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VAT Compensation Scheme for charities

  1. Overview
  2. Qualifying conditions and supporting documentation
  3. What you need to calculate the claim amount
  4. What is total income and qualifying income?
  5. What is qualifying expenditure and qualifying tax?
  6. How do you calculate the claim amount?
  7. Making a claim

How do you calculate the claim amount?

The claim amount is called eligible tax in legislation. This is the amount which a charity may claim under the scheme. This is the amount which is eligible to be claimed based on the level of non-public funding received.

The claim amount or eligible tax for the calendar year to which the claim relates is determined by the formula:

  • qualifying tax x (qualifying income or total income).
  • Example

    A charity wants to apply for a Value-Added Tax (VAT) refund through the VAT Compensation Scheme. To work out how much it can claim, it will have to figure out its total income, qualifying income and qualifying tax.

    Total income
    Income Amount
    Donations €2,000
    HAP payments €10,000
    Fundraising €10,000
    County Council grant €5,000
    Total income €27,000

    The charity's total income was €27,000, however the charity received payments from HAP and the county council. These payments should be deducted from the total income to calculate the qualifying income.

    Qualifying income
      Value
    Total income €27,000
    Less HAP payments €10,000
    Less County Council grant €5,000
    Qualifying income €12,000

    The charity has total expenditure of €9,400 in the claim year. Of that expenditure, €900 was for non-charitable purposes. The qualifying expenditure is €8,500. It paid €1,572 in VAT on qualifying expenditure.

    The claim amount is calculated as follows:

    €1,572 x (€12,000/€27,000) = €698

    The charity can submit a claim for €698 for that year.

It is important to note that the minimum claim which may be submitted is €500 and that the maximum claim from 01 January 2022 is €1,000,000.

The total annual amount available to be paid out under the scheme is capped at €10 million per year. The amount which may be paid to any charity depends on demand from all applicants.

This means that the amount paid by Revenue to any charity may be less than the claim amount.

Next: Making a claim

Published: 01 December 2023 Print this page

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