THE TAX BENEFITS OF DONATIONS IN ITALY
Donating is convenient for you. Find out how and why.
Answers to the most frequently asked questions on tax matters.
What are tax breaks?
Tax breaks are reductions in the tax base (tax deductions) or tax rate (tax relief) provided for in particular situations.
Tax breaks are recognized for two categories of expenses: i) those considered fundamental for the development and well-being of people (e.g. health, education, first home mortgages, etc.), and ii) those related to people’s aspirations (e.g. for their overall personal and social development).
What is the difference between tax deduction and tax relief?
The tax deduction reduces the tax base, the relied reduces the tax. To be clear, with the deduction you act before the tax is calculated. With the relief, the gross tax is first calculated and then a reduction applied to arrive at the net tax due.
What is the percentage of donations that can be deducted?
The third sector reform has increased the tax concessions for donations made from 1st January 2018 in favor of non-profit organizations and allows the application of two different and alternative solutions (Article 83 of Legislative Decree 117/2017):
If you work as a natural person you can choose between:
- deduction of the donation, without absolute limits, but within 10% of the total declared income;
- relief of 30% of the donation up to a maximum of € 30,000.00.
For example, if you donate € 100.00 you can choose between:
- decrease the taxable income by € 100.00 and therefore, depending on the applicable bracket, obtain savings that increase with the increase of income;
- deduct € 30.00 from the taxes due.
From 1st January 2018, donating is more conventient and most importantly, ‘the more you donate, the more convenient it is’. If you have a company you can deduct without absolute limits up to a maximum of 10% of the total declared income: for example, if your company donates € 1,000.00 you can consider this amount as a cost and consequently decrease the profit on which you have to pay taxes.
What are the ways to take advantage of the tax breaks?
To deduct the amount spent, or ask for a tax relief, it is necessary that this has passed through a financial intermediary – i.e., using either the postal channel (postal money orders, for example) or the bank channel (bank transfer, check, credit cards, debit cards, etc.). It is not possible to take advantage of tax breqaks for donations made in cash.
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