Thursday, 18 February 2021
Department of Finance
Value Added Tax
100. To ask the Minister for Finance the status of the operation of the VAT refund scheme for charities which he introduced; his views on the uptake of the scheme; and if he will make a statement on the matter. [9259/21]
As the Deputy will be aware, I introduced the VAT Compensation Scheme in Budget 2018 to relieve the VAT burden on charities and to partially compensate them for the VAT paid on expenditure related to independently raised income on or after 1 January 2018. The scheme was not applicable to VAT paid in years prior to 2018.
The funding for the scheme is capped at €5 million per year and where the total amount of claims in any year exceeds this amount, refunds are paid to charities on a pro-rata basis. Charities can only make one claim per year in respect of the previous year, which must be submitted between 1 January and 30 June. For example, a claim in respect of 2018 had to be made between 1 January 2019 and 30 June 2019.
Revenue started accepting claims for the scheme in January 2019 in respect of eligible VAT paid by charities in 2018. A total of 1,143 claims were received for that year and as the total amount claimed exceeded the €5m fund, refunds were issued on a pro-rata basis, with the full fund allocated.
Last year, in response to the impact of the COVID-19 pandemic, the closing date for submission of claims was extended from 30 June 2020 to 31 August 2020. In total, 910 claims were received for that year and as the total amount claimed exceeded the €5m fund, refunds were issued on a pro-rata basis, with the full fund allocated.
Revenue is now accepting claims in respect of eligible VAT paid by charities in 2020 which must be submitted between 1 January and 30 June 2021.
As the scheme is now in its third year of operation, it is subject to review. Accordingly, officials of my Department and Revenue are engaged with the sector to review the operation of the scheme.