Monday, 3 December 2018
Budget 2018 Decision means charities can reclaim some of their VAT Payments.
The VAT compensation Refund scheme compensates charities for the VAT they occur on their inputs,
in recognition of the work undertaken by the charities sector.
The Charities VAT compensation scheme will take effect from 1 January 2018 but will be paid one year in arrears i.e. in 2019 charities will be able to reclaim some element of the VAT costs arising in 2018.
Charities will be entitled to a refund of a proportion of their VAT costs based on the level of non-public funding they receive. For example, where a charity’s gross income for 2018 involves
30% funding from State/EU/international organisations and 70% privately sourced income
including fundraising, subscriptions and donations, they may claim 70% of their VAT input costs for
Not eligible for relief under the scheme will be VAT incurred on private non-charity related
expenses; VAT incurred that is subject to an existing VAT refund order and VAT incurred
that is otherwise deductible.
A capped fund of €5 million will be available to the scheme in 2019. The scheme, including
the amount provided in the fund, will be subject to review after three years. Claims under the
scheme cannot be made until 2019 as it will take some time for Revenue to establish IT and
Where the total amount of claims in a given year exceeds the €5 million
capped amount, charities will be paid on a pro rata basis, e.g. where the total value of claims by all
charities in 2019 amounts to €10 million, each charity will receive 50% of their claim.
Qualifying charities must be registered with the Charities Regulator, have tax clearance, and provide a set of audited accounts for the year in which the claim is being submitted. For administrative purposes, claims valued below €500 will not qualify.