Edward Timmins (Wicklow, Fine Gael)
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342. To ask the Minister for Finance if he will increase the VAT registration requirement on supply of services from its current very low value of €42,500 and look at increasing all the thresholds. [39676/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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The current position is that small businesses with a low turnover are not obliged to register for VAT, thereby avoiding the administrative burden that VAT registration entails.

I am advised by Revenue that the VAT registration thresholds are subject to the requirements of EU VAT law, with which Irish VAT law is obliged to comply. Under the Directive there is an upper limit of €85,000 on registration thresholds that Member States may apply. Ireland’s VAT registration thresholds are set at €85,000 for supplies of goods and €42,500 for supplies of services. These VAT goods and services thresholds were increased from €80,000 and €40,000 in Finance Act 2024.

These two VAT thresholds arise as a result of a historical derogation which permits Ireland to retain two separate VAT registration thresholds. The estimated cost of raising the VAT threshold for services from €42,500 to match the VAT threshold for goods of €85,000 is €100 million, although this figure is tentative.

It should be noted that if the registration thresholds were merged at €85,000 it would not be possible to reverse as a historical derogation cannot be relied on once it has been removed by a Member State.

Finally, as the Deputy will be aware, it is a longstanding practice that the Minister for Finance does not comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.