VAT on quotes: how to calculate it and show it to the customer
23%, 13.5%, the VAT threshold and Revenue: what you actually need to know about VAT on your quotes, without getting lost in registration rules that probably don't apply to you yet.
VAT for tradespeople in Ireland
In Ireland, the two things you'll hear most about are VAT (Value Added Tax) and Revenue, the Office of the Revenue Commissioners, which runs the tax system through its online service, ROS.
VAT: The standard rate is 23%. Most construction, repair and maintenance work, the kind of jobs plumbers, electricians, painters and builders actually do, qualifies for the reduced 13.5% rate rather than the standard rate. But here's the part a lot of independent tradespeople don't realise: if your turnover from services is below the VAT registration threshold, you're not required to register for VAT at all, and if you're not registered, you don't charge it. That threshold is set and periodically revised by Revenue, it's currently in the region of €40,000 for services over a 12-month period, but always check the exact current figure on revenue.ie rather than relying on a number you read somewhere, it does move.
Sole trader registration: Registering as a self-employed sole trader with Revenue is a separate thing from VAT registration. It's what lets you trade properly and file your annual return (Form 11) through ROS using your PPS number. You need this regardless of whether you're anywhere near the VAT threshold.
For most tradespeople, what actually matters day to day isn't the VAT technicalities, it's sending a clear quote and keeping a record of every payment you receive. That's what protects you if there's ever a dispute, not a registration you probably don't need yet.
If your income is growing and you're approaching the threshold, or you're regularly doing work for VAT-registered businesses who ask questions about it, that's the point to sit down with an accountant and look at your specific situation properly.
When do you actually need to register for VAT?
You become liable to register for VAT once your turnover from services crosses the threshold Revenue sets (again, check revenue.ie for the exact current figure, it's reviewed from time to time). If you're close to it, or you've already crossed it, here's what changes:
- You register for VAT through ROS, linked to your existing Revenue registration.
- You must charge VAT on your invoices, typically 13.5% for construction, repair and maintenance work, 23% for anything that falls under the standard rate.
- You file VAT returns on a regular schedule (usually bi-monthly for most small businesses).
- You can reclaim the VAT you pay on materials, tools and other business costs, which is a real upside once you're registered.
For the large majority of independent plumbers, electricians, painters and general tradespeople, none of this applies yet, and there's no benefit to registering early just to look more official. Some business customers may ask whether you're VAT registered for their own accounting purposes, that's normal, and if you're not registered, the honest answer is simply that VAT doesn't apply to your invoice.
If your turnover is climbing and you can see the threshold coming, that's the moment to get proper advice rather than working it out on your own, registering late or getting the rate wrong can be an expensive mistake to unpick.
How to show the price on the quote
If you're not VAT registered, which covers most independent tradespeople starting out, you simply quote the total price with no VAT line. There's nothing to break out because you're not charging it.
Simple quote structure:
Materials: €450 Labour: €350 Total: €800
That's it. The customer pays the total, no VAT shown.
If you are VAT registered, you break it out instead:
Materials: €450 Labour: €350 Subtotal: €800 VAT (13.5%): €108 Total: €908
With Prummo, you build the quote with every line item clear and the customer sees the full breakdown. The maths is done for you automatically, no chance of a costly mistake on the VAT line.
Whatever your VAT status, it's always worth issuing a simple receipt or record for every payment you receive: date, amount, description of the work, and payment method (bank transfer or cash). That's what actually protects you in a dispute, far more than any tax registration.
Common mistakes to avoid
Mistake 1: Charging VAT without being registered. If you're below the threshold and not registered, you cannot legally show or charge VAT on an invoice. Doing it anyway just confuses the customer and isn't correct.
Mistake 2: Never registering as a sole trader with Revenue. This is separate from VAT. Even if VAT doesn't apply to you, you still need to be registered as self-employed with a PPS number and file an annual Form 11 return. Skipping this is a much bigger problem than not being VAT registered.
Mistake 3: Not keeping a record of payments. More important than any tax filing for day-to-day peace of mind is having a clear quote and a receipt for every job. Without a record of what you charged and why, that's exactly where disputes with customers start.
Mistake 4: Mixing your personal and business bank accounts. Running everything through one personal account makes it hard to see what you're actually earning. Even a basic separate account for the trade helps you understand your own numbers.
Mistake 5: Worrying about registration rules that don't apply to you yet. A lot of tradespeople spend time reading up on VAT obligations meant for businesses turning over far more than they are. Focus on what matters now: clear quotes, and a proper record of every payment.
Frequently asked questions
Do I need to charge VAT on my quotes?
In most cases, no. If your annual turnover from services is below the VAT registration threshold (check the current figure on revenue.ie, it's currently in the region of €40,000 but is reviewed periodically), you're not required to register and you simply quote the full price with no VAT. Only once you cross the threshold do you need to register and start charging it.
How do I register as a sole trader with Revenue?
You register as self-employed through ROS (Revenue Online Service) using your PPS number, this is separate from VAT registration. Once registered, you file an annual self-assessment return (Form 11) covering your income and expenses. Many tradespeople do this through an accountant, but it can also be done directly through ROS.
Do I need to issue a formal invoice for every job?
If you're not VAT registered, you're not required to issue a formal VAT invoice. What you should always do is send a clear, itemised quote up front and give the customer a simple receipt for every payment, with the date, amount, description and payment method.
What happens if a business customer asks for a VAT invoice and I'm not registered?
You can't show or charge VAT if you're not registered, so explain that plainly and provide the accepted quote plus a payment receipt instead. Business customers sometimes ask out of habit for their own accounting, it's a normal question, not a problem.
How do I know when I'll need to register for VAT?
It's based on your turnover from services over a rolling 12-month period crossing the threshold Revenue sets, which is reviewed from time to time, so always check revenue.ie for the current figure rather than an old number. If your income is approaching that level, it's worth talking to an accountant before you cross it, not after.
What should I keep as proof of payment?
A simple receipt for every payment: date, amount, description of the job, and how it was paid (bank transfer or cash). In Prummo, you can log each payment directly against the accepted quote, so you always have an organised history without relying on loose paperwork.