Marian Harkin (Sligo-Leitrim, Independent)
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271. To ask the Minister for Finance if he will consider increasing the VAT turnover threshold from the current €37,500 to at least €50,000, given the increase in the cost of services and the increased cost of living; and if he will make a statement on the matter. [54640/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Deputy should note that the VAT registration thresholds are subject to the requirements of EU VAT law, with which Irish VAT law must comply. Our VAT thresholds were increased to their current values, €37,500 for services and €75,000 for goods, on 1 May 2008.  Under VAT law, traders/businesses such as B&B’s are required to register and account for VAT where their supply of guest or holiday accommodation exceeds the services threshold. 

It is important to note that Ireland’s current registration thresholds are some of the most generous thresholds in the EU. Some Member States do not operate any VAT registration threshold, requiring all businesses to register. As an administrative practice, Revenue allow businesses that are approaching the threshold to take account of the VAT element of their Purchases-for-Resale in calculating turnover. This avoids a ‘cliff-face’ effect when approaching the threshold. There is no data available to suggest a bunching effect below the threshold.

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. However every business keeps records and the vast majority of businesses keep these records electronically. Therefore, there is not that much additional administration involved in being registered for VAT beyond submitting VAT returns and, for some small businesses, this might only entail an annual VAT return. 

I have currently no plans to change this threshold.