Dáil Éireann Debate, Tuesday - 18 September 2018
127. Deputy Joe Carey asked the Minister for Finance his plans to exempt or reduce the rate of VAT charged in the delivery of community development projects with a view to maximising the direct spend on communities (details supplied); and if he will make a statement on the matter. [37004/18]
Amharc ar fhreagraCommunity development projects are generally exempt from VAT. Exemption from VAT means that they do not charge VAT on any goods or services they supply and also cannot claim deductibility on the VAT they pay on inputs related to their service.
The VAT rating of goods and services is subject to the requirements of EU VAT law, with which Irish law must comply. VAT is charged on the basis of the good or services being supplied. It is not possible to apply VAT on the basis of the nature of the consumer.
However, in line with my Budget 2018 announcement, a VAT compensation scheme for charities will be introduced in 2019 in respect of VAT expenses incurred in 2018. Where community development projects are registered as charities, they may qualify under the scheme. The compensation scheme provides that charities will be entitled to a refund of a proportion of their VAT costs based on the level of non-public funding they receive, up to a total capped fund of €5m. Details of the scheme as announced last year can be found in the following link:
http://www.budget.gov.ie/Budgets/2018/Documents/VAT_Compensation_Scheme_For_Charities.pdf
While the high level principles of the scheme were published on Budget Day in 2017, the parameters of the operation of the scheme are currently being progressed so that guidelines for charities can be published in advance of the 2019 commencement date.
