Buying Services From Abroad: Irish VAT Below the Threshold

Why the domestic turnover threshold is not the whole test

Revenue lists a principal annual turnover threshold of EUR 42,500 for persons supplying services only, subject to the detailed categories and rules. That is not a spending allowance for buying services overseas. Its separate registration guidance covers businesses required to register because of goods or services acquired from abroad, including businesses that would otherwise remain unregistered.

For example, imagine a newly formed consultancy with EUR 6,000 of sales and several overseas subscriptions. Comparing EUR 6,000 with a domestic sales threshold answers only one question. The founder should also give the accountant the purchase invoices, supplier entities and intended business use. Do not wait for turnover to catch up before discussing those bills.

Keep goods and services separate in the review. A threshold mentioned for acquiring goods from another EU country is not a threshold for a software subscription or consultancy service. The fact that both were bought through the internet does not make them the same kind of transaction.

• Revenue: current domestic VAT thresholds and categories
• Revenue: registration arising from goods or services acquired abroad

Identify who supplies the service and who receives it

The general B2B place-of-supply rule looks to where the business customer is established, including the relevant fixed establishment where applicable. Revenue gives an example of a US supplier providing services to an Irish-established company: the Irish customer self-accounts. The rules also cover services received from EU suppliers, not only distant non-EU providers.

Start with the legal supplier on the actual invoice. A familiar global brand may bill through an Irish entity, another EU entity or a non-EU entity. The website's domain, card currency and location of its customer-support team do not settle that analysis. Nor should you infer the company's VAT establishment solely from its incorporation or registered-office address.

Also check whether the customer is the LTD, a director personally or an earlier sole trade. If a founder opened an account before incorporation, changing the payment card may leave the old contracting customer in place. Ask the supplier and adviser how to document any change; do not silently rewrite old invoices.

• Revenue: general B2B and B2C place-of-supply rules

Check the service before applying a reverse-charge code

Software access, advertising and consultancy are useful items to flag for review, not a statement that every product sold under those labels has identical treatment. Revenue's general rules can be displaced by exceptions. Examples include services connected with immovable property, passenger transport, physical event admission and restaurant or catering services.

A company booking an overseas conference might receive separate invoices for admission, hotel accommodation, sponsorship and a marketing service. Sending all four through one generic overseas-expense code can hide different treatments. Give the adviser the contract and deliverables, not just the bank description.

A practical purchase review should distinguish an ordinary remote service from a property-related job, a physical admission and a bundled supply. Ask which Irish rate and accounting treatment apply to the actual service and relevant date. Do not assume that a foreign supplier means either automatic exemption or an automatic standard-rate charge.

• Revenue: exceptions to the general place-of-supply rules

A no-VAT invoice is not the same as no Irish obligation

Under self-accounting, the business customer accounts for Irish VAT on the received service rather than relying on a supplier's Irish VAT charge. Revenue explains that the applicable Irish rate is used on the invoiced amounts. It also says to provide your VAT number to the supplier, otherwise VAT may be charged in another Member State.

If a bill already contains foreign VAT, do not simply enter that amount as Irish deductible VAT or assume it removes an Irish liability. Have the customer status, supplier treatment and any required invoice correction checked. Keep the original invoice, correspondence and credit note together if a correction is made.

Never use another company's VAT number to make a checkout screen accept the order. An account field is not a substitute for the correct registration and transaction analysis.

• Revenue: self-accounting for services received from abroad

Worked example: the VAT due and the deduction are separate

Suppose a fictional Irish-established company receives an overseas business service invoiced at EUR 800. For this illustration only, assume the service is taxable in Ireland at the current 23% standard rate and the reverse charge applies. The self-accounted amount is EUR 184: EUR 800 multiplied by 23%. This is not a ruling that every overseas service uses that rate.

Revenue allows recovery where the cost supports taxable supplies or qualifying activities, subject to the rules and evidence. It does not allow recovery for exempt supplies or non-business activities. If the whole EUR 184 is properly deductible, the received-service output amount and matching input deduction can offset each other. The transaction still needs accounting and reporting.

If no deduction is available, that same EUR 184 can instead be a real tax cost. Registration does not automatically create full recovery. For a company with mixed uses, Revenue requires an appropriate apportionment; a founder should not pick a convenient percentage without support.

Use the example to ask two distinct questions: what must the company account for, and what is it entitled to deduct? Budgeting only the supplier's EUR 800 charge can miss the second outcome.

• Revenue: current VAT rates, including the 23% standard rate
• Revenue: who can reclaim VAT and restrictions on deductions
• Revenue: apportionment for taxable, exempt and non-business activities

VAT3 reporting: T1, T2 and ES2 do different jobs

Revenue's VAT3 instructions include received-service VAT in T1, with the amount entitled to deduction included in T2. T2 is not automatically a copy of T1. ES2 records the value of services received from suppliers in other EU countries; it is not the box for the VAT amount.

Do not put every overseas subscription into ES2. A non-EU service can still need reverse-charge treatment without becoming an intra-EU acquisition of services. Keep the supplier-country distinction in the bookkeeping export and have the adviser confirm each reporting field.

An offsetting deduction is not a reason to omit the transaction. Reconcile the purchase schedule to the return so that a reviewer can see both the accounting and any relief claimed. Filing software should reflect the agreed treatment rather than determine it.

• Revenue: completing VAT3, including received services and ES2

Arrange the right registration and effective-date review

For a business established in the State, Revenue's process is online through ROS, by the business or its tax agent. Its registration guidance identifies TR2 for limited companies and a different route for non-established businesses. Incorporation alone does not complete Revenue registration or decide the correct application route.

Prepare a short chronology: incorporation, account opening, first service invoice, first customer sale and any existing tax registrations. Ask the adviser whether registration is mandatory, what the effective date should be and how the company's own sales must be treated. Do not assume receiving a VAT number means every sale automatically follows one treatment.

If costs have already been incurred, make the earlier dates visible. Revenue states that registration may be backdated in certain circumstances by agreement with the Revenue office. This is not a promise of backdating, approval or automatic correction of old returns. Check the required approach before submitting an application.

• Revenue: registration process, established-business routes and effective dates

Build a supplier register before the next renewal

Revenue's purchase-record guidance asks for details such as the invoice date, supplier, cost before VAT, VAT charged and separate recording by rate. A bank feed is useful for matching payments, but it is not the full explanation of what was supplied or why a tax code was selected.

For a practical handover, collect one current invoice per provider and a complete transaction export for the period being reviewed. Keep credit notes and annual renewals visible so the same charge is not counted twice. Ask the adviser to document the agreed treatment next to each supplier.

• Record the legal supplier, country, named customer and account reference.
• Describe the actual service and the business activity it supports.
• Separate EU from non-EU services and flag any uncertain establishment.
• Retain invoices, corrections, contracts and payment matches.
• Record the approved tax code, deduction basis and person who reviewed it.
• Review new providers and changes in billing entity, not only new prices.

• Revenue: purchase-record details to retain

Already bought the services? Review the history, not just next month

Make a list of affected periods and give the adviser the unedited invoices and filed-return history. Identify which suppliers changed entity, which invoices carry tax and whether purchases were made before or after incorporation. Do not guess a correction by netting old errors into the next return.

Agree who will assess registration dates, calculate any liabilities, review deductions and handle Revenue correspondence. Historical review may be a different engagement from a straightforward new registration. Keep a written record of the proposed steps and responsibility for completing them.

Stopping a subscription does not settle earlier transactions. Equally, low turnover or a quiet trading period should not be used as evidence that no purchase-side obligations existed. This is a reason to get the records assessed, not to assume a particular penalty or outcome.

Get a scoped quote for cross-border VAT support

StartCompany.ie's tax-services page includes VAT registration, returns, reverse-charge advice and Revenue correspondence support through the relevant professional service. Send a concise description of the business, supplier countries, sample invoices and dates through an agreed secure process. Avoid putting credentials or unnecessary customer data into an initial enquiry.

Ask which work can be provided for your case: a transaction review, registration application, historic return work or continuing filings. Agree the scope and total payable before instructing the work. A routine registration order is not automatically a historical VAT review.

New founders should arrange this review alongside their launch budget, not as a substitute for company formation or bookkeeping. Revenue decides registration matters, and an adviser needs the actual facts to assess the transactions.