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NEWS > Charity Sector News > Budget 2024: VAT Compensation Scheme doubles from €5m to €10m

Budget 2024: VAT Compensation Scheme doubles from €5m to €10m

Charities Institute Ireland welcomes the decision to double the cap of the VAT Compensation Scheme from €5m to €10m in Budget 2024

Increasing the VAT Compensation Scheme from €5 to €10 million is a significant boost for charities, enabling more funds for impactful projects. We are grateful for this positive step toward empowering charitable organisations to continue their valuable work.

The VAT Compensation Scheme for charities 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 conducted a survey in 2021 to assess how the VAT Compensation Scheme worked operationally. The survey highlighted the ways in which charities used the refunds to deliver on their mission. Some examples of direct feedback from the survey and consultation with charities include:

“The VAT compensation scheme has enabled us to dedicate even more funds to our vital cancer services. This was particularly true given the challenges and increases in demand for our services due to Covid-19. The €68,000 rebate we received from the VAT compensation scheme in 2020 is the equivalent of funding nearly 200 nights of palliative care for cancer patients through our Night Nursing programme.”

• “ISPCC – the refund from the Scheme is equivalent to running Childline for two days.”

• “Grant funding covers only about 50% of our annual running costs and we depend on fundraising income to cover the remainder. Any
additional income, including the VAT compensation scheme, enables us to provide the range of our in-demand housing and support

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