Donations are deductible from the income on which you pay income tax. The tax authorities will then contribute (depending on your income) almost 52% towards your generosity (if you donate €100, this will result in an income tax saving of €52).
In the tax plans for 2019 this benefit is gradually reduced to just 37%.
Terms and conditions of donation
You do, however, have to make a donation to a ANBI. Your donations are tax-deductible if, and to the extent that, they exceed 1% of your (combined) aggregate income (the deduction threshold). And the deduction is capped at 10% of your (combined) aggregate income (the deduction ceiling).
Alternatively, you can make a donation in the form of a regular payment. In that case, you are not subject to the deduction threshold or the deduction limit. You may also make a donation in the form of a periodic payment to an association with at least 25 members. In practice, this option is used to enable the tax authorities to contribute towards the funding of the construction of sports facilities (such as artificial turf pitches, for example).
Create a gift
The tax benefit of 52% of the value of the gift may be a good reason to make a tax-deductible donation. An artist who wishes to donate one of his own artworks to a museum in New York makes a valiant attempt to do so. However, that attempt is rejected by the tax court.
The value of the work has been estimated at €100,000. By means of a notarial deed, the artist donated the work in 2012 in the form of a periodic transfer (over a period of five years, one-fifth of the ownership is transferred each year) to a foundation he had set up himself. The foundation then transfers the work to the museum. The artist’s own foundation was, of course, interposed because the American museum does not have ANBI status.
The Tax and Customs Administration has declared the ANBI regime applicable to the foundation (even as a cultural ANBI, which means that a surcharge of €1,250 may be applied when deducting the donation). The artist deducts the five periodic payments of €20,000 each (increased by the surcharge) from his income for income tax purposes as a periodic donation.
ANBI status revoked
In 2015, the Tax and Customs Administration revoked the foundation’s ANBI status with retroactive effect. The court agreed with this decision. After all, the foundation’s actual activities were focused solely on the transfer of the painting to the museum. This does not serve the public interest, but rather the individual interest of one of the foundation’s directors (the artist himself).
Is this a (tax-deductible) donation?
In proceedings concerning the deductibility of the periodic donation from income for the purposes of income tax, the court ruled that Arnhem-Leeuwarden Court of Appeal that this does not constitute a gift. For that to be the case, the donor must be impoverished and the recipient enriched. As the foundation is required to transfer the painting to the museum, the foundation is not enriched. The value of the gift to the foundation is nil.
Furthermore, according to the Court, it cannot be argued that the artist receives no consideration in return. He donates the painting to the museum so that it may be exhibited there, thereby raising his profile. The fact that this consideration from the museum may be of a lower value than the valuation of the painting does not alter this. In that case, it is not a gift for the balance.
Service Centre
In proceedings concerning Court of Appeal of The Hague The tax court concludes that the ANBI acted as a so-called ‘front organisation’. The donation was made to a mosque which holds ANBI status. However, correspondence from the mosque shows that, in accordance with the donor’s wishes, the amount of the donation was passed on to an organisation that does not hold ANBI status. The mosque is therefore merely the payment agent and not the recipient of the donation. A statement to the contrary, drawn up retrospectively, was unable to turn the tide.