Exemption from payment of certain taxes
Under Irish law, charities and other approved bodies may apply for relief from payment of certain taxes. Detailed information about the conditions under which these exemptions are granted is published by Revenue. A charitable organisation that enjoys the benefits of tax relief is assigned a charity (CHY) number by Revenue. This is not the same as the charity (CRA) number assigned by the Charities Regulatory Authority.
Tax exempt status is not automatic for charities. Before granting it, Revenue must be satisfied that the entity in question is formally established for charitable purposes only, and that it applies all of its resources to these purposes. To get tax exempt status, it is not necessary to be incorporated as a company, but the charitable entity must have a constitution and rules.
The term “charitable purposes” is used by Revenue to mean “the relief of poverty, the advancement of education, the advancement of religion, or other works of a charitable nature beneficial to the community”. The tax code also recognises the promotion of athletic or amateur games or sports as beneficial to the community, even though these are excluded from the definition of charities in law.
Revenue publishes and regularly updates the list of all of the charities that enjoy tax exemption on its website, which is the source of the data on www.benefacts.ie.
Tax-efficient gifts: tax relief on donations to charities
Separate from and additional to the provision for charities to be exempt from having to pay certain taxes, the tax code provides for recognised charities to enjoy the benefit of tax relief on donations.
This means that Revenue will refund to eligible charities the value of the tax paid by donors on their charitable gifts – subject to certain thresholds and other rules – thereby increasing the value of the gift by the taxpayer’s marginal rate of taxation.
A charity that has already gained recognition as such by Revenue for exemption from payment of taxes must apply for the benefit of this additional tax relief, enabling tax-efficient gifts. A separate list of these – a fraction of those with a CHY number – is published and regularly updated by Revenue on its website, which is the source of the data on benefacts.ie.
Besides eligible charities, the definition of bodies that can avail of tax-efficient gifts includes
- recognised educational institutions
- recognised bodies set up for the purposes of education in the arts
- bodies set up for the promotion of the observance of the Universal Declaration of Human Rights or the implementation of the European Convention for the protection of Human Rights and Fundamental Freedoms, or both.