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Charities seek commitment on VAT Compensation

Monday April 30th, 2007

Irish charities have called on all political parties in the General Election campaign to publicly commit themselves to introduce a VAT compensation scheme for charities in the Programme for the Next Government.

At the launch today (Mon. April 30th) of a new ‘Give VAT Back to Irish Charities’ poster outside Leinster House, Richard Dixon, Chairperson of the Irish Charities Tax Reform Group (ICTRG) said that, unlike the business sector, charities cannot reclaim VAT on their expenditure.

“The VAT bill for many charities equals the spend on some of their major activities. Most people will not be aware that a portion of their ‘euro’ given to charities at different fundraising events is returned to the Government in VAT by the charities involved.

“This severely limits the work of charities, with the aged, the sick and people with disabilities, as well as those most in need, both at home and abroad. It has a very human cost,” he said.

Charities pay approximately €25m in VAT annually.

EU law prevents a direct VAT refund to charities, but EU Commissioner, Laszlo Kovacs, recently confirmed that EU governments may provide compensation by way of grant. The Danish government has just introduced such a scheme for charities there.

“Following discussions with the political parties we are happy that they now all agree in principle to end the VAT anomaly affecting charities, which also limits development of philanthropy in Ireland.

“ We want a clear commitment to a VAT compensation scheme in the Programme for Government that emerges following the General Election,” Mr Dixon said.

(See also below examples of VAT paid by charities)

For further information contact:
John Gallagher,
John Gallagher Consulting
Tel. 087.9369888

Examples of VAT on Charities

Keith Duffy puts up a VAT Campaign posterSome charities pay hundreds of thousands of Euro in VAT each year. Small charities pay far less. None can reclaim their VAT in the way that the business sector does.
There is a very human cost for the many, many people for whom charities, big and small, provide vital services and support.

  • The Irish Cancer Society’s €300,000 VAT bill would fund their Cancer Information Service for a year.
  • The VAT bill of RESPECT/Daughters of Charity would pay for two extra houses to cater for 12 people with intellectual disability.
  • Concern’s VAT bill is almost as high as their entire Budget for Rwanda, which provides community based health care for 12,000 underprivileged children.
  • Bothar paid €469,000 VAT in 2005
  • Accord would use its €77,000 Vat bill to pay for training of marriage counsellors, an area not covered by its funders.
  • St Vincent DePaul estimates its 2006 VAT bill at €2.6 million, which roughly equals annual spend on Education support by the Society.
  • The Carmichael Centre in Dublin paid €8,526 in VAT on stationery and printing in 2005. This would have run 17 one-day training courses.
  • Galway Simon’s €42,000 VAT bill equals the cost of an additional housing support officer.
  • St Christopher’s Services Longford paid €157,000 VAT in 2005, much of it on accommodation and transport for it services to people with mental disability.
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