Once you have registered a new company with the Companies Registration Office (CRO) in Ireland, the next step that you will need to do to get up and running is to register the company for tax.
To do this, you will need to fill out a Form TR2 which will allow you to register for all the relevant taxes for your company (Corporation Tax, VAT, PAYE/PRSI, RCT). Instead of paying an expensive accountant to do this task for your, you may be able to do this yourself if you understand all the aspects of the form.
In this blog post, I will give you a real-life example you can follow as well as a quick run down and explainer of the more difficult parts of the form.
Check out this completed TR2 that can be used as a reference point
Explainer on Key Points on each section of the TR2 Form
Part A – General Details
There is nothing too difficult in this section – it should be all readily available information.
Here is a short list of what you will need to have ready:
- Business / Registered Office Address
- CRO number – find this on your certificate of incorporation
- Date company was registered – find this on your certificate of incorporation
- When business activity commenced
- Company shareholder, director and secretary information
- Details of your tax advisor (if any)
- Estimates of annual turnover for the first year
- Details or rental agreements (if any)
- Prior owner VAT details if the company was acquired
Part B – Corporation Tax
In the easiest section of the form, all companies will be required to register for corporation tax. All you have to do is tick the box.
Part C – VAT Registration
Once your turnover exceeds the threshold of €75,000 for the supply of goods or €37,500 for the supply of services then you are required to register for VAT in Ireland.
Even if you are below these thresholds you may still choose to elect to have your business VAT registered.
Here are a few of the tricker items you may not be familiar with that are included in this part of the form:
Cash Receipts Basis of Accounting: With this basis of accounting you will only pay VAT on your sales whenever the customer pays you. If your turnover is below €2 million per annum or 90% of your supplies are made to customers who are not registered for VAT then you you can use this basis for completing your VAT returns.
Intra Community Activity: if your business exports or imports goods or services to customers in other EU countries then these amounts will need to be accounted for appropriately and disclosed in separate sections of your VAT returns. There also will be additional reporting requirements in the form of VIES (VAT Information Exchange System) information which are often submitted on either a monthly or quarterly basis.
Postponed Accounting for VAT: If you import goods from outside the EU, then you can use the postponed accounting scheme to improve your cash flows. Instead of paying VAT on imports immediately and then claiming it back at a later date, with postponed accounting you are allowing all traders to reclaim VAT at the same time that it is self-accounted for on a VAT return.
If you register for VAT make sure that your invoicing template correctly accounts for the right VAT rates for the product or service you are selling.
Part D – Registration as an Employer for PAYE/PRSI
This section is relevant to your business if you are hiring staff – you will be required to note how many full time (over 30 hours a week) and part time (less than 30 hours a week) you have hired.
As well as this you will have to note what software you use to calculate the payroll taxes that will be included in the P30 returns ( or describe your manual system).
Some companies do payroll in-house and some outsource it to a professional firm – if you do outsource payroll then add in your advisor’s details in this section also.
Part E – Registration for Relevant Contracts Tax (RCT)
The final part of the TR2 form is related to Relevant Contracts Tax (RCT). This form of tax applies to certain payments by principal contractors to subcontractors in the construction, forestry and meat-processing industries. The rates of tax are 0%, 20% and 35%.
What is the difference between a TR1 and TR2 Form
The TR1 form is for tax registration of sole traders, partnerships and individuals in Ireland. Whereas a TR2 form is completed by resident companies to register for tax in Ireland.
Disclaimer: This blog post is for informational and educational purposes only and should not be construed as financial advice.