November 5, 2023
Greater tax benefit for periodic donations to a Public Benefit Organisation (ANBI)
Have you ever thought about making a donation to an ANBI? By doing so, you are supporting a good cause and also receive a tax benefit!
The tax benefit depends on your company and the type of gift. The tax benefit is greatest for periodic donations. It is also good to know that you do not have a tax advantage with a cash gift.
If you have a sole proprietorship (eenmanszaak) or a general partnership (V.O.F.), the following rules apply to you:
Regular (one-time) donation
A regular gift is a gift that you only make once (a one-time gift). A gift that you make annually, but not recorded in an agreement, also counts as a normal gift. For regular donations, you may deduct the difference between your donation and the threshold amount up to a maximum of 10% of your threshold income. The threshold amount is 1% of your threshold income, but at least €60.
For example, you have a threshold income of 20,000 euros and you want to make a regular donation of 500 euros. The threshold amount for you is 1 percent of 20,000, which is €200. You may deduct the difference between your donation and the threshold amount, which is 500 - 200 = 300 euros.
A gift is a periodic gift if it meets the following 3 conditions:
- you give the same amount every year to the same institution / association, you may decide for yourself whether you split the annual amount into several amounts or pay in one go;
- you pay the amount at least in 5 consecutive calendar years;
- you have determined when your annual donation will stop, for example after 5 years. You must also record that the donation will stop if you or someone else dies before that period expires.
With a periodic gift you can deduct the full amount of the gift, so that is more than with a regular gift. Previously there was no maximum, but from January 1, 2023 this deductibility has a maximum of €250,000 per year. If you made your periodic donation before October 4, 2022 at 4:00 PM, this maximum does not apply and you can still deduct the full amount in your tax return.
For a gift to a cultural ANBI, you receive even more tax benefit. You can increase the amount of your gift by 25%, which means you can multiply it by 1.25. Then you can deduct that amount. There is a maximum increase of your gift of 1,250 euros. The other rules such as the maximum and threshold amount for a regular donation still apply.
For example, if you give a periodic gift of €10,000 euros per year to a cultural ANBI, you can multiply it by 1.25, which is €12,500 euros. The increase is €2,500 euros, but this is higher than the maximum of €1,250 euros. Therefore, instead of deducting €12,500 euros, you can deduct only €11,250 euros.
If you have this type of company, there are slightly different rules for you. You can deduct your gifts from your profits. In one year, this can be a maximum of 50% of your profit, with a maximum of €100,000 euros. If you make a gift to a cultural ANBI, you receive even more benefit. You can then increase the amount of your gift by 50%, with a maximum increase of €2,500 euros.
For example, if you make a periodic donation of €3,000 euros to a cultural ANBI, you can deduct €3,000 x 1.5 = €4,500 euros from your profit. The increase is €4,500 - €3,000 = €1,500 euros. €1,500 is lower than €2,500, so the maximum is not exceeded.
The rules for the deductibility of gifts to an ANBI vary depending on the situation. It is useful to check which rules apply to you before making a donation. We do recommend that you use periodic donations instead of regular donations so that you make optimal use of the tax benefits!
Do you want to know if the good cause you donated to is an ANBI? You can check it here.