VAT compensation scheme for charities

QUESTION

To ask the Minister for Finance the number of applications which have been received to date in 2019 in respect of the VAT compensation scheme for charities which he announced in Budget 2018; the steps he is taking to promote the scheme; and if he will make a statement on the matter.

REPLY

The VAT Compensation Scheme for Charities was introduced in Budget 2018 to reduce the tax burden on Charities and partially compensate them for the VAT incurred in delivering on their charitable purpose. Under the Scheme, Charities are entitled to claim a refund of a proportion of their VAT costs based on their level of non-public funding. The Scheme applies to VAT incurred on or after 1 January 2018 and will be paid one year in arrears. For example, in 2019, Charities can reclaim some element of the VAT paid in 2018, but VAT paid in prior years cannot be claimed.

A total annual capped fund of €5m is available for payment under the Scheme, which will be subject to review after three years. Where the total amount of eligible claims from all Charities in a year exceeds the capped amount, claims will be paid on a pro-rata basis. Detailed information regarding the VAT Compensation Scheme for Charities is available on the Revenue Commissioners website at the following link:

https://www.revenue.ie/en/tax-professionals/tdm/value-added-tax/part12-refunds-and-repayments-of-tax/vat-compensation-scheme/vat-compensation-scheme-guidelines.pdf

Since 1 January 2019, 101 claims have been received by Revenue from Charities amounting to €1.5m. The closing date for submissions in respect of 2018 is 30 June 2019. Once the closing date has passed, Revenue will review the claims received and issue refunds later in the year in accordance with the rules of the Scheme. Charities wishing to submit a claim in respect of 2018 can do so through the Revenue Online Service (ROS) at any stage between 1 January 2019 and 30 June 2019. The minimum claim amount that can be submitted is €500. A ‘linked’ agent may also make the claim on ROS on behalf of the Charity. 

Regarding the overall communications strategy for the Scheme, I am aware that Revenue has, in addition to publishing the detailed information on its website, engaged directly with Charities to explain the operational administration and issued reminder notifications in January 2019 advising of its commencement. Revenue also issued an e-Brief to tax practitioners in December 2018 setting out the details of the Scheme and how it will operate and has worked with the Charities representative bodies to prepare a list of Frequently Asked Questions (FAQs). Furthermore, Revenue plans to publish a further notification in early May reminding Charities of the 30 June 2019 closing date.