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Practical manual for Income Tax 2023.

Example: Deduction for donations made to entities included in the scope of Law 49/2002

Mr. SMA has made the following donations:

  • To the NGO “TT” included in the scope of Law 49/2002 to which no donation had previously been made, the amount of 1,000 euros in 2023.

  • To the foundation “XX” included in the scope of Law 49/2002 to which the following donations have been made since 2020 for priority patronage activities:

    Financial year 2020 2021 2022 2023
    Donation 500 euros 700 euros 1,000 euros 1,000 euros

Determine the amount of the deduction for donations that corresponds to you in 2023.

Solution:

Deduction base (1,000 + 1,000) = 2,000

Amount of deduction for donations = 867.50

Breakdown of amounts:

  1. Donations to the NGO “TT”

    (1,000 euros) (1)

    150 euros at 80% = 120

    850 at 35% = 297.50

  2. Donations to the “XX” Foundation

    (1,000 euros) (2)

    1,000 euros at 45% = 450

    Total (120 + 297.50 + 450) = 867.50

Notes to the example:

(1) The 1,000 euros donated for the first time to the NGO “TT” that have not been allocated to priority patronage activities and programs are subject to the percentages provided for in article 19 of Law 49/2002 for donated amounts, which have been increased by five percentage points (going to 80% on the first 150 euros and 35% on the remaining amount). (Back)

(2) The 1,000 euros donated to foundation “XX” for priority patronage activities and programs is subject to a percentage of 45 percent, resulting from increasing by five percentage points the percentage provided for in article 19 of Law 49/2002 for cases in which the taxpayer, in the two immediately preceding tax periods, had made donations to the same entity for an amount equal to or greater than, in each of them, that of the previous year (40% + 5% = 45%).

Please note that in order to apply the increased percentage of 45%, donations must have been made in favour of the same entity in the two previous tax periods for an amount equal to or greater than the donation from the previous year in each of them. Therefore, in this case, in the 2023 financial year, the amounts donated in 2021 and 2022 have been taken into account, but also those made in the 2020 financial year, since if in said financial year 2020, Mr. SMA had not made any donation to foundation XX, he would not be able to apply the increased percentage of 45% to the deduction base in 2023. (Back)Ç