Donations are tax-deductible, including from profits on which corporation tax is payable. We set out the conditions for this deduction in our article Gift deduction in Vpb.
Opting for the charitable donation allowance
In this article, we also state that where a gift is (primarily) motivated by the personal needs of the director– a director and (major) shareholder (DGA) of the private limited company – that donation should result in a dividend payment, followed by a donation from the DGA’s private assets.
In a policy decision However, the State Secretary for Finance has approved that a donation made by a private limited company (B.V.) which meets the conditions for the donation allowance is not regarded as a distribution. The charitable donation deduction is then claimed in the private limited company’s corporation tax return.
This means that the director and major shareholder (DGA) can choose whether donations are deducted from his income for income tax purposes or from the profits on which the private limited company (B.V.) pays corporation tax. The DGA can therefore optimise the donation deduction:
– let him Ltd. If you pay the donation, it is tax-deductible for the corporation tax (and in the case of several private limited companies that do not form part of a fiscal unity, the donations may, of course, also be distributed amongst those companies);
– does the director and major shareholder make the donation? myself, in which case the charitable donation deduction will be claimed on his tax return income tax.
The best way to allocate your charitable giving allowance naturally depends on your specific circumstances. The advisers at VWGNijhof will be happy to help you determine the best approach.
Periodic gifts
In both corporation tax and income tax, the charitable donation allowance is subject to a threshold. However, income tax does offer the possibility of circumventing this threshold. In that case, the donation must take the form of a regular donation be paid in instalments. This is another way of maximising your tax relief on charitable donations. We set out the conditions for a regular donation in our article Periodic donation.
Association
Regular donations are not only tax-deductible for income tax purposes when made to an ANBI (public benefit organisation), but also when made to:
– an association;
– with full legal capacity;
– and at least 25 members;
– which is not subject to corporation tax or is exempt from it.
The tax deduction for regular donations offers clubs an excellent opportunity to secure tax-efficient funding for projects such as the installation or replacement of a (artificial) grass pitch, the (new) construction of the clubhouse, or similar initiatives.