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NEWS > Charity Sector News > Charity bodies welcome Tax Strategy Group review of VAT compensation Scheme

Charity bodies welcome Tax Strategy Group review of VAT compensation Scheme

Success of scheme supports increase in fund to €20m in Budget 2022

The publication of the Tax Strategy Report on the VAT compensation Scheme for Charities has been welcomed by Charities Institute Ireland (Cii) and The Wheel.

The Scheme was introduced in Budget 2018 to reduce the tax burden on charities and to partially compensate them for the VAT paid in delivering on their charitable purposes.  Under the scheme charities may claim a refund of a proportion of their VAT costs based on their level of non-public funding.  Cii and the Wheel were pleased to engage with the Department of Finance and the Revenue Commissioners and contribute to the review.

As the Tax Strategy paper makes clear, the scheme has now operated for three years for claims relating to 2018, 2019 and 2020.  In each of those three years, claims received exceeded the capped amount available (€5m). For 2018, claims made were valued at just over €37m; for 2019 claims amounted to over €39.5m and for 2020 claims were made for almost €32m.

In line with the Scheme, payments were calculated and issued on a pro-rata basis. Based on the available allocation of €5m, successful charities received just 13.4% (2018), 12.6% (2019) and 16% (2020) of the original claim submitted.

Cii and The Wheel believe that the operational success of the Scheme more than justifies  its continuation and both organisations are calling on the Government to increase the fund to €20m in Budget 2022.


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