Char­i­ties hit by huge VAT bills to State

Fo­cus Ire­land paid €1.1m in VAT — al­most as much as home­less char­ity re­ceived in grants

Sunday Independent (Ireland) - - News - Maeve Shee­han

CHAR­I­TIES are still fork­ing out mil­lions in VAT to the Gov­ern­ment be­cause of an EU anom­aly.

Al­though char­i­ties are ex­empt from pay­ing a range of taxes here, they are re­quired to pay VAT, with health and hous­ing or­gan­i­sa­tions run­ning up par­tic­u­larly high bills.

Fo­cus Ire­land was paid €1.12m by lo­cal au­thor­i­ties last year to sup­port home­less peo­ple and fam­i­lies.

The char­ity ended up pay­ing al­most that ex­act amount back to the State in VAT, funds that Fo­cus Ire­land said could have been used to sup­port fam­i­lies in the wors­en­ing home­less­ness cri­sis.

The North and East Hous­ing As­so­ci­a­tion re­cently built nine houses in north county Dublin at a cost of €1.25m. On top of this, the as­so­ci­a­tion paid €172,980 in un­re­claimable VAT — more than the cost of an­other fam­ily home.

In the area of health, MS Ire­land, the char­ity that pro­vides front­line ser­vices for peo­ple with mul­ti­ple scle­ro­sis, has paid €585,477 in VAT to Rev­enue over five years. That’s an av­er­age of €117,090 a year which, ac­cord­ing to MS Ire­land, would pay for a full-time phys­io­ther­a­pist and a full-time MS nurse in the or­gan­i­sa­tion’s respite cen­tre.

An­other lead­ing char­i­ta­ble or­gan­i­sa­tion, Spe­cial Olympics Ire­land, will host the All Ire­land Games in Dublin next year at an ex­tra cost to the or­gan­i­sa­tion of €2.28m. But €415,000 of that will go back to the ex­che­quer in un­re­claimable VAT pay­ments.

“This one VAT bill alone — if re­bated — would more than pay for Spe­cial Olympics Ire­land’s Young Ath­letes Pro­gramme for four to sev­enyear-olds,” the or­gan­i­sa­tion says.

The pro­gramme has been suc­cess­fully pi­loted but will cost €275,000 to roll out.

The Wheel, the largest rep­re­sen­ta­tive group for Ir­ish char­i­ties, is call­ing for re­forms to the VAT sys­tem ahead of the Bud­get.

Al­though char­i­ties ben­e­fit from tax breaks, an EU di­rec­tive re­quires that they pay the full VAT rate when they buy equip­ment, em­ploy builders or trades­men; and they can­not claim back any of this money. The EU Com­mis­sion has al­ready sug­gested that mem­ber states can com­pen­sate char­i­ties for VAT , with­out breach­ing the di­rec­tive.

Ivan Cooper, direc­tor of ad­vo­cacy at the Wheel, urged the Gov­ern­ment to in­tro­duce such a scheme in Ire­land, adding that a “ready-made tem­plate” which com­plies with EU VAT law al­ready ex­ists in Den­mark.

“Re­bates there are pro­vided from a capped fund, which lim­its ex­po­sure to the Dan­ish Ex­che­quer. It could be eas­ily repli­cated here,” he said.

A De­part­ment of Fi­nance work­ing group pre­vi­ously rec­om­mended a VAT com­pen­sa­tion scheme for char­i­ties in a re­port in 2015 but this never ma­te­ri­alised.

The De­part­ment of Fi­nance de­clined to com­ment on the in­tro­duc­tion of a VAT com­pen­sa­tion scheme for char­i­ties in ad­vance of the Bud­get.

BREAK NEEDED: Ivan Cooper of Wheel calls for in­ter­ven­tion

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