11/10/2002

Government can introduce a VAT refund mechanism without falling foul of EU VAT law says EU Commissioner David Byrne

Speaking at ICTRG’s 11th Annual Conference – VAT – Uncharitable Taking – the campaign continues… Commissioner Byrne outlined the current EU Commission thinking on VAT on charities. Referring to discussions on the issue with Fritz Bolkestein, the Commissioner with responsibility in the area of VAT, Byrne informed participants that his colleague strongly believes that it is “difficult to modify the VAT regime further at EU level to specifically facilitate charities. On the other hand, national governments could if they wished fund charities outside the VAT system, in recognition for the VAT they pay” (our emphasis).

It is finally on the record, the government is not prevented by the Sixth EU VAT Directive from introducing a VAT refund grant scheme for charities. Indeed Commissioner Byrne specifically suggested that ICTRG’s efforts “might best be directed (again) on Charlie McCreevy.”

The conference also heard from guest speaker Kathy Sinnott who argued that the state saves money on neglecting services and when people “who care about community who are willing to volunteer time, talent and money to compensate for state neglect” come together to do something about it the state taxes them!! Kathy believes that “if we can successfully reform taxes, we can remove one of the incentives for government neglect and at the same time keep maximum resources earmarked for charity for charity.”

Janice McAdam reported on the background to ICTRG’S web-based VAT campaign and its success in the pre-election phase. Pointing out that such web based campaigns are known as viral campaigns Janice urged participants when called upon in the next phase, to turn the response from a mere virus to an epidemic!

Breen Cassidy of Ernst & Young outlined progress on the research on VAT on charities commissioned by our sister company ICTR Ltd. The final deadline for submission of completed questionnaires or annual accounts (if you cannot complete the questionnaire for any reason) has been extended to 31st October 2002 and Deirdre Mortell (ICTRG Chair) called on all members who have not already done so to submit the information as soon as possible.

UCD Law Lecturer Oonagh Breen gave us a whistlestop tour of government sales tax (= VAT) regimes for charities in Australia, New Zealand, Canada and the US suggesting that whilst the USA is “utopia” we could learn a lot from the systems in Canada and Australia. Oonagh also raised the issue of “compliance costs” which have proved a problem in Australia and which we should not lose sight of.

On a different note Kieron Brennan of Triodos Bank (which supported the Conference) and Paul O’Sullivan of Clann Credo Ltd outlined alternative sources of loan finance to traditional commercial banks. Ethical banking is in its early stages in Ireland but it is set to develop significantly over the coming years.

Following a lively question and answer session with Commissioner David Byrne, Deirdre Mortell closed the conference by calling on Charlie McCreevy, a champion in the area of tax relief on charitable donations, to put in place a VAT-refund mechanism for charities.

Kathy Sinnots speech
(Word 36KB)

Janice Mc Adam's presentation
(Powerpoint 149KB)

Breen Cassidy's presentation
(Powerpoint 44KB)

Oonagh Breen's speech (Powerpoint 82KB)

Triodos Bank information
(Word 32KB)