Apportionment and Recovery Percentages: Irish Businesses
Updated 30 October 2026
Written for the 2026 VAT codes
This article uses the 2026 VAT codes that new customers are set up on. If your codes look like S1 - IE or P1 - IE, you are on the current codes: see Moving to the 2026 VAT Codes.
This article is for Irish businesses with both taxable and exempt income, such as a business that also provides insurance, finance or health services.
What apportionment is
If you make both taxable and exempt supplies, you can only deduct the VAT on costs used for your taxable supplies. VAT on costs used only for exempt supplies cannot be deducted. VAT on shared costs, which Revenue calls dual-use inputs, is deducted in part, using a recovery percentage.
Your codes
| Code | Use it for | Example |
|---|---|---|
TAX-PUR-23 |
Costs used only for taxable supplies | Stock for resale |
EXE-PUR-23 |
Costs used only for exempt supplies | Equipment used only for a medical service |
RES-PUR-23 |
Shared costs | Office rent, audit fee, IT |
RES-PUR-23-RC |
Shared services bought from outside the EU. For EU suppliers, use RES-PUR-23-EUS |
Software subscriptions from a US supplier |
There are 13.5%, 9% and 0% versions of the EXE and RES codes. Aedon posts RES-PUR-NA-PEA itself, so you never enter it manually.
How the recovery percentage works
The main method is the turnover method:
Recovery percentage = taxable turnover ÷ total turnover.
Where turnover does not fairly reflect how your shared costs are used, a different method must be used. Your accountant agrees the method.
For example, with taxable turnover of €150,000 and total turnover of €200,000, the percentage is 75%. On €12,000 of VAT on shared costs, you deduct €9,000.
What Aedon does at each VAT3 return
- Adds up the VAT on your RES codes.
- Applies your recovery percentage.
- Posts one journal that puts the VAT you can deduct in T2 and the rest into costs.
The annual review
At the end of each accounting year, the percentage is worked out again on the year’s actual figures, and the VAT deducted is adjusted. Aedon posts the adjustment on the return your accountant tells us to use.
What we need from your accountant
| Setting | Example |
|---|---|
| Method | Turnover, or an alternative method |
| Accounting year end for the review | 31 December |
| Current recovery percentage | 75% |
| Return for the annual adjustment | The first return after the year end |
Useful official links
- Value-Added Tax Consolidation Act 2010, section 61: Apportionment for dual-use inputs
- Revenue Notes for Guidance, Finance Act 2016: amendment of section 61
Need help?
Ask your accountant about your method and percentage.
For help with Aedon.Accounting itself, please raise a case and our support team will help.
Related articles
Apportionment and Recovery Percentages: Irish Charities
Choosing the Right VAT Code: Irish Businesses
Choosing the Right VAT Code: UK Businesses
Choosing the Right VAT Code: UK Charities
Creating New Tax Codes
Creating Tax Periods
