In the Netherlands, philanthropy is encouraged, in particular, through tax incentives for donors. However, the government ensures that there are no abuses in this area. Donations are deductible from taxable income if they meet a number of conditions, and there are plans to make some changes to these conditions in 2024.
What you need to know about giftenaftrek?
So that you can get a complete picture of what donations are in the Netherlands and how to get a giftenaftrek - a tax deduction, we suggest that you familiarize yourself with our overview. In particular, you can clearly distinguish for yourself regular and regular donations, which is very important. Be sure to pay attention to what conditions must be met in order for the donation to be regarded by the tax service as regular.
At the same time, as we wrote, as of January 1, 2023, the government has limited the tax credits for ordinary donations to €250 per calendar year. This measure was introduced to avoid the temptation to make overly large donations in order to reduce or even eliminate taxable income. Also we wrote about another change in the field of taxation of donations, which entered into force on April 14, 2023. We are talking about regular donations under marital contracts and taking as a basis the decision of the Supreme Court of the Netherlands of October 7, 2022.
The 5-year term may not be met in all cases.
Donations are considered regular if you have been making them for at least 5 years. If a donation qualifies as a regular donation, then it can be deducted in full from income tax, while a threshold applies for regular donations. However, in some situations, even if this deadline is not met, it is possible to maintain the status of a regular donation, respectively, the possibility of deduction remains in those years in which all conditions were met.
The contract may provide that regular donations stop in certain cases. For example, loss of ANBI status by the institution or bankruptcy, on the other hand, the loss of a stable income or ability to work by the donor. In these cases, the right to deduct remains until the termination of the contract or until the conditions are met. The condition for retaining the right of deduction is that the donor had little or no influence on one of the above circumstances. This was already possible within the framework of the policy of the tax service, but now they plan to fix this rule at the legislative level.
Donations in kind
The bill also states that the value of gifts in kind in the future will have to be determined by an independent valuation if it exceeds threshold 10 euros (per partner). This may be an appraisal report from an independent expert, but an invoice may suffice. In other words, if the total amount of in-kind donations made this year exceeds the limit, an assessment must be made.
The threshold applies to the aggregate of in-kind donations per donor. Thus, this means that if two fiscal partners jointly make in-kind donations, an assessment should be made when the value of these donations exceeds EUR 20 in a calendar year. This threshold applies to both regular and regular donations.
ANBI status for an institution located in a country outside the EU
To take advantage of the income tax deductibility of regular donations, these donations must be made through the ANBI (algemeennutbeogendeinstelling - public benefit institution). In the Netherlands, such organizations are included in a special register, they can always be checked by link. However, this is not the case when an institution potentially meets ANBI characteristics but is located overseas.
To also be classified as an ANBI in the Netherlands, these establishments in "third countries" must meet the same conditions as for the Dutch ANBI. It is this provision enshrined in the bill, although in practice it is already being applied now.
Making donations is noble. But taking into account the nuances of taxation, this must also be done wisely. If you have any doubts or questions regarding your donation situation, please contact us at consultation!
Publication Date: 14.06.2023
