VAT on unsold goods donated to charities should be abolished, MEP says

Dublin MEP Frances Fitzgerald has called for the removal of VAT on all bona fide donations of unsold products from businesses to recognised charities.

Fitzgerald highlighted this issue in a letter to the Taoiseach Leo Varadkar, along with the benefits for sustainability and the green economy.

“Every day, businesses in Europe are sending millions of unsold or returned products to be destroyed each year, while a large proportion of these products are in perfect condition to be donated to charities,” she said.

“Charging VAT on these charitable donations means that the cost of donating increases and the incentives to support valuable causes are reduced.

“Genuine charitable donations of unsold products should not be subject to VAT charges.

“This is something that Ireland has the ability to remove under EU VAT law and I am asking for this to be looked at.

“While very low value charitable gifts are exempt, the levying of VAT on donations above €50 is often a disincentive to donate.

“An example of this is the donation of technological equipment such as computers or machinery to charitable educational or community organisations.

“The requirement for VAT payments often makes donating such items more onerous than simply destroying them, which is VAT-free.

“This has implications for sustainability and the circular economy. Analysis by the European Environmental Bureau shows the value of destroyed electronics and clothing in the EU will amount to €71.29 billion by 2030 if no new policy measures are taken.

“In the face of this waste and unnecessary CO2, failing to donate products to citizens in need is unacceptable.”

Fitzgerald says Ireland should follow other EU member states who implemented VAT relief for such donations.

“While Ireland currently still requires VAT to be paid on charitable gifts over €50 in value, I believe there is value in exploring the possibility of removing this requirement.

“This would be of great benefit ultimately for communities and not-for-profit organisations, as well as our climate goals more broadly.”