Special rules apply to tax-deductible donations for larger donations.
If the donation amount in one year is higher than 20% of your taxable income, the excess portion of the donation amount must be spread over several years. This is to prevent the tax burden from being disproportionately reduced by large donations in one year.
The so-called ‘ceiling’ for the donation deduction is 20% of the donor's total income in the respective tax assessment period. This includes all taxable income, for example from employment, self-employment, capital gains or rental and lease income.
If the donation amount exceeds the 20% limit, the excess amount may be deducted as a special expense in the following years, as long as it remains within the limit. The deduction is then spread over a maximum of seven years, starting with the year of the donation.
Here is a simplified example:
Let's assume that a donor's taxable income in one year is €50,000. The 20% limit for the deduction of donations is therefore €10,000 (20% of €50,000). If the donor donates €15,000 in this year, €10,000 is immediately deductible and the remaining €5,000 can be spread over the following years, as long as it remains within the 20% limit.
It is advisable to consult a tax advisor for larger donations to plan the optimal timing and distribution of donations for maximum tax benefit.
Donation receipts should be issued carefully and correctly, as the liability risks for the issuing non-profit organisation and its board members can be significant.
