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Vat on turnover less than €37500 / €75,000

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  • 01-09-2019 2:00pm
    #1
    Sheepdish1
    Registered Users Posts: 618 ✭✭✭


    In terms of Vat registration what does business do with invoices if they are not registered due to being under the threshold of €37500 for services and €75,000 for products ?

    How do companies invoice for VAT if product turnover is less than threshold per annum?

    For example, I’ve seen a small businesses advertising €33 + vat for a product. Does this mean the turnover of that business exceeds the €75,000 per year so they must charge vat ?

    Or can I charge vat and offset this against any VAT that I pay if the turnover is less than the threshold ?


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    #2
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    Sheepdish1 wrote: »
    In terms of Vat registration what does business do with invoices if they are not registered due to being under the threshold of €37500 for services and €75,000 for products ?

    How do companies invoice for VAT if product turnover is less than threshold per annum?

    For example, I’ve seen a small businesses advertising €33 + vat for a product. Does this mean the turnover of that business exceeds the €75,000 per year so they must charge vat ?

    Or can I charge vat and offset this against any VAT that I pay if the turnover is less than the threshold ?


    Yes, you can voluntarily register for VAT. The thresholds are when you must register.



    Weigh up the pros and cons.



    Sounds obvious, but you cannot charge VAT until registered.


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    #3
    Sheepdish1
    Registered Users Posts: 618 ✭✭✭Sheepdish1


    Thank you for reply. It may seem obvious but what are pros and cons of registering?

    I can see a pro to register if I’m incurring VAT as a high expense when purchasing materials to make a product.

    Con would be submitting and returning it out of profits but that seems straight forward.

    Is there anything else that I should consider?


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    #4
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    Sheepdish1 wrote: »
    Thank you for reply. It may seem obvious but what are pros and cons of registering?

    I can see a pro to register if I’m incurring VAT as a high expense when purchasing materials to make a product.

    Con would be submitting and returning it out of profits but that seems straight forward.

    Is there anything else that I should consider?

    VAT is never paid out of profits. You're a collector for Revenue basically.

    The main pro is that you can claim input VAT on, say, products or services that come with VAT, otherwise you'd have to incur as an expense.

    One other pro is the claim that a VAT registered business comes across as more professional.

    The main con would be that you become more expensive for those that cannot reclaim VAT.

    The other con is the extra admin involved.


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    #5
    antoinolachtnai
    Registered Users Posts: 9,773 ✭✭✭antoinolachtnai


    In general, if you are selling mainly to vat-registered businesses, you are better off to opt to be vat-registered. You will be able to price more competitively.

    If you sell to the public, you are generally speaking better off not to opt to be VAT registered.

    If you are in doubt, you need to work through the scenarios in a spreadsheet.

    €75000 is just not a lot of products. If you sell 75k of goods with a 33 percent net margin (which is pretty good) the business will still only make 25 grand, which is really only enough to pay one person minimum wage or a little more. This is not really a 'small business'. It's a micro business, a part-time gig or even just a hobby.

    So if this is an issue for you, look carefully at your overall model to make sure it makes sense.


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