The VAT3 return: where your T1 figure comes from
T1 is the VAT you charged. The hard part is not the addition, it is knowing which invoices belong to this period at all.
Every VAT-registered Irish business files a VAT3. Two boxes carry most of the weight:
- T1 — VAT on sales. The output VAT you charged your customers this period.
- T2 — VAT on purchases. The input VAT you are entitled to reclaim.
You pay the difference. T1 is arithmetic over invoices you already hold, which makes it sound easy, and it is — once you have settled the one question that decides which invoices count.
The two bases, and why it matters which one you are on
Invoice basis
VAT is due when the invoice is issued. Every invoice you issued in the period counts, whether or not a cent has landed. Sell €50,000 in August and collect nothing, and the VAT on all of it is still due.
Cash receipts basis
VAT falls due when the money arrives. You count the payments received in the period, and each payment carries the VAT of the invoice it settles, in proportion to how much of that invoice it settles.
Worked example. A €1,230 invoice carrying €230 of VAT, half paid this period.
- Invoice basis: €230 in T1 for the period you issued it. The payment is irrelevant.
- Cash receipts basis: €115 this period, and €115 whenever the rest lands.
Same invoice, same customer, two different returns. A refund in the period subtracts on the same rule, because money given back was not received.
The cash receipts basis is not automatic — you have to be eligible and you have to opt in. Most small businesses invoicing other businesses are on the invoice basis by default. If you do not know which you are on, that is the first thing to establish, before any arithmetic.
What counts as a supply, and what does not
- A draft is not a supply. It was never issued to anybody, so it never enters the return.
- A cancelled invoice is trickier than it looks. Deciding a past period from a status you read today means an invoice issued in one period and cancelled in the next can vanish out of a return you have already filed. The reversal belongs to the period the credit note was issued — there is a whole guide on that, because it is where the money moves.
- Reverse-charge supplies carry no VAT, so they contribute nothing to T1. They are reported separately, and folding them in as a 0% sale is a different return. See reverse charge invoices.
Per rate, and never across currencies
Your T1 is one number, but it is built from a rate at a time — 23% on one line, 13.5% on another, 9% or 0% on a third. Keeping the rates apart is what lets you check the total rather than trust it.
Currencies are a harder rule: they are never added. A €4.04 figure and a $8.05 figure do not make 12.09 of anything. A VAT return is denominated in one currency, so if you invoice in more than one you get a figure per currency and convert the others yourself — which is a real conversation with your accountant about which rate applies on which date, not a division somewhere in a spreadsheet.
The deadline
Irish VAT periods are two-monthly by default: January–February, March–April, May–June, July–August, September–October, November–December. The return and payment are generally due by the 23rd of the month following the end of the period when you file through ROS. Some businesses are on quarterly, four-monthly, half-yearly or annual filing instead, so check what your own registration says.
This is a plain-English summary, not tax advice. Revenue's guidance on VAT returns is the authority, and your accountant knows your registration, your basis and your filing frequency.
Kayment gives you the T1 figure, and says what it is not
Per rate, per currency, for the period, on whichever basis you file. What it deliberately does not do is present a T1 with a blank T2 as though it were a finished return — Kayment sees what you invoice and nothing you buy, so it says so on the screen rather than handing you a number that looks complete and isn't.
See how it works