Explore answers, insights and our mission to serve communities in need.
Donation receipt and tax
Those who do good can also benefit from it for tax purposes. Many people who make donations to help children in the Philippines eventually wonder how they can claim their support against tax with the tax office. The way to do this is via the donation receipt, which is also known in officialese as a ‘confirmation of donation’. It serves as proof that a payment has actually been made to a charitable organisation and that no consideration was expected in return. Below, we explain the rules that apply, when such a certificate is required, and how donations can specifically affect your tax liability. It is particularly worth taking a close look at the details when making regular donations, as minor formal errors in the documentation can sometimes lead to the tax office not recognising a donation, even though it would actually be tax-deductible.
What is a donation receipt?
A donation receipt confirms that a specific amount has been paid voluntarily and without any consideration to a charitable organisation. It is issued by the recipient organisation, provided that it is recognised as charitable by the tax office and holds a valid exemption notice. Without this status, no valid certificate may be issued at all, which is why it is worth checking briefly before making a donation whether the organisation is duly recognised.
Formal requirements for a donation receipt
For the tax office to accept a donation receipt, it must contain certain details. These include, amongst others:
- Name and address of the donor
- Name and address of the recipient organisation
- Amount donated, in figures and words
- Date of payment
- Confirmation that no consideration was received in return
- Reference to the tax relief, including the tax office’s reference number
If any of this information is missing, the tax office may not accept the receipt. It is therefore advisable to check the documents briefly for completeness upon receipt, rather than filing them away without looking at them.
When is a donation receipt required?
Not every donation automatically requires a detailed certificate. The law has introduced a practical simplification here, which applies particularly to smaller amounts.
Simplified proof for amounts up to 300 euros
For donations of up to 300 euros, simplified proof of donation is usually sufficient. In this case, a bank statement, the transfer form or a printout from online banking is sufficient as proof, provided that it shows the name of the organisation, the amount and the transaction date. In this case, the organisation is not obliged to issue a separate donation receipt. However, anyone who would still like to have a tangible example of a donation receipt for their records can request an informal confirmation from most organisations.
For donations of 300 euros or more, a formal donation receipt containing all the details mentioned above is required. Most charitable organisations send this out automatically, often once a year for all donations made during the previous calendar year. If you wish to ensure that you actually receive such a receipt, you should keep your address and contact details up to date with the organisation in the case of larger or multiple donations, so that the post reaches you.
When making online donations via a donation form, obtaining proof of donation is usually straightforward. After making the payment, you will generally receive an automatic confirmation email, and the actual donation receipt will follow separately once the organisation has finalised its annual accounts.
Deducting donations from tax
For tax purposes, donations are classified as ‘special expenses’. This means that they reduce your taxable income and can therefore lower your tax bill. The key question here is whether donations are tax-deductible and to what extent, as there are clear legal limits in this regard.
Maximum limits and carry-forward of donations
In principle, donations up to 20 per cent of total income can be deducted as special expenses. So, anyone who donates a particularly large amount in a given year need not worry that the excess amount will be lost. Amounts exceeding this limit can be carried forward to subsequent years and claimed there. This so-called ‘carry-forward of donations’ ensures that larger donations have a long-term tax impact, even if they exceed the limit for a single year.
A few practical tips can help you avoid wasting time when completing your tax return:
- Keep a chronological record of receipts and certificates, ideally in both digital and paper form
- If you make several small donations during the year, keep your bank statements to hand
- Keep an eye on the deadlines for your tax return so that all supporting documents are available in good time
- If you are unsure about anything, consult your tax adviser or the income tax assistance service
It is also important to note that donations are generally made on a voluntary basis and that the amount is left to each individual’s discretion. Some people opt for a fixed monthly amount, whilst others donate on specific occasions, such as at Christmas or following a natural disaster. From a tax perspective, it makes no difference whether donations are made as a one-off or on a regular basis, provided that a valid receipt is obtained in the end.
If you’re wondering how much you should donate, there’s no one-size-fits-all answer. Some people donate smaller amounts over a longer period, whilst others support a single project with a larger sum. Both approaches are valuable, provided you end up with a valid receipt and your own records are complete and well-organised when it comes to filing your tax return. Anyone who wishes to receive a donation receipt regularly should ensure their contact details are up to date with the relevant organisation and, where possible, make donations by bank transfer rather than in cash, as bank transfers can be clearly documented later on.