The two-thirds rule, applied to your quotes and invoices.

Revenue’s rates for trade work

The rate depends on what is supplied.

• 23%: the standard rate, for most goods sold on their own, and for a survey or an inspection of a building with no other work done.
• 13.5%: construction, repair and maintenance work on buildings, subject to the two-thirds rule.
• 9%: supply and install of a heat pump heating system, since 1 January 2025.
• 0%: supply and install of solar panels on a private home, since 1 May 2023.

Set up at signup, registered or not

Signup asks whether the business is registered for VAT. A registered business starts with a Standard rate of 23%, a Reduced rate of 13.5%, a Second reduced rate of 9% and a Zero rate of 0%. Each can be changed in Settings under Tax.

A business that is not registered charges no VAT. Its quotes, invoices and credit notes have no VAT columns and say that the business is not registered for VAT.

Once Revenue registers the business, Register for VAT in Settings under Tax takes the VAT number and the registration date. Each invoice follows the registration in force on the day it is issued.

The two-thirds rule, worked out from cost

Revenue’s rule compares what the goods cost with the price of the job, both before VAT. When the goods cost more than two thirds of the price, the whole job takes the goods rate.

The goods are the Materials lines. A Materials line with no cost recorded is weighed at its price. Labour, Subcontract and Expenses lines count in the price only, and an optional extra the customer has not ticked stays out of the sum.

On a quote or invoice that charges VAT, the Part of the supply lines charge 13.5% until the goods pass two thirds. Past that, the whole supply goes to 23%. A stated Supply rate decides instead. The test is an exact fraction, never a rounded 66.67%, so a job exactly on two thirds keeps 13.5%.

Where the goods set 23%, the quote or invoice PDF says why, as the office’s own screen does: “Two-thirds rule: the goods cost more than two thirds of the price, so the whole supply is at 23%.”

• Goods that cost you 700 euro in a job priced at 1,000 euro: 23% on the whole job.
• Goods that cost you 600 euro in a job priced at 1,000 euro: 13.5%.

A VAT treatment on every line

Each line on a quote, an invoice or a job has a VAT treatment. On a quote or invoice that charges VAT, the list of treatments shows each one’s rate.

For a registered business, a Part of the supply line on a quote, or one typed on an invoice, also has a Supply rate. So does a kind of work, and its rate reaches the hours on the job’s invoice too. It puts the whole supply at any rate you hold. The heat pump installation kind of work is set at 9%, and at 9% or 0% the goods are not weighed.

The PDF of a quote or invoice that charges VAT shows the rate and the VAT on each line, then the VAT at each rate and the total.

• Part of the supply: the job’s rate, 13.5%, 23% under the two-thirds rule, or the Supply rate stated.
• Separate, standard rate: 23%.
• Separate, reduced rate: 13.5%.
• Zero rated: 0%.
• Exempt, Outside the scope and Disbursement: no VAT.

Principal contractors and the reverse charge

Where RCT applies, the principal contractor accounts for the VAT on a subcontractor’s construction work, and the two-thirds rule does not apply.

A customer whose Customer type is Principal contractor needs a VAT number on file. A registered business’s invoice to that customer charges no VAT and shows no rate or VAT amount, and prints their VAT number and the line “VAT on this supply to be accounted for by the Principal Contractor.” A job whose kind of work has Construction work unticked, such as a survey, is charged VAT as usual, with no RCT.

On an invoice to a Principal contractor customer, the RCT held back is recorded with Record a payment as Tax withheld at source. It settles that part of the balance and never lowers the invoice total.

Jobs in Northern Ireland

Work on a building is supplied where the building is. A job in Northern Ireland is a UK supply, outside the scope of Irish VAT, and the Irish rates are never applied to it.

A site there is saved and flagged Outside your registration area. A quote or invoice for the site cannot be sent or issued until you choose how the VAT is handled. The route offered is the reverse charge, for a registered business with its VAT number on file and a customer with a UK VAT number (GB or XI) on file.

That invoice charges no VAT and prints both VAT numbers with the line “Reverse charge: Land-related service supplied in the UK. Customer to account for UK VAT.” Invoicing under your own UK registration is not supported yet, because invoices go out in euro only. The accountant’s export marks each cross-border invoice.