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?
Currently, the IT Act allows deduction from the total income of an individual on the donations made to prescribed relief funds and charitable institutions. The deductions range between 50% and 100% of the amount donated.
Bulgarian non-profit legal entities conducting activity for public benefit, registered in the Central Registry of Non-profit Entities Conducting Activity for Public Benefit or equivalent EU/EEA non-profit legal entities are exempt from donation tax and from inheritance tax (e.g. in case of a will towards such entity). The donation tax exemption is for both received and granted donations. For EU/EEA non-profit legal entities, the exemption applies subject to provision of official documents from the other country certifying the status of the entity.
Bulgarian non-profit legal entities are not subject to corporate income tax (“CIT”) unless they generate profits from business activity.
Any expenses for donations incurred by Bulgarian entities are deductible for CIT purposes up to 10% of their accounting profit before tax if the donation is in favor of the above-mentioned non-profit entities conducting activity for public benefit. The reviewed relief is not applicable in case the management of the donating entity directly or indirectly benefits from the granted donation.
The law also envisages tax deductions for individuals for the donations made throughout the year in favor of certain strictly indicated institutions/facilities. The deduction is a certain percentage (5%, 10% or 15%) from the tax base of the income taxable through the total annual tax base.
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 for an individual 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.
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.
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.
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.
Yes. A person who makes a donation to non-profit organisations is eligible to receive a tax credit under section 46 of the Income Tax Ordinance, provided certain conditions are met.
The tax credit is equal to 35% of the donation. However, in any tax year the credit granted must not exceed the lower of 30% of the assessee's chargeable income in that particular year or NIS 9,184,000 (for 2017).
Gifts [exceeding eur 100,00] to charitable foundations, educational and cultural non-profit associations, certain research institutions, Mount Athos monasteries and other relevant entities will reduce the individual’s income tax by 10%, computed on gifts amounts not exceeding 5% of the individual’s total yearly taxable income.
Furthermore, a large number of educational, religious, cultural, athletic, governmental, research, medical entities are subject to zero or minimal [0,5%] gift or inheritance tax.
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.
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).
British Virgin Islands
See answers to 6 above and 8 below.
Gifts to qualifying institutions can be claimed back as tax credits in part, this must be done so within a period of four years following the year which the gift was made.
A taxpayer may only claim a tax credit if that taxpayer:
- made a donation of $5 or more to an approved donee organisation where there is no identifiable direct benefit to the taxpayer (or a family member);
- earned taxable income during the same year;
- was a NZTR at any time during that tax year; and
is an individual.
The total gifts that may be claimed may not exceed the taxpayer’s taxable income for the year.
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.
Most cantonal gift and inheritance tax laws provide an exemption for gifts/donations to tax-exempt charities. Moreover, donations of individuals to tax-exempt charities in Switzerland are, in general, deductible for income tax purposes up to 20% of the taxable income of the taxpayer. For the definition of tax-exempt charities, see below question 26.
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.
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.