Sunday Independent (Ireland)

Charities hit by huge VAT bills to State

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

- 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
BREAK NEEDED: Ivan Cooper of Wheel calls for interventi­on

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