Tax One of the usual questions in the office has to do with donations and how they affect the donor financially. 

We all want the destination of our money to be clear and transparent, and for this reason, we analyze the patronage law, with practical examples.

If you have similar questions or want to know how your non-profit organization can benefit your collaborators with their donations, contact us at https://www.taxfortress.com/.

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The contribution of individuals to general interest purposes is recognized in Law 49/2002 on the tax regime for non-profit entities and tax incentives for patronage.

WHAT CONTRIBUTIONS CAN BE MADE?

WHO CAN BENEFIT?

Among others, foundations and associations declared a public utility.

WHAT TAX INCENTIVES ARE THERE FOR DONATIONS MADE BY INDIVIDUALS?

Crowdfunding: the first 150 euros donated have an 80% deduction in the full amount of personal income tax. What exceeds 150 euros has a deduction of 35% in the fee.

Loyalty: a 40% deduction may be applied to donations (instead of the general 35%) provided that donations have been made for the same or greater amount to the same entity in the two immediately preceding tax periods. 

The deduction has a limit of 15% of the taxable base in personal income tax.

WHAT TAX INCENTIVES ARE THERE FOR DONATIONS MADE BY LEGAL PERSONS?

The donated amount has a 35% Corporation Tax deduction.
Loyalty in donations: a deduction of 40% (instead of the general 35%) may be applied provided that donations have been made for the same or greater amount to the same entity in the two immediately preceding tax periods.


The deduction is limited to 10% of the tax base for the tax period.

 The amounts that exceed this limit may be applied in the tax periods that conclude in the immediate and successive ten years.

WHAT DO THEY TRANSLATE INTO PRACTICAL EFFECTS?

If a natural person donates 150 euros: The taxpayer deducts 120 euros (80% of the quota) in his personal income tax. 

That is, the cost of a donation of 150 euros is really 30 euros.

 Therefore, the chosen entity receives 150 euros, of which 30 come from the donor and 120 are an indirect subsidy from the Treasury.

If you donate 500 euros: 80% is deducted from the first 150 euros, so the taxpayer recovers 120 euros. Of the remaining 350 euros, 35% is deducted, so the taxpayer recovers 122.5 euros. Therefore, in total, the taxpayer recovers 242.5 euros.

If you donate 500 euros and it is a loyalty donation: 80% is deducted from the first 150 euros, so the taxpayer recovers 120 euros. 

Of the remaining 350 euros, 40% is deducted, so the taxpayer recovers 140 euros. Therefore, the taxpayer recovers a total of 260 euros.

In the area of ​​Corporation Tax: IS taxpayers will have the right to deduct 35% of the deduction base on the full amount, reduced by IS deductions and allowances. 

For donations (money and goods or rights) and contributions.
The amounts corresponding to the tax period not deducted may be applied in the liquidations of the tax periods that conclude in the 10 immediate and successive years. 

The base of this deduction may not exceed 10% of the tax base of the tax period.