Should I register for VAT?

Registering for VAT is a real choice for many freelancers and small businesses. In some cases the law forces your hand — once your turnover crosses a country-specific threshold, registration is mandatory. Below that threshold, you can register voluntarily, and there are good reasons to do so as well as good reasons not to.

Most countries set a registration threshold based on your annual taxable turnover. Cross it and you must register, usually within 30 days, and start charging VAT on everything you sell.

The threshold is almost always measured on a rolling basis — it's not your calendar-year revenue, but your revenue over any rolling 12-month window. That means a single big project can tip you over.

Penalties for late registration vary but commonly include having to pay back VAT on sales you should have charged it on, plus interest and a fine.

United Kingdom: £90,000 (raised from £85,000 in April 2024). One of the highest thresholds in the world.

Germany: €22,000 in the prior year and €50,000 expected in the current year (Kleinunternehmerregelung).

France: €36,800 for services / €91,900 for goods (franchise en base de TVA).

Ireland: €40,000 for services / €80,000 for goods.

Netherlands: no threshold — registration is required from your first invoice (the small businesses scheme, KOR, has separate rules).

UAE: AED 375,000 mandatory, AED 187,500 voluntary.

Bangladesh: BDT 30 lakh (3 million).

Australia: AUD 75,000 (or AUD 150,000 for non-profits). Threshold applies to GST.

Always confirm with your country's tax authority — thresholds change.

Your clients are mostly VAT-registered businesses. They reclaim the VAT you charge, so adding it doesn't make you more expensive. Meanwhile you reclaim VAT on your own costs — pure win.

You spend a lot on VAT-bearing inputs. Software subscriptions, equipment, professional services, co-working space, even the laptop you're reading this on. If you're spending serious money on these, the input VAT you can reclaim adds up fast.

You want the credibility signal. A VAT number on your invoice reads as 'real business' to enterprise procurement teams. For some buyers, no VAT number means no contract.

Your clients are consumers or non-VAT-registered small businesses. Adding 20% (or whatever your rate is) overnight makes you 20% more expensive in their eyes — and they can't reclaim it.

Your input costs are small. If you mostly sell your time and don't buy much, there's little input VAT to reclaim and the admin overhead is dead weight.

You're close to the threshold and growth is uncertain. If you might dip back below it, voluntary registration locks you into compliance for at least a year or two in most jurisdictions.

Once registered, you must charge VAT on all taxable sales, issue compliant VAT invoices, file returns (usually quarterly), and pay over what you owe on time. Most countries require digital filing — the UK's 'Making Tax Digital' rules, for example, require approved software.

Budget at minimum a few hours a quarter for record-keeping, or a few hundred per year for an accountant to handle it. For most small businesses this is the real cost of registration, not the tax itself.

When in doubt, talk to an accountant who knows your country's rules — they'll usually pay for themselves in the first year. The country-specific calculator pages on this site list the current threshold and link to the relevant tax authority.

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