Country Idealist Profiles

Ireland – Tax legislation

Posted in Ireland, Ireland - The Third Sector by blopote on August 14, 2008

Seperate from the legal statue issue is the tax treatment of non profit organisations that have been granted charitable recognition by the Revenue Commissioners.  Organisations whose purposes include the advancement of education or religion, the relief of poverty or organisations that are of benefit to the community can apply to the Revenue Commissioners for a charity number which allows them certain tax exemptions such as exemption from paying income tax and corporation tax on interest, annuities, dividends and shares, rents on property, gifts, profits from trade or land owned.

Section 848 of the Taxes Consolidation Act 1997 provides tax relief, at the standard rate, for personal donations between IR£200 (Irish Pound /Punt – currency used prior to introduction of the Euro) and IR£750 per annum to designated third world charities.  The tax relief goes to the charity, rather than the donor and is given by means of a top‑up payment by the Revenue Commissioners to the charity of the tax associated with the donation.  The charities are designated by the Minister for Foreign Affairs with the consent of the Minister for Finance.

Section 486A of the Act provides tax relief for company donations to eligible charities.  An eligible charity is one authorised by the Revenue Commissioners and which has been granted exemption from tax for three years prior to its application for approval.  Relief is given where the donation to any single charity by a company is not less than IR£250 and not more than IR£10,000 in any 12 month accounting period.  The upper limit for donations from a single company to all charities in a 12 month accounting period is the lesser of IR£50,000 or 10% of the company’s profit.

The VAT (Value Added Tax) treatment of charitable organisations is a direct consequence of EU VAT law, with which Irish VAT law must comply.  Under the Sixth VAT Directive, a wide range of charitable and voluntary organisations are deemeded to be exempt for VAT purposes.  This means that the organisations involved do not charge VAT on their services, but as a necessary corollary, they are unable to recover the VAT they bear on the goods and services that they purchase in the course of their activities.  Generally speaking, VAT can only be recovered by registered businesses who charge VAT to their customers.  This position cannot be altered unilaterally by the Government in view of the EU provisions.

Under the Charities Acts recognised charities are exempt from certain other taxes such as Capital Gains tax, Deposit Interest Retention Tax, Government Stamp Duty on property sold, Capital Acquisitions Tax and Probabe Tax.  In addition, educational establishments are allowed tax free gifts fr the purposes of the teaching of the natural sciences, carrying out research and promoting education in art, architecture, theatre, filem arts, literature and music.


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