Bookkeeping / VAT

Guidance on the VAT treatment of certain independent groups of persons (Cost Sharing Groups)

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Revenue eBrief No. 246/23

Cost Sharing Group

A new Tax and Duty Manual (TDM) Cost Sharing Group has been published to provide guidance on the VAT treatment of certain independent groups of persons (Cost Sharing Groups).

The VAT treatment on the Exemption for Certain Activities in the Public Interest TDM has been marked as no longer relevant.

EXTRACT:

Introduction
This guidance sets out the VAT treatment of certain independent groups of persons, commonly referred to as a Cost Sharing Group.

In certain circumstances an exemption from VAT applies to the supplies by a Cost Sharing Group (CSG) that would otherwise be taxable. The exemption applies when two or more persons with exempt and/or non-business activities who operate in the public interest join on a co-operative basis to form a separate, independent group of persons to supply themselves with certain services at cost and exempt from VAT.

The exemption is designed to help businesses to collaborate and to share resources without being Deterred by the cost of VAT on any recharges.

The exemption does not apply to the supply of goods or to the supply of VAT exempt activities not in the public interest, such as insurance or financial services.

  1. Cost Sharing Group exemption
    An exemption from VAT applies to the supply of services by a CSG,
  • being a group that is an independent entity established for administrative convenience,
  • by persons each of whom carries on an activity, in the public interest, which is exempt from, or is not subject to, tax,
  • for the purpose of rendering to its members the services directly necessary to enable them to carry on that activity,
  • but only if the group recovers from its members the exact amount of each member’s share of the joint expenses.

    The exemption relates only to groups whose members carry on activities in the public interest.
    The exemption can also extend to members who carry out taxable activities (in addition to VAT exempt activities in the public interest) in so far as those services are directly necessary for those members’ VAT exempt activities or activities in relation to which they are not taxable persons.