More on donating in the EU and the Persche vs. Lüdenscheid case

The European Court of Justice’s 2009 ruling in the Persche case was concerned with tax deductions for charitable giving from one European country (where the charity wasn’t registered) to another (where the charity was registered). The case held that:

  • There is no justification for different treatment (e.g. denial of tax-deduction) of a donor who gives to a charity that is not registered in the country he is giving from if:
    • The charity is recognised, for the purposes of tax benefits, in another member state (of the EU) and
    • The foreign charity fulfils the same national requirements for tax deductibility as those imposed on domestic charities (these requirements include the promotion of the interests of the general public).
  • The donor making the cross-border donation should be given the opportunity to present proof that the foreign charity would fulfil these national requirements for tax deductibility.

However, the practical effects of this ruling may well be disappointing to many EU donors. More information on the ruling and its practical implications can be found here:

It is important to note that this ruling does not mean that any donor in the EU can automatically expect a tax deduction for giving to SCI (or any other EU charity) simply because the charity is registered in one member state (the UK). Member states have altered their legislation to comply with the Persche ruling to varying degrees so donors must check the amendments their own national tax laws regarding charitable donations. For example, Germany has imposed new requirements that, although arguably compliant with the Persche judgment, still render it unlikely that many non-German charities will qualify for tax-deductible donations in Germany (see Germany page).

Even if you think that the charity you are donating to ought to meet the requirements imposed by your country’s altered tax-deductibility laws, you (and the charity) will have to convince the tax authorities of this before you can claim a tax deduction.

Further information on the way in which Austria, Bulgaria, France, Germany and The Netherlands have responded to the Persche ruling can be found here (under heading 3: “Limited, or No, Tax Incentives for International Philanthropy”):

Information on Belgium’s response can be found here (on page 10):

You may come to the conclusion that the charity you are donating to is unlikely to meet your national tax requirements. Alternatively, even if it is likely to, you may prefer not to engage in all the bureaucracy involved in getting your national tax authority to accept it for tax-deduction purposes. If you are still keen to make a tax-deductible donation to a UK-registered charity like SCI or AMF, you might consider giving through Transnational Giving Europe (TGE). To do so, contact your local Transnational Giving Europe partner (which will typically charge a 5% fee). They may need to talk to the charity to get it approved; I (Tom Ash) and others are talking to the charities about getting them preapproved. Unfortunately, not all EU countries are covered by the TGE network (e.g. Sweden).

Though it has been updated and modified in parts, the bulk of this page comes from an excellent initial report on Persche that Evi Atkinson wrote for me as part of the ongoing project of looking into and expanding the global tax-deductibility of top charities.