VAT for Sole Traders in Ireland - A Complete Guide for Tradesmen

VAT is one of the most confusing parts of running a trade business in Ireland. Most sole traders have a rough sense of what they should charge - but the details can be uncertain, especially when different jobs attract different rates.

This guide covers the key questions tradesmen ask about VAT in Ireland, with links to the Revenue pages each answer is based on.

Do you need to charge VAT as a sole trader in Ireland?

Only if you are VAT-registered. You must register for VAT with Revenue once your turnover from services goes over the registration threshold in a calendar year.

Below that threshold, you are not required to register. If you are not registered, you do not charge VAT on your invoices - and you cannot reclaim VAT on materials or tools either.

Many sole traders with turnover under €42,500 choose to register voluntarily so they can reclaim VAT on materials, tools, and other business expenses.

What VAT rate does a tradesman charge in Ireland?

The rate depends on your type of work. According to Revenue.ie, the following rates apply:

The 13.5% reduced rate covers most trade work: plumbers, electricians, builders, roofers, tilers, carpenters, and plasterers working on buildings. It covers labour and materials together on a supply-and-fit job. If you are charging 23% on a standard building job where the materials cost less than two-thirds of the price, you are overcharging.

The catch is the two-thirds rule: if the VAT-exclusive cost of the goods you use is more than two-thirds of the VAT-exclusive price of the job, the whole job is taxed at the goods rate - usually 23%. Materials you sell without fitting them are 23%.

What is the VAT rate for plumbers in Ireland?

13.5%. Plumbing services on buildings - including labour and materials supplied as part of the same job - are subject to the 13.5% reduced rate, unless the materials cost more than two-thirds of the price, when the whole job is 23%.

This covers boiler servicing, bathroom fits, heating system work, emergency repairs, and general plumbing maintenance. Watch equipment-heavy jobs: a boiler swap with an expensive boiler can cross the two-thirds line. Supplying and fitting a heat pump heating system is 9%. See the PayReady plumber guide and our free Irish plumber invoice template.

What is the VAT rate for electricians in Ireland?

13.5%. Electrical installation and repair services on buildings in Ireland are subject to VAT at 13.5%. If you supply electrical materials without installation, those goods are subject to the 23% standard rate.

An equipment-heavy job such as an EV charger install can cross the two-thirds line, which makes the whole job 23%. Solar panels supplied and fitted on a home are 0%.

What is the VAT rate for builders in Ireland?

13.5% for most construction and building work, including building new houses. Extensions, renovations, attic conversions, and repairs all fall under the 13.5% rate.

There is no zero rate for building new homes in Ireland. A temporary 9% rate applies to construction work on qualifying new apartments until 31 December 2030 - check the conditions with your accountant before using it.

What is the VAT threshold in Ireland for sole traders?

The VAT registration threshold for services is €42,500 in a calendar year (turnover, not profit). For goods, the threshold is €85,000 - but most tradesmen are primarily providing services.

If your turnover goes over €42,500 in the current calendar year, or went over it last year, you must register with Revenue. Once registered, you charge VAT on your invoices and file VAT returns - typically every two months.

Can I reclaim VAT on materials and tools?

Yes, if you are VAT-registered. You can reclaim the VAT you paid on:

• Materials used in jobs
• Tools and equipment
• Work vehicles (with some restrictions)
• Your business phone
• Accounting software and professional fees

This is called input tax. You deduct it from the VAT you collected from customers (output tax) and pay Revenue the difference. For most tradesmen buying significant amounts of materials, voluntary registration below the threshold often makes financial sense.

What goes on a VAT invoice in Ireland?

A valid VAT invoice in Ireland must include the following, as required by Revenue.ie:

1. Your business name and address
2. Your VAT registration number
3. Customer name and address
4. A unique, sequential invoice number
5. The date of issue
6. The date of supply (when the service was completed)
7. A description of the goods or services
8. The amount excluding VAT
9. The VAT rate applied
10. The VAT amount
11. The total amount due

Under the reverse charge (subcontract work for a principal contractor under RCT), the invoice leaves out the VAT rate and VAT amount and says “VAT on this supply to be accounted for by the principal contractor” instead.

A PayReady invoice carries your business details and VAT number, the customer details you enter, a sequential invoice number, the issue date, each line of the job, and the VAT rate, VAT amount and total. If the work was finished on a different day from the invoice, add the date of supply in the notes. Use our free Irish invoice templates as a starting point, or use the VAT calculator below to check your figures.

What is Relevant Contracts Tax (RCT) and does it affect VAT?

RCT is a separate withholding tax that applies to payments from principal contractors to subcontractors in construction, forestry, and meat processing. It operates alongside VAT - they are different obligations.

If you are a subcontractor, your principal contractor may deduct RCT from your payment and pay it to Revenue on your behalf. It also changes how VAT works on that job. When you supply construction services to a principal contractor under RCT, the principal accounts for the VAT, not you - this is the reverse charge. Your invoice does not charge VAT: it shows your VAT number and the line “VAT on this supply to be accounted for by the principal contractor”. The principal pays you the VAT-exclusive amount, and any RCT is worked out on that amount.

The reverse charge only covers subcontract work for a principal contractor. When you work directly for a homeowner or other private customer, you charge VAT as normal if you are registered.

Summary: VAT for tradesmen in Ireland

• Registration threshold: €42,500 in a calendar year for services
• Construction rate: 13.5% for supply-and-fit work on buildings, labour and materials together - 23% for the whole job if the materials cost more than two-thirds of the price
• Standard rate: 23% for supply-only goods
• Subcontract work under RCT: No VAT on your invoice - the principal contractor accounts for it
• Must include on invoices: VAT number, customer name and address, date of supply, rate, VAT amount, and total
• Can reclaim: VAT on materials, tools, and business expenses if registered

If you are unsure about your specific situation - especially for subcontract work, new builds, or unusual job types - always check with Revenue.ie directly or speak to an accountant.