The European Commission (EC) has responded to a question by Irish MEP Liadh Ní Riada, which noted the fact that Irish community and voluntary organisations were precluded from reclaiming VAT that had been paid on medical vehicles and equipment, despite having charity status and despite their important role in supplementing underfunded state services.

She also highlighted the Danish system, where a fixed pool of funding from which charities can reclaim VAT is in place. Any claim made has to be in proportion to the funds raised from public donations and if a charity has raised 50% of its funds by donation it can apply to reclaim 50% of its VAT. Charities’ claims are pooled and the individual charities receive a pro rata proportion of their claim.

The question was whether this system was in line with EU VAT law, to which the Commission simply replied that EU VAT law did not preclude Member States from providing, outside the VAT system, for a compensation mechanism for the amount levied as VAT.