Moneys Received Basis for VAT in Ireland | HelloBooks The moneys received basis lets eligible Irish businesses pay VAT when customers pay. Who qualifies under Revenue’s rules, and how to keep the books.
Under the moneys received basis, an eligible Irish business accounts for VAT on sales when the customer actually pays, rather than when the invoice is issued. For a business with slow-paying customers, that avoids paying VAT to Revenue before the cash arrives. Revenue limits the basis to businesses under a turnover limit or selling mainly to customers who cannot reclaim VAT.
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Revenue says you must be VAT registered and meet one of two conditions.
On the invoice basis, VAT on a sale is due for the period in which you issue the invoice, whether or not you have been paid. On the moneys received basis, it is due for the period in which you receive the money. Purchases are a separate question; check with your accountant how VAT on your own costs is treated under your registration.
The total VAT over time is the same. What changes is the timing, which matters for cash flow.
Businesses with long credit terms or customers who pay late gain the most, such as contractors waiting on stage payments or professional firms billing monthly. Retailers paid at the till gain little, because cash and invoice arrive together.
The books still record invoices when issued, because you need to know who owes you. What changes is how the VAT return is built: from receipts in the period rather than invoices. That makes accurate matching of payments to invoices essential, including part payments, which carry a proportionate share of VAT.
A credit note or bad debt is handled differently on this basis too, so agree the approach with your accountant before your first return.
You apply to Revenue to use the moneys received basis, and Revenue can cancel it if you no longer qualify. If turnover grows past the limit, plan the switch back to the invoice basis carefully: invoices issued but not yet paid at the changeover need to be accounted for so nothing is taxed twice or missed.
A consultancy issues a €10,000 invoice plus VAT in February, and the client pays in May. On the invoice basis, the VAT is due on the January to February return in March, three months before the money arrives. On the moneys received basis, it is due on the May to June return in July, after the client has paid.
Over a year with steady billing the totals even out, but for a growing business or one with a few large, slow payers, the timing difference can fund a month of wages. That is why the basis is popular with contractors, consultants and other service firms that invoice in arrears and wait for payment.
The €2,000,000 limit is measured over any continuous 12-month period, not only your financial year. A growing business should check its rolling 12-month turnover regularly, for example at each VAT return, especially after a large contract, so it knows when the basis will stop applying and can plan the switch with its accountant.
On this basis, chasing late payers brings in the VAT liability as well as the cash, so the two move together. That is fair, but it also means your VAT figures depend on how well payments are matched to invoices. Clear remittance details from customers save a great deal of guesswork.
HelloBooks matches customer payments to invoices with AI, including part payments, so you can see exactly what was received in each period. Confirm with your accountant that the VAT3 figures reflect your moneys-received registration before entering them in ROS.
Irish VAT and Revenue
Irish VAT and Revenue
Irish VAT and Revenue
How the VAT3 figures come out of the ledger
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