Ireland has one of the most complicated VAT systems for garages in Europe. Unlike the UK (one rate: 20%) or Germany (one rate: 19%), Ireland splits VAT between goods and services:

  • Parts and materials: 23% VAT
  • Labour/services: 13.5% VAT

Simple enough in theory. But on a real invoice, it gets messy fast. A brake job with €80 in parts and €120 in labour needs to show €18.40 VAT on parts AND €16.20 VAT on labour. Most handwritten invoices just slap one VAT rate on the total — and that is technically wrong.

Why Revenue Cares

Revenue does audit garages. When they do, they check VAT calculation accuracy. If you have been applying 23% to everything (including labour), you have been overcharging customers AND overpaying VAT. If you have been applying 13.5% to everything (including parts), you have been underpaying — and Revenue will want the difference plus penalties.

The average garage with €300,000 turnover and roughly 40% parts / 60% labour splits could be miscalculating €3,000–€5,000 in VAT annually. Over 3 years (Revenue's standard audit window): €9,000–€15,000 in corrections plus interest.

The Simple Solution

Your invoice needs to separate parts and labour. Every invoice. Every time. This is not optional — it is the law for VAT-registered businesses.

Example invoice:

  • Front brake pads (parts): €80.00 + VAT 23% = €18.40
  • Labour (1.5 hours × €60): €90.00 + VAT 13.5% = €12.15
  • Total excl. VAT: €170.00
  • Total VAT: €30.55
  • Total incl. VAT: €200.55

Most garage software handles this automatically. Mekavo does too — set your country to Ireland, and every invoice automatically calculates split VAT on parts and labour. No manual calculation, no mistakes, no Revenue surprises.

The Accountant Will Thank You

At VAT return time, your accountant needs to separate parts VAT from labour VAT. If your invoices already show this split, their job takes minutes instead of hours. That saves you accountancy fees — typically €50–€100 per return.

6 bi-monthly VAT returns per year × €75 savings = €450/year saved on accountancy. Plus the peace of mind that your VAT is correct if Revenue comes calling.

Mekavo handles Irish split VAT automatically. Every invoice, every job, every time. Free for Irish garages.