Charitable entities have a fundamental role in activities of general interest. Spanish tax rules, conscious that corporate or individual support for charities is an important source of contribution for the charitable sector, have established Spanish Fiscal Deductions and tax benefits for the support of these activities.
Before the end of this fiscal year, it is important for you to know how you can contribute and which are the tax advantages that you can enjoy from either monetary or non – monetary gifts in favour of qualifying institutions.
✔ Although the gift expensed is not tax deductible from the company’s tax result, a corporation is entitled to the Spanish Fiscal deductions from its final tax of up to 35% of gifts made to qualified beneficiaries. Such percentage raises to 40% if gifts made to the same entity in the two preceding years have been equal to or exceeded, in each one of these fiscal years, to the one made in the preceding year; that is to say, the level of gifts is maintained during such two – years period.
Note that the rates applying for these tax credits are higher than the standard 25% Corporate income tax rate which levies the donor’s taxable income.
In the absence of tax profits, corporations may carry forward unused charitable donation tax credits during a period of 10 years.
✔ Individuals are also entitled to the Spanish fiscal reductions in the form of a tax credit of 75% of the first 150.00 Euro. Any excess thereof can benefit from a 30% tax credit, which raises to 35% if the level of gifts in favour of the same entity is maintained during the two preceding years in the same terms as for corporations.
✔ If the donor, individual or corporation, has a gain as a result of the gift, it is not taxable. The basis for this tax credit cannot exceed 10% of the individual’s or corporation taxable result.
✔ In order to take advantage of these tax credits, do not forget to ask to the beneficiary entity for a certificate in which it is mentioned that the latter is a qualified beneficiary.
If the organization receiving the support provides any type of benefit of value (naming the donor, for example), this means that the sponsor receives something of value in return for the sponsorship, which payment does not qualify as a gift.
✔ Spanish tax rules must continue supporting any form of private philanthropy for the benefit of activities of general interest. Do not forget it, you are still in time to make your contribution before the year – end.