Did you know that giving to non-profit organizations now has more tax advantages?

Last January 10, the Congress of Deputies validated Royal Decree Law 6/2023 which modifies Law 49/2002, of December 23, on the fiscal regime of non-profit organizations and fiscal incentives for patronage.

With this validation, the reform of the Patronage Law becomes final and the new tax changes will apply to donations made or received since January 1st, which will be declared and deducted in 2025.

The reform of the Patronage Law is good news for all non-profit entities that work to generate a positive impact on society. The fiscal incentives will allow more people and companies to decide to be solidarity and those that are already able to increase their quotas without having an excessive impact on their economy.

How does this affect me if I am already a donor or want to be one?

In the case of natural persons, the base on which 80% of the donation can be deducted in personal income tax is raised. If until now they were €150, now they are €250. This means that the first €250 of your donation is 80% tax free.

The rest of the amount (over €250) now has a deduction of 40%, instead of 35%. In addition, if in the last 3 years donations have been made in favor of the entity itself, if the amount is equal to or greater than that of the previous year, the applicable deduction percentage amounts to 45%.

How does this affect me if I am already a donor or want to be one?

In the case of natural persons, the base on which 80% of the donation can be deducted in personal income tax is raised. If until now they were €150, now they are €250. This means that the first €250 of your donation is 80% tax free.

The rest of the amount (over €250) now has a deduction of 40%, instead of 35%. In addition, if in the last 3 years donations have been made in favor of the entity itself, if the amount is equal to or greater than that of the previous year, the applicable deduction percentage amounts to 45%.

What if I am a company?

In the case of legal entities, the deduction percentage in the Corporation Tax quota is increased, going from 35% to 40%. In addition, if in the last 3 years donations have been made to the same entity of equal or greater value than the previous year, the deduction percentage increases to 50%.

It should be noted that the deduction base for both natural and legal persons cannot exceed 15% of the taxable base of the tax period, 5 points more than until now.

Other ways to collaborate

From now on, the transfer of a movable or immovable property, for a certain period of time, made without consideration, can generate a right to deduction.

The provision of services is also added as a means of collaboration with the beneficiary entities of the patronage. It is specified that it can be an economic aid, but it is also allowed to be in kind or through the provision of services carried out in the scope of the collaborator’s own economic activity (until now it could only be an economic donation).

The concept of diffusion of collaboration is also expanded, since in addition to the NGO, the collaborator can now also do it. One of the objectives of the reform of the law is precisely to be able to spread the private efforts in activities of general interest.