Charities to receive only 10% of €49m sought in VAT refunds

Charities made more than 900 claims for VAT refunds to Revenue last year, totalling €49 million.

Under the VAT Compensation Scheme for Charities, charitable organisations are entitled to claim a refund of a proportion of their eligible VAT costs, based on their level of non-public funding.

The scheme is capped at €5 million annually, which means that funds are distributed on a pro-rata basis.

"The total amount claimed by charities under the scheme in respect of 2019 significantly exceeds the €5 million annual fund cap, and for this reason refunds will be paid on a pro-rata basis," noted Teresa Hearty of Revenue's charities unit.

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“This means that if all the claims submitted are found to be fully valid, then each charity will receive approximately 10 per cent of the amount claimed.”

Of the claims submitted in respect of 2019, 60 per cent were for charities supporting the community, 19 per cent were for religious charities, 14 per cent were for charities supporting education, and 7 per cent were from charities involved in the relief of poverty.

Ms Hearty said Revenue is undertaking a review of the claims and has identified some incorrect claims. “Where invalid amounts, or other errors, are identified, Revenue will contact the relevant charity to explain the reason for the reduction in their claim,” she said.

The refund amounts are expected to paid during the month of October.