Revenue eBrief No. 021/20
Charities VAT Compensation Scheme – Guidelines
Tax and Duty Manual (TDM) Charities VAT Compensation Scheme – Guidelines for Charities has been updated to reflect revised guidance for submission of claims.
- Section 4: Total Income explained – in particular regarding funds that are collected by one qualifying charity on behalf of another qualifying charity and also the circumstances in which funds should not be included in the Total Income calculation
- Section 5: Qualifying Income – includes examples of non-public funding for the purposes of this Scheme
- Section 9: Submitting a claim – details of the criteria for submitting a claim under this Scheme have been moved to the first paragraph for ease of reference
1.2 VAT Compensation Scheme overview
To reduce the VAT burden on charities and to partially compensate for VAT paid in the day to day running of the charity, a VAT Compensation Scheme for charities has been introduced.
The scheme applies to tax paid on expenditure on or after 1 January 2018 and so VAT paid in years prior to that cannot be claimed. Refunds will be paid one year in arrears.
A total annual capped fund of €5m is available for payment under the scheme, and the scheme will be subject to review after three years. Charities will be 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.
1.3 Revenue website Information on the Charities VAT Compensation Scheme is available on the Revenue website