The Government has introduced a Value Added Tax (VAT) Compensation Scheme for Charities. This scheme aims to reduce the VAT burden on charities and to partially compensate for VAT paid by the charity. The scheme applies to VAT paid on expenditure on or after 1 January 2018. VAT paid in or prior to 2017 cannot be claimed.
Charities can submit one claim per year which should relate to VAT paid in the previous year only.
Claims can be submitted between 1 January and 30 June each year. For example, VAT paid on expenditure in 2018 can be claimed between 1 January and 30 June 2019.
Claims made under this scheme are not dealt with on a first come first served basis.
The fund for the scheme will be capped at €5m. This scheme will be reviewed after three years.
Charities are entitled to claim a refund of a proportion of their VAT costs based on their level of non-public funding.
The total amount of claims in each year may exceed the capped amount. If this happens any refunds due will be paid to charities on a pro-rata basis.