The Tax Agency has reminded taxpayers that Covid-19 donations are deductible on their tax returns and therefore offer a number of tax benefits,regardless of whether they have been made in both cash and in kind.
However, the tax benefits of Covid-19 donations may be deducted next year when the income declaration for the 2020 financial year is made.
You are interested in:
Donations by Covid-19: tax benefits
On April 20, the Tax Agency published a note on donations to the Public Treasury to finance coronavirus expenses such as the purchase of material, equipment, hiring of health personnel,… etc., in which I reminded all taxpayers that Covid-19 donations are accompanied by a number of tax benefits,as they are expenses totally deductibles on the income statement.
In this way, in the IRPF, coronavirus donations will have a 75% deduction on the full tax fee, for donations of up to 150 euros. Donations over 150 euros will be entitled to 75% in the first 150 euros, and 30% for the rest of the amount.
This means that, if a person donates 500 euros, 75% of the first 150 euros can be deducted,recovering a total of 112.5 euros. Of the remaining EUR 350, 30% may be deducted, of which it would recover EUR 105. That said, out of the initial EUR 500 would recover a total of EUR 217.5.
On the other hand, those who contribute to Corporation Tax and Non-Resident Income Tax (IRNR) with permanent establishment, a 35% deduction may be applied on the full tax fee on covid-19 cash donations.
For donations in kind by Covid-19, book value may be deducted according to the rules of the Estate Tax. The basis of these deductions may not exceed 10% of the tax base for the tax period. Amounts exceeding this limit may be deducted in tax periods which end within the next ten years and successive years, while the un deducted amounts shall apply to settlements for tax periods concluded within the immediate and successive 10 years.
How to justify a donation by Covid-19?
Coronavirus donations shall be justified bya certificate issued by the State Administration, which shall appear the tax identification number and personally identifiable data of both the donor and the entity to which the donation has been made.
Once the donation is made, the organization to which you have made the donation must send you a certificate showing the amount and date of the contribution. This certificate will be used to prove that you actually made such a donation, in case there were any errors and it did not appear in your draft tax agency.
In any case, the Tax Agency also took advantage of this note to recall that from January 2021 the Administration will submit model 182 of annual information declaration of donations, for the declaration of donations made during 2020.
What are the tax benefits of coronavirus donations made by individuals?
With regard to micro-patronage,the profits will be the same as for a company or self-employed person, with 75% of the first 150 euros being deducted, and 30% in case of higher amounts.
On the other hand, in terms of loyalty, a deduction of 35% may be applied in donations, provided that donations made were from the same or greater amount, to the same entity, within the two previous and consecutive tax periods. The limit of this deduction is 10% of the liquidable base in the IRPF.
Covid-19 donations have a number of very interesting tax benefits, which in addition to allowing us to help different entities and groups in our country to combat this coronavirus crisis; are a number of advantages in the Income Statement.