In order to set up a charitable trust in Ireland, the organisation has to operate in Ireland (either as a company limited by guarantee (CLG), or other company types, associations or trusts). The charitable trust must have exclusively charitable purposes, which is examined on a case by case basis by the Charities Regulatory Authority (CRA) which was set up in 2014 to regulate Charities in Ireland. Charitable purposes are as follows:
- the prevention or relief of poverty or economic hardship;
- the advancement of education;
- the advancement of religion; and
- any other purpose that is of benefit to the community. Examples include the advancement of community welfare, including the relief of those in need by reason of youth, age, ill-health or disability or the promotion of health inter alia.
Furthermore, charities cannot be an excluded body, examples of which are bodies that promote activities that are unlawful, contrary to public morality, contrary to public policy or in support of terrorism or terrorist activities.
An application must be made online to the Charities Regulator using “MyAccount” on www.charitiesregulator.ie/en/myaccount. Charity Trustees (the people who control and are legally responsible for the management of a charity) must comply with their organisation’s governing document (constitution, deed of trust, rule book, annual report and accounts) which provides the basis for everything their organisation does and how it does it as per the rules set out in the Charities Act 2009.
If the Charities Regulatory Authority grants charitable status, then the organisation can apply for a charitable tax exemption from Revenue using a Form CHY1 along with the latest financial accounts or details of financial plans, a statement of activities and future plans along with a copy of the charity’s constitution. This means that the organisation will be exempt from paying income tax, corporation tax, capital gains tax, stamp duty, dividend withholding tax, capital acquisitions tax and deposit interest retention tax. However, if the charity has employees it will have pay Income Tax under the PAYE system. The exemption does not apply to VAT either.