What can I deduct as donations and membership fees?

You can claim tax deductions for donations and membership fees to support 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.

(2022): 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 maximum deductible donation amount. 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 up to 8.400 Euro (20 percent of 42.000 Euro) as special expenses for tax purposes.

(2022): How much can I deduct for donations and membership fees?

What are donations to a foundation'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 a notice of assessment 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 and 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.

(2022): What are donations to a foundation's capital reserves?

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.

(2022): 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, the donor must provide their identification number to the donation recipient. The authorisation can only be revoked with future effect. The donation recipient must provide the donor with the data transmitted in this way electronically or as a printout upon request. This offers the advantage for the donor of not having to keep or present a donation receipt in their own tax procedure. For the donation recipient, the obligation to keep a duplicate of the donation receipt would also be waived (§ 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 associations of independent welfare organisations 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.

(2022): How do I provide evidence of donations to the tax office?

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 tax, as it is not voluntary and not without consideration.

Membership fees for sports clubs cannot be deducted by the taxpayer.

Contributions to carnival, local heritage, animal breeding or singing clubs are also not recognised by the tax office.

However, there is a new development: If you belong to a club that is involved in nature, welfare, gender, animal or monument protection, you may deduct both your donations and membership fees from tax.

Membership fees to clubs 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, allotments, traditional customs including carnival, soldiers' and reservists' support, amateur radio, model flying and dog sports.

Club A promotes science and research, while Club B also promotes sport according to its statutes. Donations and membership fees to Club A are deductible as special expenses, but for Club B only donations are deductible, not membership fees. The decisive factor is the entry of the club's purpose in the statutes, not the actual activities of the club.

Current The Cologne Fiscal Court has ruled that charitable music clubs that do not provide training only as a subordinate activity may also issue donation receipts for membership fees paid, and the donor receives a tax reduction for this (FG Cologne of 25.2.2021, 10 K 1622/18, revision pending under X R 7/21).

(2022): What donations are not tax-deductible?

What is meant by an endowment to the "capital base" of a foundation?

Endowments thus increase the foundation capital (asset pool), meaning they are not spent and remain with the foundation. Naturally, an endowment sustainably improves a foundation's income situation.

Endowments are more generously supported by the legislator than "normal" donations: Contributions to a foundation's asset pool are deductible as special expenses up to an amount of 1 million Euro (see § 10 b para. 1a EStG). It does not matter whether it is an existing or newly established foundation.

The donor determines how the contribution is distributed across the individual assessment periods from year to year with their corresponding applications within the specified ten-year period. This special expense deduction is available again every ten years, but only for individuals subject to income tax or partners in partnerships; not for taxable corporations.

(2022): What is meant by an endowment to the "capital base" of a foundation?