Do the tax laws encourage gifts (either during the donor’s lifetime or on death) to a charity, public foundation or similar entity, and how do the relevant tax rules apply?

Private Client (2nd edition)

Israel Small Flag Israel

Under the Ordinance, an individual or a company who donate to an authorized organization is entitled to a tax credit of 35% in the case of individual donor, or 23% in the case of a company donor of the value of the contribution. The annual amount of tax credit will not exceed the lesser of (i) 30% of the taxable income or (ii) NIS 9,211,000 (for 2018). An Israeli resident may also be entitled to credit in case of a donation made abroad, subject to applicable double tax treaty.

Ireland Small Flag Ireland

In order for a charity to avail of tax relief on donations, the donation must, be made to an eligible charity, being a charitable body which was granted tax exempt status for a period of at least two years. The minimum donation on which tax relief may be obtained is EUR250 to any one charitable body in the year of assessment. The tax relief accrues to the charity at a blended rate of 31%, whereas the individual donor does not receive any tax relief or deduction for tax purposes. In comparison, corporate donors can avail of a full corporation tax deduction on donations to charitable bodies, as effectively the donations are treated as a trading expense.

There is relief from CGT on the disposal of an asset to a charitable body in certain circumstances.

Belgium Small Flag Belgium

In each region, reduced flat rates apply for gifts or bequests to certain bodies and entities such as not-for-profit organisations, international not-for-profit organisations, private foundations and public foundations, or similar entities established in the EEA:

  • in the Flemish Region: 8,5% for bequests and 5,5% for gifts,
  • in the Brussels Capital Region: 25% or 12,5% for bequests and 7% for gifts, and
  • in the Walloon Region: 7% for bequests and 7% for gifts (subject to conditions).

United States Small Flag United States

Yes, US tax law encourages gifts to charity both during a donor’s lifetime and at death. Charities that receive the bulk of their support from the public (public charities) are completely exempt from US income taxation and all donations made to them are generally tax deductible to the donor, within certain limits. Private foundations usually receive all or most of their support from a limited universe of donors. Private foundations are also exempt from US income taxation, but they are subject to strict scrutiny by the Internal Revenue Service (IRS) and are subject to many regulatory provisions with which they must meticulously comply. The US imposes limitations on how much of a charitable contribution may be deducted against a taxpayer’s adjusted gross income (AGI). For tax years beginning after December 31, 2017, if all gifts made to a public charity are solely of cash, then such gifts are subject to a 60% limit, meaning that a donor’s deduction for the gift of the cash cannot exceed 60% of the donor’s AGI for the year of the gift. Otherwise, gifts of cash to a public charity (if made along with gifts of other property to charity) are subject to a 50% limitation; gifts of long-term capital gain property to a public charity, and gifts of cash to a private foundation, are subject to a 30% limit; and gifts of long-term capital gain property to a private foundation are subject to a 20% limit. Gifts of ordinary income property to a public charity or private foundation are limited to the lesser of the basis in such property or the AGI limitation available for cash gifts to such organization. Bequests of property taking effect at death to a public charity or to a private foundation, regardless of the character of the property, qualify for an unlimited charitable estate tax deduction.

Cyprus Small Flag Cyprus

Not applicable - there are no succession taxes, and no taxes on lifetime transfers.

Austria Small Flag Austria

As mentioned, Austria does not levy a gift tax. However, if gifts to specific institutions in the form of foundations are made, a foundation entry tax may fall due. Further, under specific circumstances, voluntary gifts to specific institutions (fulfilling specific prerequisites) may be tax deductible.

Bulgaria Small Flag Bulgaria

Bulgarian tax law encourages gifts to non-profit legal entities.

Non-profit legal entities receiving subsidies from the central budget, as well as non-profit legal entities designated for the pursuit of public-benefit activities are exempt from tax in respect of any properties received and provided through a gift or inheritance. The same exemption applies to EU/EEA non-profit legal entities provided that they certify their status as conducting activity for the public benefit with official documents from their country of origin.

Donors to non-profit legal entities designated for the pursuit of public-benefit activities also enjoy tax relief:

  • Individuals are entitled to a tax deduction of up to 5% on their annual taxable income;
  • Legal entities are entitled to a tax deduction of up to 10% on their profit before taxation.

Argentina Small Flag Argentina

The ITL only allows deduction of the gift when the destination of it is:

  • National, Provincial and Municipal Tax authorities.
  • To the Permanent Support Fund, to the political organization recognized also for the case of electoral campaigns

In addition, for the following entities, the same persons must be recognized by the Federal Administration according to current regulations:

  • Religious institutions exempt from the tax
  • Exempt entities
  • The realization of the non-profit welfare medical assistance work, including the activities of care and protection of children, old age, disability and disability.
  • Scientific and technological research recognized by the relevant body or scientific research on economic, political and social issues oriented to the development of the plans of political parties.
  • The systematic and degree educational activity for the granting of degrees officially recognized by the Ministry of Culture and Education.

Monaco Small Flag Monaco

Gifts and bequests of Monaco-based assets to charities (other than specific foundations exempted under Monaco law) are subject to gift and succession tax at 16 per cent.

Italy Small Flag Italy

An exemption from inheritance and gift tax applies transfers to public entities or legally recognised foundations or associations having the exclusive purpose of assistance, study, scientific research, education, instruction or any other purpose with public benefit. The exemption also applies to transfers to legally recognised public entities and foundations and associations other than those mentioned above, as long as such transfers be made for the purposes indicated above (assistance, etc.). Both the exemptions also apply to foreign public entities and associations and foundations established in EU or EEA Member States, or, subject to a requirement of reciprocity, established in other foreign states.

Bermuda Small Flag Bermuda

There is no stamp duty on gifts of Bermudian property to Bermuda charities, or to international charities that the Minister of Finance deems to be charitable.

United Kingdom Small Flag United Kingdom

7.1 Gifts made by an individual, whether during his life or on death, to a charity (§26.1) which is recognised for UK tax purposes (§7.3) are exempt from inheritance tax (§5). In addition, where an individual leaves at least 10% of the value of his chargeable estate (§5.3) to a charity which is recognised for UK tax purposes, a lower rate of inheritance tax (36%) is applied when calculating any inheritance tax charged on the balance of his estate.

7.2 Further, individuals may on certain conditions obtain relief from income tax (§2.1) and capital gains tax (§2.6) on gifts to charities which are recognised for UK tax purposes (§7.3). For example, a gift out of taxed income by an individual to such a charity will normally enable the individual and the charity, between them, to reclaim all the income tax which the donor paid on the gross amount of the gift.

7.3 Charities which are recognised for UK tax purposes include all charities established in the UK which are registered with either the Charity Commission for England and Wales (§26.5) or the Scottish Charity Regulator, and (broadly) charities having equivalent status in other EU member states, or in Iceland, Norway or Liechtenstein, provided that such charities are registered with HMRC.

Colombia Small Flag Colombia

Yes. 25% of the gifts made to entities of the special tax regime can be credited for income tax purposes. However, certain requisites must be met as explained below.

The Colombian Tax Code establishes that non-profit corporations, foundations and associations are subject to a special tax regime with respect to income tax and complementary taxes provided always that they comply with the following conditions:

  • They are incorporated under Colombian law;
  • Their main purpose and resources are destined to health, sports, formal education, culture, scientific or technological, ecologi¬cal research, environmental protection or social development programmes;
  • Such activities are of general interest and may be freely accessed by the community.
  • Their capital contribution or surpluses cannot be distributed; and
  • Their surpluses are totally reinvested in the activity of its corporate purpose and such corporate purpose corresponds to the activities mentioned in the preceding clause.

Entities that comply with the aforementioned requirements could be considered as entities of the special tax regime, with the Colombian Tax office’s approval.

Cayman Islands Small Flag Cayman Islands

N/A

Germany Small Flag Germany

Transfers on death or by gift to charities etc. are exempt from inheritance or gift tax. However, gratuitous transfers to foreign charitable entities are only tax free if certain conditions are met which has to be confirmed in each individual case.

Singapore Small Flag Singapore

Donations made to approved institutions of public character ("IPC") or the Singapore Government for causes that benefit the local community are eligible for 250% tax deduction. IPCs include charities, universities, hospitals, public or private funds for the establishment of education or scholarships, etc.

Portugal Small Flag Portugal

Specific deductions in Personal Income Tax and Corporate Income Tax are available for contributions to certain cultural, social and charitable entities.

France Small Flag France

Gifts during the donor’s lifetime or on death benefit from a total exemption of gift and/inheritance tax provided the beneficiary is qualified as charities of public interest (“fondation d’utilité publique”).

Reductions of income tax, ISF and IFI are also granted when gifts are made to qualified charities.

Liechtenstein Small Flag Liechtenstein

Donations to qualified charities are tax deductible up to 10% of the annual taxable income per year.

Mexico Small Flag Mexico

The Mexican Income Tax Law authorizes taxpayers to deduct the donations made to the entities that are called by the law as "tax-exempt institutions” or "grantee institutions” (“donatarias autorizadas”), as well as those donations made to the federation or to the federative entities.

The donatarias autorizadas must be entities dedicated to altruistic purposes and must obtain an authorization from the Mexican tax authorities.

According to article 151, section III of the Mexican Income Tax Law, donations made by a taxpayer to this kind of institutions are deductible up to a total amount that does not exceeds the 7% of the taxable income obtained by the taxpayer in the immediately preceding year that in which the tax deductions are being made.

Brazil Small Flag Brazil

Donations to charity are also subject to ITCMD taxes although the entity is recognized as of public interest and is recognized as tax exempt. Donations only brings income tax incentive when the contributions are made directly to funds controlled by the Municipal, State and National Child and Adolescent Rights Councils, which must be proven by certificates issued by these Councils.

Updated: May 30, 2019