There are times when you stumble on a good cause or a great movement, and you think to yourself: “I want to contribute to this. I think this is important!”. That’s fine, of course. The recipient will be very happy with your contribution, you will feel good and with a little luck the goal of the effort is achieved. You transfer the money and that was that. Or, maybe not? There’s a small chance the money your contributed was a tax deductible donation. That’s a bonus of course! The government in certain countries will allow non-profit organisations to offer tax benefits such as tax rebates, tax-free donations, tax credits or tax deductible donations to people who donate to good causes.
In the Netherlands, for example, patrons can deduct the value of their contribution from their taxable income. In the UK, Gift Aid allows charities to reclaim the base rate already paid by the donor on the contribution. In the US, Charitable Contributions Rebate allows taxpayers to deduct tax from cash donations and possessions to charities and in Ireland, the Charitable Donation Scheme allows tax relief, on eligible charitable donations, to approved charities. In this article, we’ve compiled a list of charity tax programs in various countries around the world. We have collected this information to provide you with an overview of tax programs and tax deductible donations in various countries, using only sources that are freely available on the Internet. Here is a list of countries with their tax deductible donations and tax-free donation policies. The article covers:
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Tax deductible donations in Europe
Donors can deduct the value of their donations from their taxable income, provided the charity is registered as a public benefits organisation (ANBI). Income tax rates in the Netherlands vary from 19% to 52% and tax-free donations are limited to 10% of the annual taxable income. Currently, the scheme is used by about 8% of taxpayers. Charities are not required to provide information about the donations received to the tax authorities. Companies are also entitled to deduct the annual value of their gifts up to a maximum of 50% of their annual profit/income.
Individuals can receive crowdfunding donations without having to pay tax if:
- The amount of the individual donations does not exceed €2,122.00;
- He or she does not exceed the wealth tax threshold after receiving the donations (Note! Personal savings and other assets should be included in this threshold!).
For more information on this and for information for organisations please visit the Whydonate website, or visit the tax authorities’ website.
In Austria, the public can deduct donations up to a value of 10% from the previous year’s taxable income, but this only applies to donations to 5% of the charities (6,500 of all 123,000 charities and foundations combined). This includes 5,200 fire departments and charities, which are committed to social causes, science, art, culture and conservation. Contributions to foundations are also tax deductible donations. This scheme was introduced in 2017 and approximately 18% Austrian taxpayers donate in this way (Source: Spendenbericht 2017). Charities are required by law to identify private donors by name and date of birth and to report their donation to the tax authorities for rebate. Businesses can also benefit from a tax deductible donation tax of up to 10% of last year’s taxable income on eligible donations to charities and or foundations.
Tax credits can be requested on charitable donations and while details may vary according to the level of income tax paid, tax-free donations generally amounts to approximately 45% of the value of the donation. Donors provide certificates of charity donations to the tax authorities and receive a refund of the tax paid. The tax deductible donation amount is limited to 10% of the individual’s taxable income. Corporate gifts are also tax deductible donations up to 5% of the total net income of the taxable period, with a €500,000 cap.
The Czech Republic’s tax system allows the public to donate to all charities registered for the public benefit and exempts these donations from income tax up to a total value of 10% of their taxable income. Charities provide their donors with a “donation confirmation” upon request. Currently, just over 3% of taxpayers donate in this way. Corporations can also exempt donations to registered charities up to a total value of 5% of their taxable income.
There are no tax breaks for individuals who donate to charities in Finland, except those who donate to selected universities in the European Economic Area. They can donate tax-free but the tax benefits only apply to donations from individuals or companies, who donate between €850 and €500,000. They can deduct this amount from their income or their profits. Businesses are only eligible for tax-free donation below the €850 threshold.
Individuals in France can claim a reduction of 66% of their income tax (tax credit) for the amount donated or a reduction of 75% of the wealth tax. Donations to certain causes (including charities that work for those in need) can qualify for a 75% rebate. However, the tax credit is limited to 20% of the annual taxable income. More than four in ten donors (43%) give tax responsibly. Charities provide proof of the donation for tax purposes, but are not required to provide tax authorities with information about the donations unless verification is requested. Companies can deduct 60% of the value of their donation from corporate tax up to a maximum of 0.5% of their annual turnover.
Individuals in Germany can deduct up to 20% of their pre-tax income as a donation to a non-profit organisation, provided this is recognised by the tax authorities. There is a small administrative burden for charities as donors only need receipts for donations over €250 and no formal interaction is required between charities and the tax authorities. Donor surveys show that more than a third (37%) of taxpayers donate in this way.
Both Irish and UK tax incentives increase the value of donations allowing charities to benefit from the tax that donors have already paid on their donations. In Ireland, the charity benefits from the taxable income that individual donors paid for their donation. This applies to gifts from taxpayers, who donate between €250 and €1,000,000 during the year. Charities must submit letters with the donor’s consent to the tax authorities before they can claim the tax payment or credit. However, when it comes to corporate gifts, companies claim the tax-free donation for themselves.
Different tax incentive schemes exist in Italy, with different structures and benefits depending on the cause or type of charity. This includes tax-free donation to charities that qualify as ONLUS (Organiszazioni non lucrative di utilità social) such as the Art Bonus scheme, which offers the public a 65% tax credit on the amount of their donations to art or cultural institutions; a Social Bonus scheme for public buildings; donations to schools (School Bonus), universities and scientific research. The limits vary according to the specific incentive program, but for general tax-free donation, individuals can donate up to 10% of their taxable income. Similar incentive schemes also exist for corporate gifts.
Tax-free donations have more than doubled in Norway since 2005, with nearly 3.5 billion Norwegian Kroner (NOK) being donated in this way in 2015. Individuals who donate NOK 500-40,000 annually to charity are eligible for a tax rebate on the value of those donations. There is a similar schedule for corporate donations. Charities must register for approval to receive such gifts and must provide details of the donations to the tax authorities in order to access the tax benefit (with the consent of the donors).
Slovakia abolished its former tax-free donation scheme in 2004 and replaced it with a fixed percentage allocation scheme, as is the case in some other Central and Eastern European countries. The current scheme allows the public to allocate 2% of their income tax directly from their tax returns to a nonprofit (or 3% if they have done over 40 hours of volunteering in the past year). A similar arrangement also exists for corporate donors, who can allocate 1-2% of their corporate tax to charities and donate more than a third (35%) of businesses in this way. There are more incentives for companies that donate to sports organisations.
As in Slovakia, Slovenia also has an allocation scheme with a fixed percentage, but at a lower level. The public can complete a tax return and allocate 0.3% of their income tax to an NGO, political party or church, which usually amounts to €5 to €50 per person (depending on their income). Companies can also donate 0.5% of their taxable income to public benefit organisations and an additional 0.2% if the donation is for cultural organisations or disaster relief.
The Spanish public can claim a 30% tax deductible donation for the value of their contributions. However, there is a 75% tax credit on the first $150, donated by those who have donated in the last three years or more. The tax credit is limited to 10% of the taxable income. A similar schedule exists for corporate donations. In order for donors to access the tax payment, charities must submit details of the donations received to the Treasury Department.
In Sweden there is no tax deductible donation procedure for individuals or organisations that contribute to charities.
Individual donors in Switzerland are eligible for tax rebates on monetary donations and the value of other donations (including real estate, intellectual property and more), provided they have donated more than 100 Swiss Francs (€85) throughout the year. The tax credit is limited to 20% of one’s taxable income and only applies to donations to authorised charities. Charities provide donors with a summary of the donations made in the past year to submit to the tax authorities. An estimated 25% of taxpayers use this system. A similar arrangement also applies to corporate donations.
As with the Irish scheme, Gift Aid allows charities to claim the base rate of tax, which is paid on the value of the gifts they receive from the taxpayer (increasing the value of the donation by 25%). Donors must complete a Gift Aid Statement so that the charity can reclaim the tax credit from the state. Taxpayers with a higher rate then have the right to reclaim the difference between the higher rate and the basic rate. Additional tax benefits apply to donations such as land, real estate, stocks, donations to payrolls, cultural artifacts, inheritances and workplace donations. With no minimum donation or limit on Gift Aid donations, CAF’s UK Giving 2018 report indicates that half of all UK donors are currently using the program. Companies using the scheme receive the tax break for themselves by deducting charitable donations from their taxable income.
In Australia, donors can only claim a tax rebate for gifts or donations to organisations with DGR status. A DGR is an organisation or fund that can receive tax deductible donations. Not all charities are DGRs. The person who makes the donation is the person who is entitled to the rebate. The amount that you can claim as a deductible amount depends on the type of donation. For cash donations, you can claim the amount of the donation, but it must be $2 or more. There are different rules for donating property or shares depending on the type and value of the property.
Tax deductible donations in the Americas
In Canada, you can claim your charitable tax credit for donations made before December 31 of the applicable tax year or unclaimed donations made within the past five years or unclaimed donations made by your spouse or legal partner. You can claim eligible amounts in donations up to a maximum of 75% of your net income. For donations from certified cultural property or environmentally sensitive land, you may be able to claim up to 100% of your net income. There are two rates of charitable tax credits for both the federal government and the provinces and territories. Any eligible amount you give over $200 will qualify for a higher rate.
You may be able to claim a rebate of your federal taxes if you donate to a 501(c) 3 organisation. To be able to deduct donations, you must submit a Schedule A with your tax form. The amount that you can deduct from your taxes may not be equal to the total amount of your tax deductible donation. If you donate non-cash items, you can claim the fair market value of the items on your taxes. If you donated a vehicle, your rebate depends on whether the organisation keeps the car or sells it at an auction. If you’ve received a gift or a ticket for an event, you can only deduct the amount that exceeds the value of the gift or ticket. To be able to claim tax rebates, it is important to keep track of your donations to charities.
Legal entities based in Mexico who make donations to authorised organisations can deduct up to 7% of the taxable income paid in the previous tax year. This applies to both companies and individuals. However, only 4% of the 7% can be awarded to government agencies.
In Brazil, the amount of the tax deductible donation is dependent on the category of the organisation to which the donation is made. For contributions to the National Cancer Care Support Program and to the National Health Care Support Program for Persons with Disabilities, companies may deduct up to 50% of donations and individuals may deduct up to 100% of donations from their income tax. For donations to the National Fund for the Elderly and the Fund for the Rights of Children and Young People, the sum of the rebates may not exceed 1% of the income tax due. When it comes to contributions to private not-for-profit legal entities with projects, approved by public policy councils for children and young people and for contributions to sports projects, companies can use the full rebate of the donation up to a limit of 1% of the income tax due. Individuals can get the full rebate of the donation up to a limit of 6% of the income tax due. For contributions to cultural projects, a company can deduct 40% of the value of its donation and a private individual can deduct 80% of the value of the donation from their taxable income. When it comes to contributions to private non-profit legal entities with OSCIP, only companies can claim tax benefits.
Disclaimer: We are not legal counsels, tax advisers or official representatives of any country or government. We’ve gathered the best information available on the Internet on tax deductible donations to help our readers find information about various national nonprofit tax programs and tax deductible donations.