Dáil Éireann debate -
Wednesday, 25 Jan 1995

Vol. 448 No. 1

Written Answers. - VAT Liabilities of Charities.

Eric J. Byrne

Question:

33 Mr. E. Byrne asked the Minister for Finance if he has received representations regarding the VAT liabilities incurred by charities; if his attention has been drawn to the fact that such liabilities may outstrip Government grants received by such charities; if he will introduce measures to redress any anomalies arising; and if he will make a statement on the matter. [1545/95]

Minister for Finance (Mr. Quinn)

I can confirm that representations have been made to my office regarding VAT borne by charities during the course of their activities.

While I understand and sympathise with the frustration felt by the bodies and individuals concerned, I must explain that this situation is, in fact, a direct consequence of EU VAT law. The Sixth VAT Directive, to which Irish law must conform, provides that most charitable activities are exempt from VAT: this means that bodies engaged in such activities do not charge VAT on the services that they provide but, as a necessary corollary, neither are they entitled to recover the tax borne on the goods and services they purchase in the course of these activities. Generally speaking, VAT can only be recovered by VAT-registered businesses.