When Do I Have To Register For VAT?

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Value-added tax can be considered one of the most controversial strategies of the previous century regarding taxation. It is the idea that we should add cost to goods and services for the benefit of the government. 

Many people were opposed to this idea as this increases the cost of almost everything. When it was implemented in some countries, there were even controversies, and their proponents were affected by it. Many riots and impeachment happened all across the world as if they have brought the apocalypse.

However, it is now seen as an effective means of collecting taxes from the population. It is barely noticeable by the masses, but this depends on the laws in that particular country or state. This methodology is standard in many countries across Europe, although others in Asia and even the United States is probably going to follow soon. 

There are many ways that this can be applied, but you will usually see these with products. Services can also have VAT, but this depends on the service and its location.


Registration for Value-Added Tax is Necessary

Now, when do you have to register for this? It depends on the laws in your area. You need to know about them first before you can do anything. If you are going to do business in the European Union, then you have to be aware of this. You cannot even operate any business there without applying for value-added tax. 

There are two ways that you can avoid this: selling VAT-exempted products and services or having a yearly profit below a certain margin. As mentioned before, this changes from country to country. The European Union does follow this principle. 

Some Rules with Value-Added Tax

Even if the EU follows the same rules for all its members, there are” asterisks” attached to these rules. One previous example would be the United Kingdom. Before their separation from the EU, they already have a different set of rules for their taxation.

Would they require at least 20% of the total cost to be covered with VAT? If you think that your products are exempt, then you need to apply for that. If you’re not going to register for their system, then it would be fine. However, you would be missing out on refunds based on this system. Additionally, you would still pay it in one way or the other. 

As mentioned before, there are specific deadlines and thresholds that you need to be aware of when applying for VAT. In the UK, you need to file it in the next 30 days. The limit for the taxable amount is £85,000 if you know that you will exceed that this month, you must prepare for an application as soon as you can. 

If you will be late, there is a corresponding fee for that. You can also apply even if you did not reach the threshold. Update your status with the HMRC. They are also the ones responsible for exemptions. 



Adding value-added tax is one of the ways of the government to collect taxes from the consumers. Even though there might be negative implications, it does help in adding more budget to the government for their projects. For businesses, you must be aware of the laws concerning this. 

It is going to increase your prices, but it will help your company reach a broader market. You would not want your operations to cease in that market either, so compliance is the key. It will just take some time to get used to, especially if your current location does not have it.

It requires you to have a firm understanding of your finances and the current needs of your company. If you would like professional input on this matter, don’t hesitate to reach out! Or you can follow us from one of our social media where you can dm us as well

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Annette Ferguson

Annette Ferguson

Owner of Annette & Co. - Chartered Accountants & Certifed Profit First Professionals. Helping Online service-based entrepreneurs find clarity in their numbers, increase wealth and have more money in their pockets.