Before starting with the tax issues, we want to highlight the importance and necessity of donations to NGOs. Because, really, one thinks about the effectiveness that it supposes for the change and social improvement. Among the reasons, the following stand out:
- Social commitment
- Personal satisfaction
- Today it is very easy to make donations to the entity of your choice
- To ensure that solidarity projects are carried out
- The destination of donations is controlled because NGOs are accountable.
- If you are not comfortable with large-scale projects, you can also donate to local and small NGO projects
- Donations and the supported project can be monitored, setting an example for those close to them.
- Finally, by donating, you are taking action, adding and proposing directly.
For all these reasons the idea of donations to NGOs is defended, however, there is another positive aspect that can help people take that last impulse to decide to donate. It is about the tax benefits that donations to NGOs have, the possibility of deducting taxes and being able to receive part of the donation back in the income tax form. It is an aspect to take into account, since a part of the donations corresponds to the public administration and it is often unknown.
Deductions on donations to NGOs
First of all, it is necessary to make a two-way differentiation between the entities and institutions that receive donations and are worthy of patronage. That is, entities that receive disinterested help from a natural or legal person so that the entity carries out its activities of general interest, such as cultural, artistic, scientific or social aid activities.
On the one hand, there are the beneficiary entities of patronage, of which the foundations and associations of public utility in general stand out. On the other hand, there are entities dedicated to priority patronage activities, of a more specific interest, such as activities against gender-based violence or for the fight against poverty and the achievement of sustainable human development in the developing countries. In the two types of entities there are differences in the percentage of deductions, however, in both they are beneficial.
In the case of donating as a natural person to the beneficiary entities of patronage:
- Up to the first € 150 donated, 75% of the amount is deducted (€ 112.5)
- From those € 150 the deduction will be 30% of the amount.
- If in the previous two years a donation has been made to the same NGO for the same amount or more, from 30% it would be reduced to 35%. That is, after the third year in a row donating, a 5% is added to the deduction.
* If the non-profit entity that receives the donation is not included in the areas specified in title II and article 16 and, based on the provisions of articles 19, 20 and 21 of Law 49/2002, will return only 10% of the donated amount. In the case of Navarra (25%) and the Basque Country (20%).
A practical example of a donation to an NGO dedicated to preserving the environment:
- At the end of the year, if a person has donated € 1000, of the first € 150 the Public Treasury returns € 112.5 (75%).
- Of the remaining € 850, € 255 (30%) is returned.
- In total of the € 1000 donated, € 367.5 is returned.
In the case of donating as a natural person to priority patronage activities, the percentages to deduct vary:
Up to the first € 150, 80% of the donated amount is deducted (€ 120)
From there, 35% is deducted
In case of repetition for two or more years, donating the same amount or higher, 40% is deducted.
* In this case, if the non-profit entity that receives the donation does not comply with the tax regime specified in articles 19, 20 and 21 of Law 49/2002, only 15% of the donated amount will be returned. In the case of Navarra (25%) and the Basque Country (20%).
In the case of donating as a legal entity:
The deduction is made on corporation tax (IS) and 35% of the donated amount will be returned.
In case of repetition of 3 years donating the same amount or greater than that donated last year, the deduction increases to 40% of the donated amount.
Both for donations from natural and legal persons, the data necessary for the deduction are the following:
In order to be entitled to deductions for donations to entities and institutions provided for in Law 49/2002, the effectiveness of the donation made must be proven, through a certification issued by the donor entity stating the following:
- N.I.F and personal identification data of the donor.
- N.I.F and identification data of the donor entity.
- Express mention that the donor entity is included among those regulated in article 16 of Law 49/2002, of December 23.
- Date and amount of the donation when it is monetary.
- Public document or other authentic document that certifies the delivery of the donated property when it is not a question of money donations.
- Destination that the donor entity will give to the donated object in the fulfillment of its specific purpose.
- Express mention of the irrevocable nature of the donation, without prejudice to what is established in the imperative civil rules that regulate the revocation of donations.
In the case of revocation of the donation for any of the assumptions contemplated in the Civil Code, the donor will enter the fees corresponding to the applied deductions enjoyed in the tax period in which said revocation occurs, without prejudice to the delay interest that may apply.
Tax Agency (2016 fiscal year): "Model 100. Declaration of Income Tax for Individuals". Retrieved from https://www.agenciatributaria.es/AEAT.internet/Ayuda/16Presentacion/100.shtml
Tax Agency (2018 fiscal year): "Model 200. Corporate Tax Declaration". Retrieved from https://www.agenciatributaria.es/AEAT.internet/Ayuda/18Presentacion/200.shtml
OXFAM Intermón (s.f.): “Donations to NGOs: we explain everything you need to know and how to collaborate”. Retrieved from https://blog.oxfamintermon.org/todo-lo-que-te-interesa-conocer-sobre-las-donaciones-a-una-ong/