Revenue eBrief No. 072/21
Charities VAT Compensation Scheme
The Charities VAT Compensation Scheme Guidelines have been updated.
These Guidelines have been updated at Section 4 to include information on the treatment of Covid-19 wage subsidy scheme payments for the purposes of calculating a VAT Compensation Scheme claim.
Further clarification on the calculation of ‘Total Income’ and ‘Qualifying Income’ has also been provided in Sections 5 and 6.
Information about this scheme is available on www.revenue.ie.
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.