Updated August 2026 · 8 min read
General information for Irish trade businesses, not tax advice. Confirm anything that affects your business with your accountant or Revenue.
Quick answer: there are two main ways to account for VAT on your sales in Ireland. On the invoice basis, VAT is accounted for when the supply is made or the invoice is issued, whether or not the customer has paid you. On the moneys received basis (you'll also hear it called the cash receipts basis, or just the cash basis), you account for it when the money actually lands. The invoice basis is the standard one. The cash basis can be a real help to a business waiting on slow payers, but not every trade business can use it, and there's one exclusion that catches a lot of construction firms. Worth reading before you ask your accountant to switch you.
What the two bases actually mean
Say you finish a job on the 10th of March, invoice it that day, and the customer pays you in May.
On the invoice basis, the VAT on that invoice belongs to the period covering March. You'll likely be paying it over to Revenue before the customer has paid you.
On the moneys received basis, that VAT falls into the period when the money arrives in May.
Same job, same invoice, same VAT eventually. The difference is timing, and timing is cash flow.
Why this matters more for trades than for most businesses
Two reasons.
You carry the materials. You've already paid the wholesaler for the boiler, the cable, the paving. Pay VAT on the sale before the customer pays you and you're funding both out of your own pocket.
Commercial customers pay on their terms, not yours. Domestic work usually settles quickly. Property managers, facilities companies and public bodies pay on thirty, sixty or ninety days. A business can be perfectly profitable and still be handing Revenue VAT on money it hasn't seen.
So if your work is nearly all domestic and paid promptly, the difference is small. The more of your book sits on long commercial terms, the more this matters.
Important: if you subcontract to a main contractor, read this first
Here's the part that catches people out, and it's the reason to have this conversation with your accountant rather than acting on an article.
Revenue lists the transactions the moneys received basis cannot apply to, and "construction services supplied by a sub-contractor to a principal contractor" is on that list, in those words.
There's a reason. Where RCT applies, those supplies are reverse charge: you don't charge VAT on that invoice at all. It carries the line "VAT on this supply to be accounted for by the principal contractor", and the main contractor accounts for it instead of you. There is no VAT of yours on that invoice to defer in the first place.
So if you mostly subcontract to main contractors, the cash basis is not the cash-flow fix it looks like above. If your work is a mix, which is common, only part of your book is in scope, and your accountant will tell you which part.
The same list excludes connected parties, intra-Community acquisitions and imports. Less relevant to most trades, but another reason the answer is "ask", not "assume".
Who can use the moneys received basis
Revenue sets the conditions, and there are two routes in. You may be able to apply if either:
- your turnover does not exceed, and is not likely to exceed, EUR 2,000,000 in any continuous period of 12 months; or
- at least 90% of your supplies are made to customers not entitled to claim a full deduction of VAT, or who aren't registered for VAT. In plain terms, that route is typically relevant to businesses selling mostly to private individuals rather than to other VAT-registered businesses.
Meeting a condition isn't the same as being on it. If you're already VAT registered, you must apply to your Revenue office in writing, and you cannot change basis until Revenue authorises it. The authorisation takes effect from the start of the period in which it issues, or from a later date if one is specified, so it isn't retrospective and it isn't instant.
Switching isn't flicking a setting
Revenue has rules for invoices and debts straddling the changeover, so VAT isn't paid twice or missed. Going on, moneys received don't include payments already accounted for. Coming off, an adjustment is made in the period you cease, covering the VAT on what customers still owe you at that date.
None of that is yours to calculate, but the first return under a new basis needs your accountant's attention, which is a reason not to switch casually mid-year.
The part people miss
The moneys received basis changes when you account for VAT on your sales. It isn't a different way of running the business: you issue invoices exactly as before, to the same Revenue checklist, and VAT on purchases follows the normal deduction rules.
It doesn't reduce your VAT bill. It moves when you pay it. Treat the delay as extra money rather than deferred money and you end up in a worse hole than you started.
And there's a real trade-off: you cannot claim bad debt relief while you're on the moneys received basis. That's Revenue's own wording. The basis that helps with slow payers takes away your relief on the customer who never pays at all.
How to know which basis you're on
Ask your accountant. That sounds glib, but most business owners genuinely don't know, and the answer changes how you should read your own numbers. Three questions worth asking in the same conversation:
- Which basis am I on, and does it still suit the shape of my business?
- How much of my work is subcontracting to principal contractors, and therefore out of scope for the cash basis anyway?
- If my direct commercial work is growing, would applying be worth it?
Where JobFlow fits
We build JobFlow, Irish job management software, so read this knowing that. Your VAT basis is a setting in JobFlow, and the VAT summary your accountant gets follows it rather than being re-cut afterwards. It also puts the correct Irish VAT treatment on every invoice line as the job is billed, which matters whichever basis you're on.
What it doesn't do: choose your basis, apply to Revenue for you, or file anything. Eligibility and the application are your accountant's territory, not software's.
Next in this series, and the one most people need first: the RTD explained, the annual return that catches businesses out at year end. If you're weighing up tools rather than rules, we compared them in best invoicing software for Irish trades.
FAQ
What's the difference between the invoice basis and the moneys received basis?
On the invoice basis you account for VAT when you make the supply or issue the invoice, whether or not you have been paid. On the moneys received basis you account for it when the customer pays. The invoice basis is the standard method in Ireland; the moneys received basis is available to businesses that meet Revenue's conditions and are authorised to use it.
Does the cash basis mean I pay less VAT?
No. It changes when the VAT falls due, not how much. The benefit is cash flow, not a reduction.
Can a construction subcontractor use the cash receipts basis?
Not for construction services supplied to a principal contractor. Revenue's list of transactions the moneys received basis cannot apply to includes construction services supplied by a sub-contractor to a principal contractor. Those supplies are reverse charge in any case, meaning the main contractor accounts for the VAT rather than you. If you also do direct work for householders or other customers, ask your accountant how that affects your position overall.
What happens if a customer never pays me?
It depends which basis you're on. On the invoice basis you may already have accounted for VAT on that sale, and bad debt relief may be available where the conditions are met. Revenue is explicit that you cannot claim bad debt relief if you are accounting for VAT on the moneys received basis. Talk to your accountant about a specific debt.
Do I still have to issue invoices on the cash basis?
Yes. The basis changes when you account for the VAT, not your invoicing obligations, so you issue invoices exactly as you did before.
Sources
- Revenue, "Who may opt for the moneys received basis?". The EUR 2,000,000 and 90% conditions, and the list of excluded transactions including construction services supplied by a sub-contractor to a principal contractor.
- Revenue, "How do you apply for the moneys received basis?". Applying in writing, the authorisation requirement and when it takes effect.
- Revenue, "Changing to and from the moneys received basis". The adjustments in both directions, including the debtors adjustment on cessation.
- Revenue, "Bad Debt Relief". That relief cannot be claimed on the moneys received basis.
- Revenue, "Moneys received basis of accounting". The plain description of both bases.
- Revenue's material on the VAT treatment of construction services, and the reverse-charge provisions for subcontractors supplying principal contractors.
This is general information, not tax or legal advice. VAT rules, thresholds and conditions change, and your own circumstances matter. Confirm your position with your accountant or with Revenue directly at revenue.ie.