Every year, when the time comes to render accounts with the Tax Agency through the presentation of the income statement, doubts arise about the possible deductions that can be applied based on the regulations that apply in the year in question. One of the most frequent cases is that of the deduction for donations to non-profit entities,such as non-governmental organizations (NGOs).

In general, it can be said that people who during the past year have contributed certain amounts to this type of entities, can obtain
allowances for donations in 2016,
indicating it in their Personal Income Tax return in the boxes specifically destined for this purpose.

The first advice that can be given in this area is to review very well the data that the Tax Agency itself incorporates into the model that is going to be presented.

This type of donations do not usually appear automatically, being necessary in this case to enter them manually so that the data of the declaration correspond 100% with the reality of the taxpayer.

When can a donation allowance be applied in the 2016 Income Tax?

As can be expected, a tax relief for donations may only be applied when a donation has occurred to some of the types of entities detailed above. Therefore, it is very important to be clear about the concept of donation,at least the concept that the Treasury itself has.

Thus, for the Tax Agency, a donation is any contribution of money, regardless of the amount, that is made to an NGO or any other entity as long as it is not for profit.

In addition, this contribution can be made by any means: monthly or annual installments, punctual payments through sporadic collaborations, etc.

What is essential is that these donations have charitable or humanitarian purposes,being necessary to maintain the supporting documents that prove it, given the possibility of having to justify to the Treasury the application of a certain deduction.

How much can a tax relief for donations reach?

To answer this question accurately, you must know the tax regime of donations in force in Spain.

To do this, we must take into account the tax reform that occurred in 2015, since it approved important changes with respect to the regulations in force until that moment.

These changes focus mainly on the way in which donations are taxed in the income statement.

Based on these changes in legislation, the Treasury takes into account:

  • The periods during which a person has been contributing money to a non-profit entity or NGO.
  • The amounts that the taxpayer in question has contributed throughout the year that is declared.

Taking into account these aspects, the final percentage of these deductions for donations can vary greatly from the final amount contributed.

Those years in which less than 150 euros have been donated, the deduction reaches 75% of the contributions. On the other hand, contributions that exceed 150 euros have a different mode of taxation.

In these cases, other issues such as the fact that donations always go to the same entity or are distributed are valued. Attention is also paid to the periodicity of donations and the evolution of the amounts donated.

In general, in these cases, the tax relief for donations can reach only 30%. However, in cases where donations are constant to an entity during the last years, that percentage can be increased by 5 points.

In what case can the deduction for donations not be obtained in the 2016 Personal Income Tax?

It is also important to know that there is a circumstance that prevents access to these allowances.

Thus, in the event that the donations are greater than 10% of the liquid base of the Personal Income Tax, they cannot be applied.

To finish understanding all the existing regulations in the matter that is being treated, it is necessary to know the possibility of obtaining a deduction for donations in the Corporation Tax,in the event that it is a company that makes the donation.

In these cases, the fifth final provision of the Corporate Tax Law must be applied, which includes the possibility, established in Law 49/2002 on the Tax Regime of Non-Profit Entities, that there are deductions for both natural and legal persons. Thus, it is in this law that the requirements that must be met in all cases for donations to be tax-deductible are collected.

If you take into account everything that has been said, and due to the dense legislation existing in Spain, for example, the Gift Tax Law, it is always advisable to confirm with an advisor

the possibility of applying these deductions,always with the aim of avoiding subsequent problems with the Treasury.