Written answers

Tuesday, 18 September 2018

Photo of Michael Healy-RaeMichael Healy-Rae (Kerry, Independent)
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137. To ask the Minister for Finance the reason buses for transporting persons with disabilities are not exempt from paying VAT (details supplied); and if he will make a statement on the matter. [37293/18]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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The Value-Added Tax (Refund of Tax) (No. 15) Order, 1981 enables VAT paid on qualifying goods, such as aids and appliances constructed or adapted for use by a disabled person, to be refunded where the goods are purchased for the exclusive use of disabled persons suffering a specified degree of disablement. Motor vehicles are excluded from this Order because the qualifying provisions for the Disabled Drivers and Passengers Scheme provide for a refund of VAT and residual vehicle registration tax for qualifying disabled drivers, passengers and organisations.

Non-profit groups engaged in non-commercial activity are exempt from VAT under the EU VAT Directive. This means that they do not register for VAT and cannot recover VAT incurred on goods and services that they purchase. This non-entitlement to VAT deductibility is a general feature of VAT exemption and there is no provision in either European law or Irish VAT law to allow a zero-rating or exemption for supplies of this nature. VAT is a tax on consumption and is applied to supplies being made by a person and not to supplies received by them. In this context, it is not possible under EU VAT law, with which Irish VAT law must comply, to introduce a VAT exemption based on services received, or on the basis of the recipient of a service, nor is it possible to allow for zero rating of such supplies.

However, in line with my Budget 2018 announcement, a VAT compensation scheme for charities will be introduced in 2019 in respect of VAT expenses incurred in 2018. Charities will be entitled to a refund of a proportion of their VAT costs based on the level of non-public funding they receive, up to a total capped fund of €5 million. While the high level principles of the scheme were published on Budget day in 2017, the parameters of the operation of the scheme are being progressed so that guidelines for charities can be published in advance of the 2019 commencement date.

In relation to the aforementioned Disabled Drivers and Passengers Scheme, Section 92 of the Finance Act 1989 and Statutory Instrument No 55/2018 set out the criteria under which charitable organisations can claim a repayment of VRT and VAT paid on specially constructed or adapted vehicles under the Disabled Drivers and Passengers Scheme.

To qualify under the scheme, an organisation must be a charitable organisation within the meaning of the Charities Act 2009 (No. 6 of 2009), that is –

(a -entered in the register of charitable organisations under Part 3 of that Act, and

(b- whose purpose is to provide services to persons with disabilities, and

(c- in furtherance of that purpose, is engaged in the care and transport of disabled persons.

An applicant must qualify under all the conditions outlined above and adapted vehicles must be used to transport persons who are severely and permanently physically disabled and who hold a Primary Medical Certificate.

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