VAT and Charitable Donations via SMS Text Message

Questions have arisen in relation to the VAT treatment of donations to charity, usually for specific disaster appeals, made via mobile phones using SMS shortcodes. The purpose of this eBrief is to clarify the correct VAT treatment that should apply in respect of such donations.


The provision of telecommunications services is liable to VAT at the standard rate, currently 21%. Charitable donations are not deemed to be consideration for a supply and are therefore outside the scope of VAT. Generally speaking, the donations in question are made where an individual texts an SMS shortcode specific to a charity, with the intention of donating money to that charity.   Following receipt of that text message, a separate message is sent to the individual and the amount that represents the donation is debited to their bill or to their prepaid phone credit, as the case may be.

Donations where the telecommunications provider waives their fee

Where the full amount of the donation is passed over directly to the charity concerned, the entire amount is deemed outside the scope of VAT. The amount involved represents a donation to charity and, because the operators have waived their fee, is not regarded as consideration for the supply of a telecommunications service. It is not a question that any VAT due on a taxable transaction has been waived. It is on the basis that no consideration has been charged for a telecommunications service that no VAT charge arises.

Donations where a fee is charged for the telecommunications service

Where the provider of the telecommunications service charges a fee for facilitating the transaction, then they are obliged to charge VAT at the standard rate on this fee.

However any monies that are directly transferred to the charity, independent of this fee, are considered to be a charitable donation. This donation is also deemed to be outside the scope of VAT.


Where €1 is attributed to the shortcode but 10c of this is deducted as a fee for the telecommunications provider, then that 10c will be liable to VAT at the standard rate. This 10c is deemed to be consideration for the supply of telecommunications services. The remaining 90c, assuming it is passed in full to the charity, is considered a donation and no VAT will apply to this.

Where the full €1 is directly transferred to the charity, and the service provider makes no deduction, that full amount is a non-taxable donation to that charity.

Where other parties involved in the process charge fees, such as those providing technical support, those fees are also liable to VAT.


The charity involved, the mobile operators, and any other party supplying services to support the process, must be in agreement in respect of the transaction set-up. The mobile operators must be able to clearly identity all appropriate transactions in their records so that the VAT status of amounts treated as contributions to charity can be verified.