VAT implications for donations received

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Frankie
Frankie Registered Posts: 8
in VAT
Hi. The Ltd company is VAT registered (animal sanctuary) and not a charity. They receive donations via a PayPal donate button on their website and donations directly into the PayPal account. I have come across some information that if the donations are made via the PayPal donate button there may be VAT implications as the website itself is the service being provided in exchange for the donation and the donations received directly are purely donations and would therefore fall outside the scope of VAT.

This seems unlikely to me but wonder if anyone has had any experience with this?

Thanks!

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  • davealucas
    davealucas Registered Posts: 140 Dedicated contributor 🦉
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    My understanding of the VAT rules are that donations are outside the scope of VAT unless paid as part of a service provision (i.e. the company provides a service to the donor). PayPal is only a conduit for receiving those funds so that should not affect the VAT status of the donation. However, if PayPal take a fee from the donation, that fee is subject to VAT at the standard rate.
  • Frankie
    Frankie Registered Posts: 8
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    Thank you for your reply. I have satisfied myself that it is outside the scope of VAT. I think the information I read was a US post, may be different there. PayPal does take a fee but does not charge VAT on their fees.

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