The rules governing tax relief on gifts made from or to a private limited company (BV) will be abolished with effect from 1 January 2025. These proposals form part of the 2025 Tax Plans, which are yet to be debated by Parliament. See also our article Top 10 Budget Day 2024.
Gift deduction
At present, donations made by a private limited company (BV) or public limited company (NV) to a public benefit organisation (ANBI) and to SBBI support foundations (“teaching at the BV“), deductible from profit up to a maximum of the lower of: 50% of the profit or €100,000.
Since 1 January 2024, donations made by a private limited company (BV) to an ANBI or an SBBI support foundation that exceed this threshold are no longer regarded as a distribution of profits to the BV’s shareholder that is subject to dividend tax and income tax (“distribute from the private limited company“).
Abolished
If the 2025 Tax Plan Bill is passed without amendment on this point, both schemes will be abolished with effect from 1 January 2025. As a result, any donation made by a private limited company (BV) will be treated as a distribution of profits to the shareholder, in respect of which:
- the private limited company is required to pay dividend tax (15%);
- The shareholder must pay income tax in box 2 (24.5% or 31%), less the dividend tax withheld by the private limited company.
Income tax deduction for charitable donations has not been abolished
The income tax deduction for charitable donations will not be abolished (the outline agreement does state that this scheme will be standardised on 1 January 2028, but this is to be examined in more detail in the coming years). A donation made by a private limited company (BV), on which dividend tax and income tax have been paid, may be deducted by the shareholder in his or her income tax return, if and to the extent that the conditions are met. We will not go into further detail on these conditions here.
Business expenses
Where companies support charitable organisations through sponsorship or advertising, such expenditure does not constitute a donation but is a cost deductible from profits. Expenditure incurred in the context of corporate social responsibility also qualifies as a deductible business expense. Only expenditure incurred for shareholder-related reasons (the shareholder’s wish to support a charity) is affected by the abolition of the tax arrangements for giving to and from a private limited company described above.
Business owners who wish to make use of the tax relief schemes for gifts – which are likely to be abolished on 1 January 2025 – would be well advised to make the gift(s) before the end of 2024.