Dáil Éireann Debate, Tuesday - 5 July 2022
160. Deputy Michael Collins asked the Minister for Finance if there is a plan to increase the VAT limit for businesses (details supplied) given the rising costs; and if he will make a statement on the matter. [36048/22]
Amharc ar fhreagra171. Deputy Holly Cairns asked the Minister for Finance his views on increasing the VAT threshold for small and medium enterprise service providers to €80,000; and if he will make a statement on the matter. [35547/22]
Amharc ar fhreagraI propose to take Questions Nos. 160 and 171 together.
The Deputy should note that the VAT registration thresholds are subject to the requirements of EU VAT law, with which Irish VAT law must comply. Our VAT thresholds were increased to their current values, €37,500 for services and €75,000 for goods, on 1 May 2008. Under VAT law, traders/businesses such as B&B’s are required to register and account for VAT where their supply of guest or holiday accommodation exceeds the services threshold.
It is important to note that Ireland’s current registration thresholds are some of the most generous thresholds in the EU. Some Member States do not operate any VAT registration threshold, requiring all businesses to register. As an administrative practice, Revenue allow businesses that are approaching the threshold to take account of the VAT element of their Purchases-for-Resale in calculating turnover. This avoids a ‘cliff-face’ effect when approaching the threshold. There is no data available to suggest a bunching effect below the threshold.
In setting registration thresholds levels, the objective is to strike an appropriate balance between the desirability of reducing the administrative burden on small businesses and the Revenue authorities and the need to avoid undermining tax compliance or causing competitive distortions relative to registered firms. However every business keeps records and the vast majority of businesses keep these records electronically. Therefore, there is not that much additional administration involved in being registered for VAT beyond submitting VAT returns and, for some small businesses, this might only entail an annual VAT return.
