Catherine Murphy
Question:261. Deputy Catherine Murphy asked the Minister for Finance if schools can claim a VAT rebate in the context of being in possession of a charity number. [22586/22]
View answerTuesday, 10 May 2022
Questions (261, 267)
Catherine Murphy
Question:267. Deputy Catherine Murphy asked the Minister for Finance his views in relation to allowing all schools to claim VAT back in the same way as other entities with charity numbers; the estimated costs involved; and if he will make a statement on the matter. [22689/22]
View answerWritten answers
I propose to take Questions Nos. 261 and 267 together.
I am advised by Revenue that the VAT rating of goods and services is subject to EU VAT law, with which Irish VAT law must comply. In accordance with the VAT Directive a school that is engaged solely in the provision of children’s or young people’s education is exempt from VAT. As is the case with all VAT exempt activities, this means that they are not required to charge VAT on their supply of the relevant services, nor are they entitled to reclaim VAT on their purchases used for the services. This is a fundamental feature of the VAT regime at EU and national level.
However, alongside the VAT system, there is a grants scheme under which bodies (including schools) which are qualifying charities may qualify for a grant in recognition of the VAT they have incurred. The VAT Compensation Scheme was introduced in recent years to reduce the tax burden on Charities by partially compensating them for the VAT incurred in delivering on their charitable purpose. Under the scheme, charities may apply for a grant related to a proportion of their VAT costs, based on their level of funding other than from public and certain other sources. In order to be a qualifying charity for the scheme, a school would need to be registered with the Revenue Commissioners and hold a charitable tax exemption under section 207 Taxes Consolidation Act 1997, and be registered with the Charities Regulatory Authority. It’s qualifying income would exclude income from public sources and educational fees. A total annual capped fund of €5m is available under the Scheme. Where the total amount of eligible applications from all Charities in a year exceeds the capped amount, grants are paid on a pro rata basis. Detailed information regarding the VAT Compensation Scheme for Charities is available on the Revenue Commissioners website at the following link: www.revenue.ie/en/companies-and-charities/charities-and-sports-bodies/vat-compensation-scheme/vat-compensation-scheme-for-charities/index.aspx.
Finally, I am advised that the information required to estimate the cost of the Deputy’s suggestion to allow all schools to reclaim VAT is not readily available as Revenue do not have data about their purchases.