Why did my renovation quote jump from 13.5% to 23% VAT?
Supply-and-fit construction work in Ireland is normally charged at the reduced 13.5% VAT rate — but if the materials used cost more than two-thirds of the total job price, Revenue's 'two-thirds rule' tips the ENTIRE job to the standard 23% rate, not just the materials. On a €6,000 ex-VAT job, materials over €4,000 ex-VAT (two-thirds) push the whole job to 23%; keep materials at or under roughly €3,900 ex-VAT on that example and it stays at 13.5%.
This rule bites hardest on jobs with a lot of supplied materials relative to labour — a large blockwork extension, a kitchen fit-out with expensive units, or a boiler swap where the unit itself is costly.
It's a whole-job test, not a line-by-line one: once the two-thirds threshold is crossed, Revenue's rule applies the higher rate to the entire transaction, including the labour portion.
The rule doesn't apply if you're subcontracting to a principal contractor under RCT (Relevant Contracts Tax) — those invoices go out VAT-free, with the principal self-accounting instead.
What to check
- Ask your builder to show the materials-vs-labour split on the quote
- Ask which side of the two-thirds line the job falls on
- Note this doesn't apply if you're RCT-subcontracting to a principal contractor
When to call a pro
Raise this before work starts if your project involves a lot of supplied materials.
Sources
- Irish Trade Price Book v1, 17 August 2026, §1 VAT (citing Revenue.ie)
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