Are Crowdfunding Contributions Tax-Deductible Donations?
There are times when you stumble upon a good cause or a great movement, and you think to yourself: “I want to contribute to this. I think this is important!”. That’s fine, of course. The recipient will be very happy with your contribution, you will feel good and with a little luck, the goal of the effort is achieved.
You transfer the money and that was that. Or, maybe not? There’s a small chance the money you contributed was enabled for tax deductions for donations. That’s a bonus, of course! The government in certain countries will allow non-profit organizations to offer tax benefits such as tax rebates, tax-free donations, tax credits or tax-deductible donations to people who donate to good causes.
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Are Crowdfunding Donations Taxable?
In the Netherlands, for example, patrons can deduct the value of their contribution from their taxable income. In the UK, Gift Aid allows charities to reclaim the base rate already paid by the donor on the contribution. In the US, Charitable Contributions Rebate allows taxpayers to deduct tax from cash donations and possessions to charities and in Ireland, the Charitable Donation Scheme allows tax relief, on eligible charitable donations, to approved charities.
In this article, we’ve compiled a list of charity tax programs in various countries around the world. We have collected this information to provide you with an overview of taxation in Europe as well as in USA including tax programs and tax deductions for donations, using only sources that are freely available on the Internet. Here is a list of countries with their tax deductions for donations and tax-free donation policies. The article covers:
Tax Deductions For Donations In Europe
Netherlands
Donors can deduct the value of their donations from their taxable income, provided the charity is registered as a public benefits organization (ANBI). Income tax rates in the Netherlands vary from 19% to 52%, and tax-free donations are limited to 10% of the annual taxable income. Currently, the scheme is used by about 8% of taxpayers. Charities are not required to provide information about the donations received to the tax authorities. Companies are also entitled to deduct the annual value of their gifts up to a maximum of 50% of their annual profit/income.
Individuals can receive crowdfunding donations without having to pay tax if:
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For more information on this and for information for organizations please visit the WhyDonate website, or visit the tax authorities’ website.
Austria
In Austria, there are tax deductions for donations up to a value of 10% of the previous year’s taxable income, but this only applies to donations to 5% of the charities (6,500 of all 123,000 charities and foundations combined). This includes 5,200 fire departments and charities, which are committed to social causes, science, art, culture, and conservation. Contributions to foundations are also tax-deductible donations. This scheme was introduced in 2017 and approximately 18% of Austrian taxpayers donate in this way (Source: Spendenbericht 2017).
Charities are required by law to identify private donors by name and date of birth and to report their donation to the tax authorities for rebate. Businesses can also benefit from tax deductions for donations up to 10% of last year’s taxable income on eligible donations to charities and or foundations.
Belgium
Tax credits can be requested on charitable donations and while details may vary according to the level of income tax paid, tax-free donations generally amount to approximately 45% of the value of the donation. Donors provide certificates of charity donations to the tax authorities and receive a refund of the tax paid. The amount of tax deductions for donations is limited to 10% of the individual’s taxable income. Corporate gifts are also tax-deductible donations up to 5% of the total net income of the taxable period, with a €500,000 cap.
Czech Republic
The Czech Republic’s tax system allows the public to donate to all charities registered for the public benefit and exempts these donations from income tax up to a total value of 10% of their taxable income. Charities provide their donors with a “donation confirmation” upon request. Currently, just over 3% of taxpayers donate in this way. Corporations can also exempt charitable donations to registered charities up to a total value of 5% of their taxable income.
Finland
There are no tax deductions for donations who donate to charities in Finland, except for those who donate to selected universities in the European Economic Area. They can opt for tax-free donations but the tax benefits only apply to donations from individuals or companies, who donate between €850 and €500,000. They can deduct this amount from their income or their profits. Businesses are only eligible for tax-free donations below the €850 threshold.