VAT doesn't have to be complicated. If you're an Irish tradesperson — electrician, plumber, builder, carpenter — this guide cuts through the jargon and explains exactly what you need to know.

The Basics: What Is VAT?

VAT (Value Added Tax) is a tax on goods and services. As a tradesperson, you collect VAT from your customers on behalf of Revenue, then pay it over (minus the VAT you've paid on your own business purchases).

Think of yourself as a tax collector. The VAT isn't your money — it's Revenue's. You're just handling it temporarily.

Do I Need to Register for VAT?

You must register if your annual turnover exceeds:

€42,500 for services (most trade work)
€85,000 for goods (if you're mainly selling products)

These are the 2025 thresholds. If you're approaching them, register before you exceed — Revenue doesn't like late registrations.

Should I Register Voluntarily?

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

You buy a lot of materials (you can reclaim the VAT)
Your customers are businesses (they can reclaim VAT, so your prices don't really go up for them)
You want to appear more established and professional

The downside? More paperwork, and residential customers effectively pay more (they can't reclaim VAT).

The Two Rates You'll Use

13.5% — For Most Trade Work

The reduced rate applies to construction services on buildings. This includes:

Plumbing, electrical, heating installation
Building, renovating, extending
Plastering, painting, decorating
Roofing, tiling, flooring installation
Kitchen and bathroom fitting
Garden landscaping (when attached to a property)

The key: If you're working on "immovable property" (buildings, land), it's usually 13.5%.

23% — For Goods and Other Services

The standard rate applies to:

Selling materials without fitting them
Equipment hire
Professional services (design, consulting)
Repairs to movable items (appliances, machinery)

The Two-Thirds Rule

Here's where it gets slightly tricky. If you supply both materials and labour together, and the materials cost more than two-thirds of the total, you must charge 23% on everything.

Example:

You install a boiler. The boiler costs €2,500, your labour is €600.
Materials (€2,500) are 81% of the total (€3,100) — that's more than two-thirds.
You charge 23% VAT on the entire €3,100.

Workaround: Issue two invoices — one for the boiler (23%) and one for installation (13.5%). More paperwork, but it can save your customer money.

What Goes on a VAT Invoice?

Your invoices must include:

Your name/business name and address
Your VAT number (format: IE1234567X)
Customer's name and address
Invoice number (sequential)
Date
Description of work/goods
Amount before VAT
VAT rate applied
VAT amount
Total including VAT

Good invoice software like TradeTime handles all of this automatically.

VAT Returns: The Basics

Most small businesses file VAT returns every two months (bi-monthly). Some file quarterly or annually — Revenue assigns your frequency based on your turnover.

On your return, you report:

Output VAT: VAT you collected from customers
Input VAT: VAT you paid on business purchases
Net amount: Output minus input — this is what you pay (or claim back)

Example:

You invoiced €10,000 + €1,350 VAT (13.5%) = €11,350
You spent €3,000 + €690 VAT on materials and expenses
You pay Revenue: €1,350 - €690 = €660

Keeping Records

You must keep VAT records for 6 years. This includes:

All sales invoices you issued
All purchase invoices and receipts
Bank statements
VAT returns

Digital records are fine — you don't need paper files. A photo of a receipt stored in the cloud counts.

Common VAT Mistakes

Wrong rate: Charging 23% when 13.5% applies (or vice versa)
Missing invoice details: No VAT number or incomplete breakdown
Forgetting the two-thirds rule: Results in under- or over-charging
Late returns: Revenue charges interest and penalties
Not claiming input VAT: You're entitled to reclaim VAT on business purchases — do it!

Using Software to Stay Compliant

The easiest way to get VAT right is to use software designed for Irish tradespeople. TradeTime has Irish VAT rates built in — select your service type, and the correct rate applies automatically. No more googling "what VAT rate for bathroom tiling."

When it's time to file your return, the software generates a summary of your VAT collected and paid. Hand that to your accountant or enter it into ROS yourself.

When to Talk to an Accountant

This guide covers the basics, but talk to an accountant if:

You're unsure whether to register voluntarily
You do a mix of work that spans different VAT rates
You work for other EU countries
You're dealing with RCT and VAT together
You've made a mistake and need to correct it

A good accountant saves you more than they cost — especially with VAT.

VAT for Tradespeople: A Simple Guide