(This document is by the Irish Revenue Commissioners, https://www.revenue.ie/en/Home.aspx)
What is Revenues role in relation to charities?
The Office of the Revenue Commissioners, Charities Section maintains a database of organisations to which they have granted charitable tax exemption. In granting tax exemption Charities Section give the body a CHY reference number. The full list of bodies granted exemption is published on the Revenue website.
Is there a register of charities in Ireland?
The Charities Regulatory Authority was legally established on the 16th of October 2014 under the Charities Act 2009. The Authority will maintain a register of charities. Further details available on the Charities Regulatory Authority website.
How should a governing document define an organisation's purposes for charitable tax exemption?
An organisation must be constituted and operated exclusively for charitable purposes. In addition, it is a basic principle of charity law that an organisation’s objects must be expressed in precise rather than broad or vague terms. This identifies as clearly as possible a recognised charitable purpose.
Exemption to tax will not be granted to organisations that have a mix of charitable and non-charitable purposes or where the objects of the body are considered to be either too vague or too broad.
What are charitable purposes?
In accordance with section 3 (1) of the Charities Act 2009 each of the following shall be a charitable purpose:
- Trusts for the Relief of Poverty
- Trusts for the Advancement of Education
- Trusts for the Advancement of Religion
- Trusts for Other Purposes Beneficial to the Community
A purpose shall not be a charitable purpose unless it is of public benefit.
It is not unusual for a charitable body to come within more than one of the headings. It should be noted that not all purposes of benefit to the community would be considered a charitable purpose. In examining an application for tax exemption the Charities Section will examine the case with regard to the objects, the actual activity of the applicant body and with regard to established charity case law.
How do I apply for charitable tax exemption?
Where a charitable organisation wishes to apply for exemption, it must submit a completed application form, Applying for Relief from Tax on the Income and Property of Charities to Charities Section, Office of the Revenue Commissioners, Nenagh, Co. Tipperary. The following documents should be submitted in support of the application: -
- Copy of the governing instrument - in draft format for a charity being newly formed.
- Statement of activities to date and plans for next 12 months, including any trading activities being undertaken/proposed.
- Annual reports and other documentation, if applicable.
- Latest financial statements/projected income and expenditure.
- List of names, addresses, occupations and PPS numbers of the Officers/Trustees/Directors.
Does a charity have to apply for a tax exemption from the Revenue Commissioners?
No, it is only necessary for a charity to apply to the Revenue Commissioners for charitable tax exemption if it may incur a liability to tax.
What reliefs from tax are available on the income and property of charities?
The tax code provides exemptions for charities as follows:
- Income Tax - Sections 207 and 208, Taxes Consolidation Act, 1997.
- Corporation Tax (in the case of companies) - Sections 76 and 78 Taxes Consolidation Act, 1997.
- Capital Gains Tax - Section 609, Taxes Consolidation Act, 1997.
- Deposit Interest Retention Tax (DIRT) - Section 266 Taxes Consolidation Act, 1997.
- Capital Acquisitions Tax - Sections 17, 22 and 76 of the Capital Acquisitions Taxes Consolidation Act 2003.
- Stamp Duty - Section 82, Stamp Duties Consolidation Act 1999.
- Dividend Withholding Tax - Chapter 8A, Part 6, Taxes Consolidation Act, 1997.
We are a not for profit organisation; does that mean we are a charity and entitled to charitable tax exemption?
No, the absence of profit motivation does not automatically make a charity entitled to charitable tax exemption.
We are an unincorporated body and have been advised to change the legal structure of the organisation to an incorporated body governed by a Constitution (formerly a Memorandum and Articles of Association); will this affect charitable tax exemption?
No, if the ethos of the organisation does not change then a body that wishes to change its legal structure should write to Charities Section prior to the change, notifying us of the reason for the proposed change and enclosing a copy of the new draft governing instrument.
Can a foreign charity be granted charitable tax exemption /determination in Ireland?
Before the Revenue Commissioners will consider an application for charitable exemption the organisation must be registered with The Charities Regulatory Authority.
Non-resident charities based in an EEA / EFTA country can apply for a determination under Sections 208A and 208B of the Taxes Consolidation Act 1997.
Eligible non-resident charities will qualify for a determination rather than an exemption. A determination will issue following evaluation of the application from the non-resident charity on the basis that it is established for charitable purposes only and were the body to have income in the state of a kind referred to in section 207 or 208 it would qualify for the exemptions provided for by those sections.
Where a non-resident charitable organisation wishes to apply for a determination, it must submit a completed application form to Charities Section, Office of the Revenue Commissioners, Nenagh, Co. Tipperary, Ireland. Download the information leaflet DCHY 1 and application form.
Can an Officer/Director/Trustee be paid as an Officer/Director/Trustee?
In general, no payments should be paid to Officers/Directors/Trustees other then out of pocket expenses. Specifically, Officers/Directors/Trustees are not to be paid for holding such an office.
Can an organisation that has charitable tax exemption have paid employees?
Yes, a charity can have paid employees. A charity that has employees should note that charitable tax exemption does not relieve it of its obligations as an employer to operate the P.A.Y.E. system for its employees. Officers/Directors/Trustees of the charity are prohibited from being employed by or in receipt of any remuneration from the charity.
Is an organisation that has been granted charitable tax exemption exempt from VAT?
No. There is no general VAT exemption for charities. However, there are a number of specific reliefs from VAT which may relate to charitable activities and are outlined in information leaflet: VAT and Charities.
We have charitable tax exemption; do we still need to get a tax clearance certificate?
Bodies granted charitable tax exemption by the Revenue Commissioners are issued with a Charity (CHY) Number. In certain instances it may be sufficient for a body just to quote their CHY number and a tax clearance certificate would not be a requirement.
An applicant with charitable tax exemption who has secured a Public Sector Contract or requires tax clearance in connection with an application for the renewal of an Excise Licence or certain other licences (including authorisation required under the Consumer Credit Act 1995 and the Criminal Justice Legal Aid (Tax Clearance Regulations 1999) should apply through the eTC system.
Does a body with charitable tax exemption have to renew its tax exemption?
No. However, a charity must adhere to the conditions attaching to that exemption and is subject to review by Charities Section.
Can charitable tax exemption be withdrawn?
Yes, tax exemption may be withdrawn (retrospectively if necessary) if the body does not comply with its charitable objects or to the conditions associated with the charitable tax exemption. In such circumstances a charge to tax as determined by the Revenue Commissioners may be raised.
What accounts does a body with charitable tax exemption need to keep?
Annual Accounts must be kept and made available to the Revenue Commissioners on request. In the case of a body with income in excess of €100,000 per annum audited accounts must be submitted.
Our charity is dissolving; what information/documentation do we have to provide to the Revenue Commissioners?
- The date the organisation ceases to exist officially
- Final set of accounts of the organisation
- Confirmation of how any residual funds, at the time of dissolution, were distributed.
What tax reliefs apply in the case of donations to charities?
Who can claim the relief?
Donations from individuals
When an individual donates, the charity or approved body claims the tax relief. To allow the charity to claim the relief you must complete one of the following forms and give it to the organisation:
If you allow the charity to claim the relief, you will not be able to claim a refund of the same tax yourself.
Office of the Revenue Commissioners
Telephone No. 00 353 67 63400 Extn: 63377
Fax: 067 32916
Lo call: 1890 66 63 33
It should be noted that the Revenue Commissioners can make available to any person the name and address of any charity which has been granted exemption from tax.