Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

I thank the Senator for raising this topic. He has given us some detailed information which I would not have been privy to on the amount of VAT that is paid by Irish Community Air Ambulance in a full year. The Senator has mentioned the issues of VAT on leasing and VAT on fuel. Most people, not just in the Cork and Munster areas but right through Leinster and several other regions in the country, appreciate and acknowledge the work being carried out by many volunteers and by people involved with the Irish Community Air Ambulance service. It has been directly responsible for getting so many people from so many situations to hospitals. I understand why the Senator is raising the issue of its VAT bill.

Section 103 of the Value Added Tax Consolidation Act 2010 deals with ministerial refund orders and authorises the Minister for Finance to order repayment of tax in certain circumstances which are set out in regulations. Rather than amending the Minister's power, the Senator's intent may have been to propose amending the VAT regulations, which would have been the Value Added Tax (Refund of Tax) (Rescue Boats and Related Equipment) Order 2013, SI 249 of 2013, which the Senator may have referred to in his opening contribution.

The refund order is in place in accordance with the EU VAT directive, which allows for historic VAT treatment to be maintained under certain conditions. Ireland has maintained this relieving provision, which provides for a refund of VAT on the cost in respect of small rescue boats and ancillary equipment to Irish Water or other qualifying groups. That is an historic situation that was always in place over many decades. The purpose of those regulations the Minister introduced was to facilitate and copper-fasten the VAT situation and their treatment under the VAT regulations in respect of those bodies that were historically in operation at that time. However, it did not cover any new operation that would be coming in subsequently.

Unfortunately, there is no scope under the EU VAT directive to introduce or amend the refund order to include the provision of aeromedical services. Similarly, there is no provision in either European law or Irish VAT law to allow a zero rating or exemption for supplies of this nature. It is important to remember that VAT legislation in Ireland as set out in the Value Added Tax Consolidation Act 2010 must comply with EU directives.There is no scope in the EU VAT directive to exempt supplies on the basis of charitable status. In recognition of the issue, which affects charities across the country, the Minister for Finance introduced a VAT compensation scheme for charities in budget 2018 to relieve the VAT burden on charities and to partially compensate them for the VAT they incur on expenditure related to income raised independently. The scheme applies to VAT incurred on expenditure on or after 1 January 2018 and is paid one year in arrears. The conditions under which it is possible to qualify for repayment under this scheme are outlined on the website of the Revenue Commissioners. Where the total eligible amount of claims from all charities exceeds the capped amount, which is currently €5 million, claims are paid on a pro ratabasis. This is a relatively new scheme, which has been in place and operating only since its introduction in 2018, and the first refunds were paid under the scheme in 2019. It continues to operate and is being reviewed now. I will respond with more detail regarding this scheme during my second intervention concerning this matter.