime gets the VAT right every time.

Key Takeaways

1. Most trade services are 13.5% VAT — but materials-only supply is 23%
2. The two-thirds rule determines whether you charge one rate or split the invoice
3. Register for VAT when turnover exceeds €42,500 for services
4. Reverse charge applies to B2B construction services — don't charge VAT to contractors
5. Get your invoices right — missing fields or wrong rates cause problems with Revenue
6. Use software that understands Irish VAT — it saves time and keeps you compliant

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Stop Worrying About VAT Rates

Try TradeTime free — built for Irish & UK tradespeople. Correct VAT rates, two-thirds rule calculations, and reverse charge invoicing — all handled automatically. Focus on the work, not the paperwork.