Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

The provision in section 22 relates to tax measures that are provided for in section 130 of the Taxes Consolidation Act 1997. The purpose of the amendments in section 22 is to ensure that thestatus quois maintained in relation to those tax measures or reliefs in the event of a disorderly exit of the UK from the EU. However, this has no bearing on the VAT treatment of goods or services received by a person, which I understand to be Deputy Naughten’s main concern. I note that Deputy Naughten appears to be concerned with the VAT treatment of helicopter services that are provided by a Cork-based air ambulance, which is run by the charity Irish Community Rapid Response. Deputy Naughten’s concerns appear to emanate from the fact that, post Brexit, the company operating the helicopter, which is currently UK registered, will have to register in Ireland and charge VAT on its supplies, meaning that Irish Community Rapid Response will be faced with an additional 23% VAT bill. I am advised that the ICRR is registered with the Charities Regulator in Ireland. Such charity activities are generally outside the scope of VAT and, therefore, many charities are not required to register for VAT or charge VAT in respect of the services they provide. Nevertheless, it is important to note that VAT is a tax on consumption which applies to supplies made by a person and not to supplies received by them. In this context, many charities incur VAT on the services they receive. This is a feature of the VAT system itself, and it is not possible under EU VAT law, with which Irish VAT law must comply, to introduce an exemption based on services received, nor to introduce an exemption based on the recipient of a service.

The Deputy will be aware of the VAT compensation scheme we have introduced for charities, which is administered by the Revenue Commissioners. This scheme seeks to reduce the VAT burden on eligible charities. Under this scheme, charities that are registered with the Charities Regulator can claim for VAT on any expenditure incurred in relation to their charitable activities, except where the charity is already entitled to a refund, deduction, relief or repayment of that VAT. The scheme entitles charities to claim a refund of a proportion of their VAT costs based on the level of non-public funding they receive. Where the total amount of eligible claims from all charities exceeds the capped amount, which is currently set at €5 million, claims will be paid on apro ratabasis. This scheme will ensure that charities are at least partially compensated for the VAT they incur on goods and services received in the course of their activities. Charities can submit only one claim per year. The scheme will reopen on 1 January 2020 for the submission of claims relating to expenditure in 2019.