Tax-deductible income tax donations

Deduct donations to charities as an income tax deduction. Under certain conditions, donations to charities and good causes are tax-deductible items for income tax. Not every donation is fully deductible. Which donations are now tax deductible. What are the deduction rules in 2020, 2021 and 2022, because these rules are becoming increasingly strict for charities. Giro 555 belongs to SHO, which is classified as an ANBI institution. The Social Interest Institutions, SBBI, are new. A periodic gift in kind is also possible.

What are private donations?

There are many charitable institutions in our country that do a lot of good work. They are largely dependent on donations from private individuals and companies. The food banks are very popular, as are many charities. Consider giro 555 from the SHO Collaborating Aid Organizations . The Tax Authorities distinguishes two types of donations:

  • The periodic donations.
  • The gifts without periodic nature.

This distinction is important, because they each follow their own tax route.

What are the periodic donations?

You can fully deduct periodic donations from income tax: there is no threshold and no maximum . This can mean a significant deduction in addition to, for example, the mortgage interest deduction. A tax-deductible donation to a charity must meet the following requirements:

  • It concerns an ANBI institution.
  • You have had the gift recorded in writing, for example with a notary.
  • You must make donations for at least 5 years. This determines the periodic nature of the gift. It is customary for the first gift to be made when the agreement is concluded, after which the rest of the gift is made four times a year later. But please note: if you become unemployed or the foundation loses its ANBI status, your multi-year obligation for the Tax Authorities will also lapse.
  • You must make at least 1 donation per year.
  • The benefits must be fixed and equal.
  • The benefits must end no later than upon death. It can also be terminated by involuntary unemployment or disability.
  • There may be no consideration in return for the gift.

When are one-off donations to foundations tax deductible for income tax?

Non-periodic donations may also be eligible for deduction. However, both a threshold and a maximum apply to one-off donations. The conditions are:

  • It must be an ANBI institution. Your gross gift to an ANBI institution is immediately net for them, because no gift taxes have to be paid.
  • You must be able to prove the donation in writing, for example with a copy.
  • There may be no consideration in return for the gift.
  • Your donation must be higher than 60 and higher than the threshold of 1% of the threshold income. The donation is deductible up to 10% of your threshold income. If you were married for the entire year or had an equivalent tax partner, the joint threshold income serves as the benchmark. When determining the threshold income, deductions within the three boxes have been taken into account, such as the deduction of mortgage interest in box 1, but not yet the personal deduction, such as the deduction of extraordinary expenses. You can then shift the deductions as you wish, as long as the total is 100%.

This also means that someone with a lower income can deduct the gift sooner, because the tax threshold is lower for him. On the other hand, someone with a higher income has a higher deduction, because their income falls in a higher tax bracket.

Donations to which institutions are tax deductible

Tax-deductible donations must be made to the following institutions in the Netherlands:

  • General Benefit Institutions, ANBI . These are designated and appointed separately by the Tax Authorities. Political parties also belong to the ANBI and therefore donations to them are deductible.
  • Church institutions.
  • Philosophical institutions.
  • Charities.
  • Cultural institutions.
  • Scientific institutions.

Is a donation to a food bank tax deductible?

Most food banks in our country have been approved by the Tax Authorities as ANBI, which means that donations to food banks are tax deductible. An institution can also lose its ANBI status with the Tax Authorities, so it is wise to check this: as long as the ANBI status applies, the donation is deductible, even if the status is withdrawn retroactively. But if you make a donation after withdrawal of status, it is not deductible from income tax.

Giro 555 from SHO

The SHO, you know from giro 555, includes the organizations ICCO & Kerk in Actie, Cordaid, the Dutch Red Cross, Oxfam Novib, Tear, Terre des Hommes, Unicef Netherlands, World Vision and Save The Children. They are all specialized in emergency aid and reconstruction aid, having started in this permanent partnership since 1989. The SHO foundation is classified as an ANBI organization

When are periodic donations to foundations tax deductible?

Periodic donations to associations are also deductible if:

  • The association is located in the Netherlands.
  • The association has at least 25 members.
  • The association has full legal capacity.
  • The association is not subject to corporate tax or is exempt from it.

What is the Central Bureau of Fundraising

The Central Bureau of Fundraising, CBF, assesses charities and, if approved, issues the CBF seal of approval or a Declaration of No Objection. The Declaration of No Objection is specifically intended for small and starting fundraising institutions. The independent CBF tests a charity on:

  • Quality of Governance.
  • Policy.
  • Fundraising, information and communication.
  • Expenditure of resources.
  • Reporting.

Foreign donations are also tax deductible

The European Court of Justice has ruled that donations to institutions in other EU countries should in principle also be deductible from income tax. The Court finds that a limitation to institutions in one’s own country is in principle a prohibited restriction on the free movement of capital. Whose deed.

Rules for charitable donations 2020, 2021 and 2022

It is easier for an institution to lose ANBI status due to the requirement that the institution must focus at least 90 percent on the general present. Furthermore, the ANBI status may lapse if a director or other important person of the institution has been irrevocably convicted in the past four years for incitement to hatred, violence or use of violence. Cash payments will no longer be tax deductible from 2021.

Social Interest Institutions SBBI

A new category of charities has been added that can be fiscally attractive. This concerns the Social Interest Institutions, SBBI. This includes sports clubs and, for example, village halls. Such a gift does not involve a tax deduction for the giver, but the recipient does not have to pay any gift tax. An inheritance is also tax-free. Organizations that no longer have ANBI status may still have or obtain SBBI status.

Key lock

Finally, if you have incurred costs for an aid organization and could have declared them there, but did not do so, you can count these costs as a deductible donation. Car costs are charged at a rate of 0.19 per kilometer driven. All in all, these are excellent initiatives, where the sword cuts both ways: a great thing for both the recipient and the giver. There is a separate form for a periodic donation in kind.

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