Larger donations: deduction limits and carry-forward
1. Annual deduction limits
An annual limit applies to tax relief for donations.
For income tax, eligible donations and deductible membership contributions may generally be deducted as special expenses up to 20% of the total amount of income (Gesamtbetrag der Einkünfte), or 4 per mille of the sum of total turnover and wages and salaries paid in the calendar year (§ 10b(1) EStG). Separate provisions apply to corporations.
The Gesamtbetrag der Einkünfte is a statutory measure (§ 2(3) EStG) and is not the same as gross income or taxable income. It may include, in particular, income from:
- employment,
- self-employment,
- commercial business,
- capital investments, to the extent included in the relevant calculation; capital income under § 32d(1) and § 43(5) EStG is excluded under § 2(5b) EStG,
- letting and leasing,
- other taxable income.
2. Exceeding deduction limits: carry-forward
Where eligible contributions cannot be deducted in the relevant year because of the statutory limits, a carry-forward may be available.
The excess may be carried forward to subsequent assessment periods without a time limit, not merely for seven years, and deducted as a special expense within the available limits in those years (§ 10b(1), sentence 9 EStG).
➡️ Contributions must be declared to the tax office and properly evidenced. The remaining carry-forward is separately assessed; payment alone, without a tax declaration, does not establish it.
3. Example
Total amount of income (Gesamtbetrag der Einkünfte): €50,000
20% limit: €10,000
Actual donation during the year: €15,000
Result:
€10,000 is deductible in the donation year if all requirements are satisfied, the alternative 4-per-mille limit does not permit a greater deduction and no further deduction restrictions apply.
€5,000 is carried forward and considered in later years when sufficient capacity is available within the 20% limit.
4. Special considerations for large donations
For substantial individual donations, such as five-figure amounts, tax advice is recommended on timing and allocation.
Donation receipts must be accurate, properly issued and follow the official form.
Incorrect or impermissible receipts may create statutory donation-related liability risks for the issuing charitable organisation and its board members.
5. Recipient responsibilities
Charitable organisations must:
- substantiate their tax eligibility and, when issuing receipts, comply in particular with the conditions and time limits in § 63(5) AO,
- use donations for the designated purposes,
- issue receipts only when all conditions are met,
- properly document donations and their use.
Notice
This information is a general overview of tax law and does not replace individual tax advice. Consult a tax adviser or the competent tax office for advice specific to your circumstances.
