Reverse Charge VAT: 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 that buy goods or services from abroad, or buy or sell construction services under Relevant Contracts Tax.
What the reverse charge is
Normally your supplier charges you VAT. Under the reverse charge, which Revenue calls self-accounting, the supplier charges no VAT and you account for it yourself. You put the VAT in T1 as if you had made the sale, and reclaim it in T2 as normal. If your business is fully taxable, the two cancel out.
There is no turnover threshold for services received from abroad. The reverse charge applies from the first euro.
These codes are in the International and Construction groups. If you cannot see them, please raise a case and our support team will switch the group on.
Which code to use
| What happened | Code | VAT3 boxes |
|---|---|---|
| You bought services from a business in another EU country | TAX-PUR-23-EUS |
T1, T2 and ES2 |
| You bought services from a business outside the EU, including the UK | TAX-PUR-23-RC |
T1 and T2 |
| You bought goods from a business in another EU country | TAX-PUR-23-EUG |
T1, T2 and E2 |
| You imported goods using postponed accounting | TAX-PUR-23-PA |
T1, T2 and PA1 |
| As principal contractor, you received construction services under RCT | TAX-PUR-13.5-DRC |
T1 and T2 |
| As subcontractor, you supplied construction services under RCT | TAX-SAL-00-DRC |
None |
| You sold services to a business in another EU country | TAX-SAL-NA-EUS |
ES1 |
Where goods or services fall in a different rate band, Aedon adds the matching code, such as TAX-PUR-13.5-EUG.
How to enter a reverse charge purchase
- Enter the supplier’s invoice at its net value. It will show no Irish VAT.
- If the invoice is in a foreign currency, convert it to euro at the exchange rate you normally use for VAT.
- Choose the reverse charge code.
- Aedon works out the VAT and posts it to both T1 and T2.
For example, you buy €1,000 of software from a US supplier and code it TAX-PUR-23-RC. Aedon puts €230 in T1 and €230 in T2. You pay nothing extra. If the supplier were in France, you would use TAX-PUR-23-EUS, and Aedon would also put €1,000 in ES2.
Construction services under RCT
- The reverse charge applies to construction services where Relevant Contracts Tax applies, other than haulage for hire.
- The subcontractor’s invoice charges no VAT and states that the principal contractor accounts for the VAT. The subcontractor uses
TAX-SAL-00-DRC. - The principal contractor uses
TAX-PUR-13.5-DRC, or the code for the rate that applies to the work. - RCT is worked out on the amount excluding VAT.
If your business is partly exempt
Use RES-PUR-23-RC for services from outside the EU, or RES-PUR-23-EUS for services from EU suppliers, where they support your shared costs. Aedon puts the full VAT in T1 but deducts only your recovery percentage in T2, so part of the VAT becomes a real cost.
Useful official links
- Revenue guidance: What is reverse charge (self-accounting)?
- Revenue guidance: Completing the VAT3 return
- Revenue Tax and Duty Manual: VAT treatment of construction services
Need help?
Ask your accountant whether the reverse charge applies to a transaction.
For help with Aedon.Accounting itself, please raise a case and our support team will help.
Related articles
Apportionment and Recovery Percentages: Irish Businesses
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
