There are a number of considerations before you decide to register for VAT
- If you expect your turnover to be over €75,000 per year you should register for VAT right away
- If you are selling to business customers who are VAT registered it’s likely you should register for VAT (VAT is not a cost to them as they can reclaim it)
- If you are selling to the general public / consumers you should avoid registering for VAT unless you are likely to go over the €75,000 threshold.
Look at the following example
Barry buys an electric scooters for €500 + VAT
So €500 + 23% VAT = €615 is the cost
Barry may now be tempted to register for VAT to reclaim the €115
BUT
Presume Barry sells the scooters for €700 each
Un VAT registered Barry has made €85
VAT registered Barry must pay 23% VAT on the sale so €131 goes to revenue
€700 – €131 + €115 (VAT saved by being registered originally) which gives an after VAT profit of €684
VAT registered Barry has no made €16 less and also has the headache and expense of filing VAT returns.
