Charity VAT Compensation Scheme – A Timely Reminder
What is the scheme?
Charities are entitled to claim a refund of a proportion of their VAT costs based on the level of non-public funding they receive. Where the total amount of eligible claims from all charities in each year exceeds the capped amount, claims will be paid on a pro rata basis. The cap on this has been increased to €10m from 1 January 2024.
How does my Charity qualify?
To be a qualifying charity for this scheme, a charity must at the date of claim and at the time that the qualifying expenditure was incurred:
- be registered with Revenue and hold a charitable tax exemption (CHY) under section 207 Taxes Consolidation Act (TCA) 1997
- be registered with the Charities Regulatory Authority (CRA)
How do we make a claim
Charities wishing to submit a claim must comply with the criteria already described above. The following will be required to submit a claim:
- tax registration number issued by Revenue
- bank account details
- Registered Charity Number (issued by the Charities Regulatory Authority). It should be noted that a claimant must hold a current tax clearance certificate when making a claim.
Claims for VAT compensation must be submitted through e-Repayments on Revenue’s Online System (ROS). The following conditions also apply:
- claims and any supporting documentation must be submitted in the format required, and in accordance with the deadlines specified by Revenue
- claims can be submitted between January 1st and June 30th in the year following the year to which the claim relates
- claims submitted after the June 30th deadline will not be accepted under any circumstances
- claims can be submitted annually in respect of eligible VAT paid in the previous calendar year only
- claims may be amended by the claimant up to 30th June of the year of claim submission but not afterwards
- the maximum claim amount is €1,000,000
- the minimum claim amount is €500
- the minimum repayment is €5
- claimants must declare and certify that all information they provide for the purposes of the claim is correct.
You will need the following details to support a claim
- detailed breakdown of total income, qualifying income and qualifying expenditure
- VAT records which form the basis for the claim e.g. invoices, receipts etc. Charities must retain all books, records and documents relevant to the claim for a period of 6 years
- evidence that the goods and services on which they are claiming VAT were applied to their charitable purpose
- evidence that the VAT for which they are seeking a refund was paid in the year to which the claim relates
- evidence that the income on which their calculation is based was received by the charity in the year to which the claim relates
- a most recent set of audited accounts. These accounts must be for the charity’s financial year and the year end of the financial year must be the year to which the claim relates or the year in which the claim is being made
- evidence that the charity was not entitled to a deduction or refund of the tax being claimed under any other legislation administered by Revenue
- evidence of compliance with all the obligations of the VAT Consolidation Act 2010, the axes Consolidation Act 1997, the Stamp Duties Consolidation Act 1999 and secondary legislation made under these Acts
What is Qualifying Income
The proportion of a charity’s income that is privately funded is known as ‘qualifying income’. This excludes publicly funded income and income already excluded from Total Income calculation.
TOTAL INCOME MINUS NON-QUALIFYING INCOME = QUALIFYING INCOME
To calculate qualifying income, a charity should deduct from its total income for the year to which the claim relates all non qualifying income. Some examples of non-qualifying income are:
- Charitable Donations Scheme repayments
- Charities VAT Compensation Schemes refunds
- County Council grants
- Pobal funding
- HAP payments
- CES payments
- Café Income
- CAS funding (not repayable)
- Charity shop income
- HSE Fair Deal payments
- RAS payments
What is qualifying Expenditure?
Expenditure in respect of which a VAT refund may be sought under this scheme is described as “qualifying expenditure”. Conditions apply to the calculation of qualifying expenditure:
- compensation may be sought in respect of VAT which was paid in the State on certain expenditure and in the year to which the claim relates
- that expenditure must have been for goods or services used by the charity only for its charitable purpose
- if a charity is entitled to receive any kind of relief, refund, repayment or deductibility under any other scheme or legislation administered by Revenue, it may not include that amount in the calculation of a claim.
What next?
Applications under the scheme should be submitted by 30th June 2024 in respect of calendar year 2023. Please contact Liam Farrell or any member of our team for further assistance.
