1) How much can a sole trader earn before paying tax?
The absolute maximum you can get paid before paying tax is €5,000 (assuming you have no other income.
Otherwise, it really depends what type of tax you are talking about – let’s see the limits for each one:
2) VAT (Value-added Tax)
You have to register, charge and remit VAT to Revenue if you surpass the following sales thresholds:
- Services – €37,500 in sales within a 12-month rolling period
- Goods – €75,000 in sales within a 12-month rolling period
3) Income Tax (PAYE – Pay As You Earn)
In 2020, as a self-employed trader you can claim an Earned Income tax credit of €1,500 (however, if you also qualify for the PAYE tax credit, the combined value of these 2 tax credits cannot exceed €1,650). You can also get a Single Person Tax credit of €1,650. In Ireland, the standard tax rate band €35,300 (taxed at 20%, after that the tax rate is 40%). Theoretically this means that you could earn €15,750 before paying income tax.
4) USC (Universal Social Income)
You do not pay the Universal Social Charge if your income for a year does not exceed €13,000.
5) PRSI (Pay-related Social Insurance)
If you earn less than €5,000 from self-employment in a year you are exempt from paying Class S PRSI (but you may pay €500 as a voluntary contributor).