It’s worth being a donor, not only because of the satisfaction it gives or, in the case of corporations, contributing towards the social good. Donations are literally worth it: they bring tax relief. Recently the German government substantially raised the level of donations which are tax-deductable to provide added incentive for private citizens and corporations to engage in donating activities:
Donations funded from private assets are deductable up to an amount equating to 20% of annual income. That means, private persons can reduce the amount of income tax they would normally have to pay by 20%. Large donations are especially worthwhile. If the amount donated within any one year exceeds the limit of 20%, the excess sum can be carried over into the following year(s). Donations can therefore be written off your income tax for any amount of years.
Donations funded from corporate assets are tax-deductable in an amount of 20% of the declared profits or 4 per mill of the sum of one year’s total turnover and payroll amount.
Donations made by sole proprietorships can also be offset against the proprietor’s personal income tax and trade tax (Gewerbesteuer).
Donations made by joint stock corporations can be offset against trade tax as well as corporation tax.
For donations of amounts less than 200 euros you only need to show the tax authorities your bank statements. For higher amounts you will need to submit a corresponding receipt. We will be happy to issue you with a receipt for any amount you wish to donate, also under 200 euros. You only have to enter the request for a receipt and your address on the bank transfer form or write to us.
The limits for the amounts which are tax deductable in the case of donations have been increased considerably over the past few years and the tax procedure has been simplified. There are still some things you should know about, though, especially in the case of larger donations. Please do not hesitate to contact us for advice. We will happy to help and, if necessary, we can call on expert advice form tax accountants.