Conditions for Retaining a CHY Number

In order to maintain a charitable tax exemption (CHY number) from the Revenue Commissioners, certain conditions must be met. For religious organisations which rely on their CHY number for exemptions from income tax, corporation tax, capital taxes and stamp duty, it is very important that these conditions are understood and adhered to.

As a charity’s donations relief under the Charitable Donations Scheme is also predicated on holding a CHY number, compliance with these conditions is important to ensure that charities can continue to avail of the tax benefits of holding a CHY number and the benefits of donations relief.

The conditions for retaining a CHY number include that the organisation must:

• Remain tax compliant;
• Maintain its charitable status with the Charities Regulator;
• Comply with the Charities Act 2009 (as and to the extent amended by the Charities (Amendment) Act 2024);
• Use all income and property for its main charitable purpose only;
• Keep proper records and accounts;
• Keep audited accounts if the charity’s annual income is over €250,000, and
• Request prior approval from the Charities and Sports Exemptions Unit of the Revenue Commissioners if it intends to accumulate funds for more than five years.

The latter requirement is one that might sometimes be overlooked, but it is important for all charities, including religious organisations, to be aware of.

Charities should be aware that Revenue may withdraw the CHY number and therefore the benefit of the tax exemption if these conditions are not complied with. The withdrawal can be effective from the date the exemption was granted.

Charity Trustees

Many charities will be aware that it had previously been a condition that the majority of the organisation’s charity trustees be resident in the State, however this condition no longer appears in the Revenue Commissioner’s published list of conditions. It is worth noting that section 54(A)(1) of the Charities (Amendment) Act 2024 will introduce a residency requirement for all charities, not just those with a CHY number. Whilst not enacted as of yet, it will require at least three charity trustees who are natural persons, and majority of those shall be resident in the State, EEA State or UK, and not be a connected relative or trustee. The reference to “residency” is a reference to tax-residency and should not be confused with the nationality of charity trustees. All charities should be aware of this provision and ensure that they are in a position to meet the requirements once the provision comes into force.

Consent to accumulation of funds

If an organisation intends to accumulate funds for more than five years, it must obtain the prior approval of the Charities and Sports Exemptions Unit of the Revenue Commissioners.

There are various reasons why charities, including religious organisations, may wish to accumulate funds for more than five years. It may be intended to carry out a building project, which requires savings to be completed. Many religious organisations have looked ahead to the funds that will be required to look after ageing members and have put aside reserves to plan for the future care and accommodation of those members. These are all good reasons for accumulating funds, but the prior approval from the Charities and Sports Exemptions Unit must be obtained.

You should submit all documentation to the Charities and Sports Exemption Unit through MyEnquiries in the Revenue Online Service (ROS).

We recommend that charities keep an eye on this requirement and also diarise ahead to seek the Revenue Commissioners consent if it appears likely that they will need to accumulate funds for more than five years.

Conclusion

Charities holding a CHY number should ensure that, in addition to meeting the requirements that are imposed by the Charities Regulator, they also comply with the conditions of retaining a CHY number. This will ensure the continued tax benefits of the charity’s CHY number and donations relief.

People also ask

For more information and expert advice, please contact a member of our Charity and Not-for-Profit team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.