Report reveals €18m VAT burden on Irish Charities

Irish Charities pay out more than €18m in unreclaimable VAT each year according to a new report from tax experts Ernst and Young. The comprehensive report was prepared for Irish Charities’ Tax Research Ltd and is based on the first detailed survey of the VAT burden imposed on the Irish charitable sector.

• The report demonstrates that VAT is a significant burden on Irish Charities costing the sampled charities €18million in 2001
• The VAT burden can be relieved by way of a Ministerial Order under Irish VAT law without contravening EU law
• The actual cost to the Exchequer of introducing a refund mechanism is 52% of the total VAT bill since the remainder is paid for from public funding - in the case of the sampled charities a VAT refund would cost the exchequer €9.4m
• The advantage of a VAT refund mechanism is that control remains with the Revenue Commissioners as to what organisations qualify for refunds