Terence Flanagan (Dublin North East, Fine Gael)
Link to this: Individually | In context

Question 226: To ask the Minister for Finance the position regarding VAT for small businesses (details supplied); and if he will make a statement on the matter. [25228/12]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

The annual turnover threshold for VAT registration depends on the nature of the business carried on. In general, there are two thresholds: the goods threshold, which is currently €75,000, and the services threshold, which is €37,500. Where 90 per cent or more of the turnover of a person or company consists of the supply of taxable goods, that person or company must register and account for VAT on sales if the total annual turnover of the business exceeds the goods threshold. I would point out that the goods threshold of €75,000 is third highest threshold in the EU with the majority of EU Member States having thresholds below €30,000. Some Member States do not operate any VAT registration threshold, requiring all businesses to register.

Registration thresholds reduce the administrative burden on both small businesses, often at the developmental stage, and on Revenue authorities. However, registration thresholds are not intended as a means of keeping small businesses permanently outside the VAT system. Therefore 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.