(2025) What are donations to a charity's capital reserves?

If a donation is made to the capital reserves of a foundation, up to 1 million Euro can be deducted as special expenses in the year of the donation and the following nine years. The tax office issues an assessment notice each year for the donation amount not yet taken into account.

The donation limit of 1 million Euro can only be claimed once within 10 years, but can be distributed as desired within this period. For larger donations, the amount of 1 million Euro can be treated as a foundation donation and the excess amount can be deducted as "normal" donations within the limit of 20% of the total income.

For jointly assessed spouses, a donation limit of 2 million Euro has applied since 2013. It is no longer necessary to prove which spouse made the donation and from which assets the donation was taken.

Since 2013, the increased special expense deduction of 1 million Euro only applies to donations "into the capital to be preserved" of a foundation. It must therefore be a "capital reserve donation".

The situation is different for consumable foundations for donations "into the consumable assets" of the foundation. These are tax-deductible only up to 20% of the total income or up to 4 per mille of the sum of turnover, wages and salaries. Any remaining amount can be carried forward indefinitely, i.e. it is considered as special expenses each year up to 20% of the total income until it is used up.