Donations made after the end of the term of the agreement no longer qualify as periodic donations. That is the position that the Tax and Customs Administration’s IB non-profit knowledge group has published this information.
In practice, regular donations are often used to fund charities, as well as (sports) clubs and cultural organisations.
Periodic donation
A donation is considered to be a regular donation if the following conditions are met:
- it is a gift in the form of fixed and regular periodic payments;
- which end, at the latest, upon the death of the donor;
- are made to public-benefit organisations (ANBI) or associations;
- are based on a notarial or private deed (for example, the form provided for this purpose by the Tax and Customs Administration) form);
- include an obligation to make annual payments for at least five years.
You can check whether an organisation qualifies as an ANBI in the ANBI register.
An association is considered to be an eligible association if it:
- has full legal capacity;
- has at least 25 members;
- is established in the EU, Aruba, Curaçao, Sint Maarten, the BES Islands or a designated jurisdiction;
- is not subject to corporation tax.
Deduction without a threshold
Regular donations are deductible from the income on which income tax is payable. A major advantage of a regular donation is that there is no threshold for claiming the deduction.
For the past few years, this allowance has been subject to a ceiling of €250,000 per calendar year. Under the tax plans for 2025, which are still to be approved by the Senate, this ceiling will be raised to € 1.500.000.
Cash donations are not tax-deductible.
Regular donations in kind with a value exceeding €10,000 may only be deducted if the value is confirmed by a valuation report or an invoice.
Knowledge group’s position
The case submitted to the expert group concerns a taxpayer who has agreed to make a periodic donation to an ANBI. The deed of donation stipulates that €50,000 is to be donated annually for a period of five years. Once the five-year period has ended, the donor continues to transfer €50,000 annually to the ANBI.
The expert group takes the understandable view that, once the period agreed in the deed of gift has expired, the gift no longer qualifies as a periodic gift.
This can be easily resolved by drawing up a new gift agreement in Year 6. This must, of course, be for a period of five years.
The five-year period is a minimum period. A periodic gift may, of course, be agreed for a longer period. It is not permitted to agree that the gift shall lapse whenever the donor so wishes. In addition to the donor’s death, it may be stipulated that the periodic gift shall cease in the event of:
- loss of ANBI status or status as a qualifying association;
- bankruptcy of the institution or association;
- the donor’s (or one of the donors’) incapacity for work or unemployment.
Gift tax
In principle, the recipient of a regular donation is liable to pay gift tax on the donation. However, for ANBIs and SBBI organisations, the gift tax exemptions the scope of which is unlimited. An SBBI is an organisation promoting the public interest. SBBI’s are not listed in a register. Many associations meet the criteria for SBBI status. In case of doubt, this can be clarified with the Tax and Customs Administration.
Other institutions must make do with the general exemption, which will amount to €2,690 in 2025. For gifts exceeding the exemption up to €154,197, the recipient will be liable for 30% in 2025 gift tax payable. Above that amount, the rate is 40%.