Introduction

In 2025, Irish charities have unprecedented opportunities to boost funding, reduce operational costs, and maximize donor contributions through available tax benefits. From VAT compensation schemes to tax-free income from charitable activities, understanding and utilizing these advantages can significantly impact your organization’s sustainability and growth. This comprehensive guide outlines the key tax relief measures and practical strategies that every Irish charity should embrace to thrive in the coming year.

1. Ensure Registration as an Approved Charity with Revenue (CHY Number)

In order to take any tax relief, the tax relief must be registered with the Revenue Commissioners by applying for registration as a Charity (CHY) number. The CHY Number is the bedrock of being able to enjoy every kind of tax relief.

Source : The Wheel, Chartered Accountants Ireland

How to Boost This Benefit:

Complete the Revenue CHY application for charitable tax exemption.
Keep registration and compliance requirements should be maintained up to date..
Periodically review and ensure that all necessary requirements in Revenue are up to date.

2. Tax Benefits From Charitable Donation Scheme (Relief on Donations)

According to the scheme on Charitable donations, if a donation is made by a taxpayer (an individual or corporate) to any of the registered charities, the eligible nonprofit can claim tax relief on contributions over 250 euros. Contributions by PAYE taxpayers and self-assessed taxpayers are acceptable.

Source : The Wheel

How to Strengthen This Benefit:

Get donations over 250: Let your donors know about the €250 so that they make efforts to donate for the better good of the charity.
Enhance Donor Interaction: Periodically alert and inform donors that their donations can still be of greater value by incorporating this scheme.
Online Forms and Digital Solutions: Simple web templates and sites may assist donors in filing their CHY3 (annual donation tax gross refund claim) or CHY4 (endure certificate) paperwork.
Employ Tax Relief for Strategy: Anticipated tax relief should be estimated and prepared to include in yearly operating and fundraising forecasts.

3. Donations and Sponsorships from Corporates

Irish charities which receive donations from corporates in Ireland are able to reclaim such expenses against their corporation tax. The corporates are rewarded with tax incentives for corporate social responsibilities which are for charities increased donations.

Source : Revenue.ie

How to Foster This Benefit:

Corporate Partnerships: Partnerships with companies can be established through long term sponsorship packages developed by forming strategic alliances among the project partners. Target savings by communicating the available tax benefits.
Structured Giving Programs: Promote structured corporate giving in such a manner that fixed donations with a limit for expenditure are made by the companies.
Offer Recognition: Publicly praise corporate donors for the donation, this will add value to their business.

Tax Benefits for Charities - Group of volunteers organizing clothing and water donations indoors.

4. VAT Compensation Scheme for Charities

This VAT Compensation Scheme helps any charity to recover a portion of VAT that has been incurred on goods and goods and services acquired the preceding year. The amount of this cost recovery period is limited by the amount of money proportionate to the number of claims. The scheme compensates charities for VAT paid on goods and services, applicable to VAT incurred since January 1, 2018. The fund cap was raised to €10 million from 2024. Applications must be submitted between January 1 and June 30 each year.

Source : The Wheel, Chartered Accountants Ireland, Chartered Accountants Ireland

How to Boost This Benefit:

Accurate Record Keeping: Ensure that all VAT incurred on purchases is accurately accounted for, and ensure all VAT records are properly documented.
Annual Submission: Submit your claim as soon as possible within the deadline (usually mid-June). The earlier you apply, the better your chances in the capped scheme.
Awareness Campaigns: Train your staff regarding VAT-eligible activities, and make efforts to find ways of avoiding non-claimable expenses.

5. Tax-Free Income from Charitable Activities

An Irish charity usually does not pay tax because most of its income is earned from supporters and sponsorships or from fundraising activities related to(notionally) sponsored goals It supports direct philanthropy.
Source : Chartered Accountants Ireland

How to Boost This Benefit:

Strategic Event Planning: Arrange such tax free fundraising events like a charitable run, an auction or lotteries etc., focusing on the correct categorisation to remain tax free.
Diversify Fundraising: Some other methods of fundraising which do not attract income tax are also available, such as certain online donation matching or crowdfunding sources.

6. Tax Exemption: Capital Gains Tax

Charitable organizations do not have to pay taxes (CGT) related to the sale of assets employed for the purpose of charity. This can be especially advantageous if one is disposing of either real estate or investment.

Source : The Wheel

How to Boost This Benefit:

Property Investments: Let all property or any assets owned be under ‘charitable usage’ for tax exemption on capital gains for such properties when sold.
Planned Asset Sales: The disposition of assets should be well managed to meet the desired timing and desired purpose of disbursements in accordance with the charity.

7. Stamp Duty Exemption on Transfer of Properties

Most of the times on transfer of properties to charities or between charities stamp duty is not charged and this saves a lot of cost for the charity seeking new property or enhancing current ones.

How to Boost This Benefit:

Negotiate for Donations in Property: When there is the need and ability to donate money instead of donating dollars encourage property transfers to avoid paying stamp duties on dollar donations.
Collaborations with Real Estate Developers: Partner with real-estate owners or developers to explore and potentially include significant donation amounts which are more beneficial in terms of stamp duty exemption to the charity organisation.

8. Reduced Rates for Trading Subsidiaries (Non-Profit Subsidiary Trading)

A registered charity is allowed to derive income from trading subsidiaries but at the same time if a charitable purpose is relevant to the profits there may be less or no corporation taxes for such activities.

Source : Revenue.ie

How to Boost This Benefit:

Separate Trading Activities: For those organisations that trade in any form, which all organisations have done at some level, then creating a trading subsidiary is a must. Ensure to transfer profits to the parent charity to enjoy the tax benefits.
Maximize Profitable Activities: Explore the feasibility of opening charity shops, social enterprises and so forth that would generate revenue for the charity, without taxation.

9. Legacy Giving (Tax-free Gifts from Estates)

This is where donors leave behind some of their estate to be donated to a charitable cause when they die; this amount is not subject to estate taxation that is inherited tax. Encouraging planned giving can result in significant long-term funding.

Source : Chartered Accountants Ireland

How to Boost This Benefit:

Encouraging Legacy Giving: Encourage legacy giving as part of donor communication to the extent of informing non-charitable benefits to the heirs and the charity that such prospects can be realised.
Estate Planning Seminars: Host estate planning workshops or webinars that educate donors on the tax benefits of leaving a charitable legacy..

10. Employee Payroll Giving and Tax Deduction

The benefit contributed towards these schemes integrates an automatic pre-tax contribution from the employee’s salary and does away with the tax liabilities since it is directed to charitable organisations.

How to Boost This Benefit:

Workplace Partnerships: Form partnerships with organisations to establish payroll giving schemes where employees are encouraged to donate regularly and tax effectively.
Publicise the Benefit: Explain to employees how they can utilise payroll giving to bring tax exemptions to further their charitable causes.

Conclusion

By effectively utilising the above tax benefits and implementing strategies to boost donations and minimise costs, charities in Ireland can significantly increase their operational efficiency and funding in 2025.