What can I deduct as donations and membership fees?
You can deduct donations and membership fees for the promotion of tax-privileged purposes. These include:
- Charitable purposes
- Benevolent purposes (e.g. workshops for the disabled, meal services or drug counselling centres)
- Church purposes
- Political parties
- Independent voters' associations
- Charitable associations and organisations
- Public institutions in Germany: e.g. universities, universities of applied sciences, research institutes, authorities, schools, state museums, state hospitals
- Legal entities under public law in Germany: e.g. city and municipal administrations, municipal associations, federal states and the federal government, as well as churches
However, donations for a club's commercial business operations are not deductible. For example, if you donate drinks for a club festival, you cannot enter this in your tax return.
To deduct donations from tax, they must be made without receiving anything in return. You can deduct not only cash donations. Donations in kind, expense donations and remuneration donations are also considered tax-relevant.
What can I deduct as donations and membership fees?
How much can I deduct for donations and membership fees?
Tax-privileged purposes include charitable, benevolent, and religious purposes, as well as the promotion of political parties and voter associations under certain conditions. Since 2007, previously specially promoted cultural and scientific purposes have been part of charitable purposes.
Donations for such privileged purposes are deductible as special expenses up to a total of 20% of the total amount of income. If donations exceed the maximum amount, the excess can be carried forward to the following year and considered within the maximum limit. This donation carryforward is unlimited in time.
Just like donations, membership fees are generally deductible as special expenses within the deductible donation limit. However, this only applies to "altruistic" purposes and organisations that do not offer benefits to the members themselves, e.g. Caritas, Lebenshilfe, DLRG. Membership fees to clubs that promote leisure-related charitable purposes with "self-interest", e.g. sports clubs, music and singing clubs, marching bands, theatre clubs, local heritage clubs, traditional costume clubs, carnival clubs, animal breeding and plant breeding clubs, model flying clubs, dog sports clubs, are not deductible.
In addition to monetary donations, you can also claim donations in kind for tax purposes. If you wish to donate your old clothes to a charitable organisation, you will need a donation receipt from them listing the market value and condition of the clothing items.
Your taxable gross income: 45.000 Euro, minus income-related expenses: 3.000 Euro, total income: 42.000 Euro
You can claim donations and membership fees of up to 8.400 Euro (20 percent of 42.000 Euro) as special expenses for tax purposes.
How much can I deduct for donations and membership fees?
What donations are not tax-deductible?
The tax officer does not accept every donation and membership fee as a special expense.
Here are some examples:
The judge orders the defendant to pay a fixed amount to a charitable organisation. The convicted person cannot, of course, deduct this "involuntary" donation from their taxes, as it was not made voluntarily and without consideration.
Membership fees for sports clubs cannot be deducted by the taxpayer.
Contributions to carnival, local heritage, animal breeding or choral societies are also not recognised by the tax office.
However, there is a new development: If you belong to an organisation involved in nature, welfare, gender, animal or monument protection, you may deduct both your donations and membership fees from your taxes.
Membership fees to organisations promoting the following purposes are not deductible: Sport, cultural activities for leisure purposes (e.g. singing, music, theatre clubs), local heritage and folklore, animal and plant breeding, allotment gardening, traditional customs including carnival, soldiers' and reservists' support, amateur radio, model flying and dog sports.
Organisation A promotes science and research, while Organisation B also promotes sport according to its statutes. Donations and membership fees to Organisation A are deductible as special expenses, but for Organisation B, only donations are deductible, not membership fees. The decisive factor is the entry of the organisation's purpose in the statutes, not the actual activities of the organisation.
The Federal Fiscal Court has recently ruled that membership fees to organisations primarily serving leisure activities cannot be deducted as special expenses in income tax. This also applies if, for example, a music club promotes another purpose in addition to "cultural activities with self-interest", such as musical training, cultural and church music events, music festivals and music competitions (BFH ruling of 28.9.2022, X R 7/21).
What donations are not tax-deductible?
What are donations to recipients in EU/EEA countries?
Previously, donations were only recognised for tax purposes if the recipient was based in Germany. The Federal Fiscal Court responded to a decision by the European Court of Justice and ruled that donations to charitable organisations based in other EU/EEA countries can also be deducted from tax in Germany.
For the donation to be recognised by the tax office, receipts and certificates must be provided, and the charitable status of the recipient must be verifiable.
What are donations to recipients in EU/EEA countries?
How do I provide evidence of donations to the tax office?
Donations and membership fees were previously only recognised for tax reduction if the donation receipts and proof of membership fees paid were attached to the tax return or sent to the tax office after electronic submission. In certain cases, simplified proof, such as a bank statement, was sufficient.
Since 2017, the obligation to submit receipts has been changed to an obligation to retain receipts: Donation receipts or corresponding proof no longer need to be submitted with the tax return. Instead, they only need to be presented if requested by the tax office. This is possible up to one year after the tax assessment notice is issued. Therefore, the donor must keep the receipts for this period (§ 50 para. 8 EStDV 2017).
The new obligation to retain receipts applies to donations made from 1 January 2017. However, receiving a donation receipt is still a prerequisite for the donation deduction. Therefore, make sure you receive a receipt. But you no longer need to submit the receipt with the tax return, only upon request by the tax office.
The donor can authorise the donation recipient to electronically submit the donation receipt to their relevant tax office. For this purpose, they must provide the donation recipient with their identification number. The authorisation can only be revoked with future effect. The donation recipient must make the data transmitted in this way available to the donor electronically or as a printout upon request. This has the advantage for the donor of not having to keep or present a donation receipt in their own tax procedure. At the same time, the donation recipient would no longer be obliged to keep a duplicate of the donation receipt (§ 50 para. 2 EStDV).
A formal donation receipt in the official format is not always required. Proof such as a bank statement, cash deposit slip, transfer slip or direct debit slip is sufficient for
- Donations up to 300 Euro made to a charitable, benevolent, church or religious organisation or to a domestic legal entity under public law or a domestic public authority.
- Donations in disaster situations paid into a special account within a certain period. Such a special account may only be set up by officially recognised welfare associations and their member organisations, as well as a domestic legal entity under public law or a domestic public authority. The amount of these donations is not relevant.
How do I provide evidence of donations to the tax office?
How donations to political parties are subsidised
In the Bundestag election on 26 September 2021, far more than just the major well-known parties stood for election. Votes and donations bring the parties additional money from the state coffers.
- For the first four million votes, there is 1.05 Euro each and beyond that 0.86 Euro per vote (share of votes, as of 2020).
- And for every Euro you donate to a party in the form of donations or membership fees up to 3,300 Euro, the party receives an additional 45 cents from the state coffers (donation share). Donations exceeding the eligible amount of 3,300 Euro are permissible, but they are not taken into account when calculating the donation share and are only considered when determining the "relative upper limit".
- Since 2017, the above amounts for the share of votes have automatically increased each year by the percentage by which the price index for expenses typical for a party has increased in the year preceding the year of entitlement (§ 18 para. 3 of the Political Parties Act).
Not only donations but also membership fees to political parties are tax-privileged. Donations and membership fees are tax-privileged in two ways:
- The donations are directly deducted from the tax liability by half for single persons up to 1,650 Euro and for married couples up to 3,300 Euro. The tax saving is therefore up to 825 Euro or 1,650 Euro (§ 34g No. 1 EStG).
- Donations beyond this are deductible as special expenses, namely for single persons up to a further 1,650 Euro and for married couples up to a further 3,300 Euro (§ 10b para. 2 EStG).
How donations to political parties are subsidised
What are donations to political parties?
All payments to parties exceeding the membership fee are considered donations. This includes, for example, admission fees. Donations to political parties are directly deducted from the tax liability by half for single persons up to 1,650 euros and for married couples up to 3,300 euros. The tax saving is therefore up to 825 euros or 1,650 euros. If the donation amount is higher, the remaining amount can be considered as special expenses up to a further maximum amount of 1,650 euros for single persons and 3,300 euros for married couples.
Thus, donations to political parties are tax-privileged up to a total of 3,300 euros / 6,600 euros (single/married). The donations must be proven with a donation receipt. For the donations and membership fees to be tax-privileged, the party must be considered a political party within the meaning of § 2 of the Political Parties Act.
All payments to parties exceeding the membership fee are donations. This includes the admission fee or the contribution from office holders, which, for example, mayors usually have to pay into the party fund.
What are donations to political parties?
