VAT on garage work is not well served by the shortcut “labour at one rate, parts at another.” Revenue’s motor-repair guidance contains important exceptions, and tyres have their own explicit treatment. A workshop that builds one blanket rule into every job can produce neat invoices that are consistently wrong.

This guide summarises the current published rules that are most relevant to Irish repair workshops. It is not tax advice. Confirm your garage’s VAT configuration and unusual transactions with an accountant or tax adviser.

Current Irish VAT rates

Revenue’s current VAT rates show a standard rate of 23% and a reduced rate of 13.5% from 1 January 2026.

The rate is determined by the supply, not by whichever department entered the line. A part fitted during a repair is not automatically reduced-rated, and a service description does not override an item that Revenue specifically excludes.

Motor-vehicle repair services

Revenue lists certain motor-vehicle repair and related services at the reduced rate. The same entry identifies exclusions, including:

mirrors
batteries
media players
tyres
tyre flaps

Revenue says these excluded items remain standard-rated when supplied in a repair service. The official entry also notes that the two-thirds rule does not apply to bona fide car repair and maintenance services under the stated concession.

Read the current wording in Revenue’s motor-vehicle repairs VAT entry. This is a better source than a rate table copied from an old invoice template.

Do not infer the treatment of every part

The Revenue entry gives examples of exclusions, not a complete workshop catalogue. When a product or transaction does not fit an established treatment, ask your accountant to decide it and then configure that item consistently.

A useful parts catalogue therefore stores a default VAT rate but allows an authorised user to review it. The default saves time; the review prevents convenience becoming policy.

Tyres and puncture repairs

Revenue’s motor-vehicle tyres VAT entry is explicit:

supplying and fitting tyres as part of repair or maintenance is standard-rated
a tyre or puncture-repair service is reduced-rated
supplying and fitting a new tube as part of that repair is standard-rated

That can place different rates on one customer visit. The invoice should preserve the distinction at line level rather than hiding the work in a single description such as “tyre job.”

VAT registration thresholds

Revenue’s current VAT registration thresholds include:

€42,500 for a person supplying services only
€85,000 for a person supplying goods
€85,000 for a person supplying goods and services where 90% or more of turnover comes from qualifying supplies of goods

Revenue calculates the threshold using turnover excluding VAT in a calendar year, subject to the inclusions and exclusions described in its guidance.

A garage normally supplies a mixture of labour and goods. Do not choose the higher threshold simply because parts appear on most invoices. The 90% test and the precise nature of the supplies matter. An accountant should confirm the applicable threshold and the date on which registration is required.

Businesses below the relevant threshold may elect to register, but that decision affects pricing, input VAT recovery and administration. It deserves advice based on the actual numbers rather than a generic rule.

What a VAT invoice needs to show

Revenue requires a VAT invoice to include specific information. The current list includes:

the issue date and a unique sequential number
the supplier’s full name, address and VAT registration number
the customer’s full name and address
the quantity and nature of goods or extent and nature of services
VAT-exclusive unit prices
discounts or reductions not included in the unit price
the consideration exclusive of VAT for each rate
the VAT rate or rates and total VAT payable
the supply date where it differs from the issue date

Some transactions require additional wording or identifiers. Use Revenue’s complete VAT invoice information requirements, not this summary, as the authority.

For a workshop, clear line descriptions help both compliance and customer understanding. “Replace front brake pads” is more useful than “parts and labour,” particularly where different VAT rates or a later dispute are involved.

Our garage invoicing requirements guide covers the document and customer-authorisation workflow in more detail.

Correcting an issued invoice

Changing the stored total after an invoice has been issued can break the link between the customer’s document, the sales ledger and the VAT return.

Revenue’s guidance on amending a VAT invoice says:

a price increase requires a supplementary invoice containing the increase and related VAT details
a price reduction requires a credit note
correcting an excessive VAT amount requires a credit note and revised invoice
correcting an insufficient VAT amount requires a credit note for the full invoice and a revised invoice

A VAT credit note has its own required information, including a unique number, the reason for issue, a cross-reference to the original invoice, amended consideration, relevant VAT rates and tax amount. Revenue publishes the full credit-note requirements.

Motorworks keeps credit notes and customer statements connected to the underlying account record. The tax decision still belongs with the business and its adviser.

Keep the VAT evidence, not only the VAT total

Revenue says VAT-registered businesses need full and true records of VAT-related transactions. The supporting set may include invoices, credit notes, debit notes, receipts, cash-register records, vouchers, accounts and bank statements. Records must be detailed and current enough for Revenue to verify each transaction.

For a garage, a period-end VAT number should be supported by:

issued sales invoices grouped by VAT rate
sales credit notes and invoice corrections
supplier invoices supporting input VAT claims
payment records and bank reconciliation
clear treatment of deposits, refunds and bad-debt adjustments where applicable
a record of any manual VAT overrides and who approved them

The Revenue record-keeping guide for garages explains how the operational and accounting records fit together.

Configure rates at the right level

A workshop system should support VAT at line level. Useful controls include:

default rates on labour codes and catalogue items
a separate default for tyres and other known exceptions
permission-controlled overrides
VAT-exclusive and VAT-inclusive totals shown consistently
reports grouped by rate and document type
credit notes linked to the original invoice

Defaults should reflect advice agreed for that garage. A software vendor should not silently decide the tax treatment of a new item from its description.

Motorworks supports configurable line-level VAT, Irish tyre-levy records, invoice and credit-note documents, and VAT reporting. Book a demo to see how a mixed workshop invoice moves from job card to final document.

A VAT review checklist for garages

Before passing period figures to the accountant, check that:

every completed taxable job that should be invoiced has been invoiced
rates on tyres and other exceptions have been reviewed
manual rate changes have a clear reason
invoice and credit-note sequences are accounted for
supplier invoices are attached to the correct supplier and period
payments do not replace or erase the underlying invoice record
the VAT report agrees with the document totals
unusual transactions have been raised with the accountant

The aim is not to make reception staff into tax specialists. It is to make exceptions visible to the person who is qualified to decide them.

Official sources

Reviewed against the linked official guidance on 2 September 2026. VAT rules and rates can change. Confirm the treatment of your supplies with a qualified adviser.

VAT for Garages in Ireland: A Practical Guide