Eu commissioner confirms that VAT refund doesn't break EU VAT law.

In February 2003 an ICTRG delegation met with EU Commssioner Frits Bolkstein. Below you can read a copy of the text of a letter received from Mr. Bolkstein after the meeting. You can also view a scanned copy of the letter here (39K)

Frits Bolkestein
Member of the European Commission

Brussels, 20 - 02 - 2003

Dear Madam,

I refer to my meeting on 3 February 2003 in Brussels with Mesdames Ni Chonghaile and Nordon and Mr McCormack of your organisation.

During that meeting, the question of the Commission's attitude to a possible scheme
whereby the Irish Government would give a subsidy to Irish charities of an amount
equivalent to the non-deductible VAT that they had incurred was raised. In particular, the delegation was concerned to know whether any such scheme would be at odds with the provisions of Community VAT law as contained in the 6th VAT Directive.

I wish to confirm to you that in the Commission's view, the granting of government
subsidies - irrespective of the beneficiaries - is in itself not contrary to European Union
VAT law. In this regard, it has also to be noted that, provided that the State Aid rules are observed. Community law in general does not prescribe how Member States should spend their revenue.

I trust that you will find this explanation useful.

Yours sincerely,

Frits Bolkstein