The Government Budget 2018 introduced the Charities VAT Compensation Scheme. Under the scheme, schools as charities may be able to reclaim some element of their VAT costs arising in 2025 based on the level of non-public funding they receive. Schools must exclude income and expenditure from canteens and tuck shops. A capped fund of €10 million will be available for the entire scheme in 2025. Where the total amount of claims in a given year exceeds the €10 million capped amount, charities will be paid on a pro rata basis, e.g. where the total value of claims by all charities for 2024 amounts to €20 million, each charity will receive 50% of their claim.
The scheme operates on a cash basis:
➢ Income received means actual monies received in the calendar year to which the claim relates.
➢ Expenditure paid means actual monies paid out in the calendar year to which the claim relates.
Claim Criteria
Claims under the scheme for the year commencing 1st January 2024 will be made in 2025 and will be paid one year in arrears. For administrative purposes, claims valued below €500 will not qualify. For example, where a school’s total income for 2023 comprises 70% funding from the State and 30% is privately sourced income including fundraising, voluntary subscriptions and donations, the school may claim 30% of the VAT they have been charged for the year.
The VAT claimed must be on expenditure that is for the benefit of the school directly.
The claim must be submitted before the 30th June 2025.
> Charities VAT Compensation Scheme – More details can be found here
Qualifying schools must be:
- Registered with the Charities Regulator Authority (CRA) at the time the qualifying expenditure was incurred, and
- Registered with Revenue and hold a charitable tax exemption (CHY) at the time the qualifying expenditure was incurred, and
- Have tax clearance status and
- Able to provide a set of audited accounts for the year in which the claim is being submitted.
You must retain all books, records and documents relevant to your claim for a period of six years.
Details on how to submit a claim to Revenue is available here. Schools making a claim should make sure they are set up on ROS to do so ahead of time.
Further guidance is available in Guideline 35 – 2024/2025.