What are expense donations?
Many people volunteer in clubs and associations, organisations, and churches. This applies to board members, club members, freelancers, and other service providers. They not only contribute their time and labour for free but also cover related expenses themselves.
Such expenses, incurred in connection with the activity or the provision of items and thus saving the club money, are referred to as expense donations. Expense donations are tax-deductible if you have a claim for reimbursement of the expenses through a contract or statute and waive the reimbursement (§ 10b para. 3 sentences 5-6 EStG).
The conditions are:
(1) A reimbursement claim is required: To waive the expenses you have incurred, you must have a reimbursement claim against the club. This claim must be granted seriously and must not be agreed upon on the condition that you waive it. Key indicators of seriousness are that the club is financially able to pay the agreed expense reimbursement and that the waiver declaration is made promptly when the claim becomes due.
(2) The reimbursement claim must be legally binding: You must have a legal claim for expense reimbursement against the club, allowing you to demand reimbursement of your expenses from the club. Due to this legal binding, the reimbursement claim must be granted through statutes, contracts, or board resolutions. A verbal promise from the club chairman to reimburse the costs is not sufficient.
(3) You must waive the reimbursement claim: This waiver must be unconditional and declared within three months for a one-off activity and within one year for a regular activity.
An expense donation is a (shortened) cash donation. It is not the expenses that are donated, but the cash amount corresponding to the expense reimbursement. It is not necessary for money to flow between the donor and the club. Therefore, the underlying expenses do not need to be specified in the donation receipt, only the corresponding cash amount. However, the club must document this in its records.
