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Donations for Tax Minimization in Ireland

Donations for Tax Minimization in Ireland

Donations can be used as a tax minimization procedure (which represents a legal manner through which the level of taxation can be reduced for various types of entities, including for corporate bodies) in Ireland. For example, the tax relief can be applied in Ireland through the Charitable Donation Scheme

In this case, the tax relief can be applied to charities and to other types of bodies that are approved by the local authorities. Our team of consultants in company registration in Ireland can provide an extensive presentation on the approved donations that can be used as a means for reducing the level of taxation

When can a tax relief be applied in Ireland? 

Donations have the purpose of sustaining a specific cause and they are usually made in the name of various types of charitable organizations operating in Ireland. Both natural persons and legal entities can enjoy the tax benefits associated with donations; the tax relief can be obtained by a corporate body provided that the below mentioned aspects are respected: 

  • • the donation takes the form of money, shares, stocks and other financial instruments that can be used on the stock market;
  • • the tax relief can be obtained as long as the donation is made to an eligible entity, recognized by the Irish tax authorities;
  • • the donation that was made to the eligible entity can’t be repaid;
  • • the donor does not benefit from the donation he or she made;
  • • the donor is a resident of Ireland (however, branch offices of foreign companies operating in Ireland can also make donations to eligible organizations);
  • • the minimum value of the donation has to be at least EUR 250 in a financial year. 

Who can receive donations in Ireland? 

As presented above, the donations can only be made to specific entities, recognized by the local legislation. As per the Irish legislation, a charitable organization has to be recognized by the Revenue Commissioners; the main legal framework available in this case is the Finance Act 2013

The legislation was amended to include the eligibility criteria for charitable institutions registered in the European Economic Area as well. However, relevant rules of law regarding donations are also established under the Taxes Consolidation Act 1997; the main tax regulations deriving from the available law can be presented by our team of consultants in Irish company formation

As we mentioned above, the minimum value per each donation of a natural person or legal entity has to be of EUR 250; however, the legislation stipulates an upper limit regarding a donation concluded in a financial year, which has to be of maximum EUR 1 million. 

What are the tax benefits for Irish donors? 

Irish donors can benefit from various tax reliefs depending on the nature of the donation. For example, in the case in which the donation was made in cash, the tax relief will be calculated from the income tax. Since the donations in Ireland can take the form of shares as well, in this case, the donor can obtain a tax relief from the value he or she has to pay on the income tax, but in this particular situation, the donor can also apply for a tax relief on the capital gains tax

In Irelanddonations can also take the form of property (real estate property); when making a donation, the value of the respective donation is calculated based on the price paid by the owner at the time of the purchase, even though the current value of the respective asset may have increased; our team of specialists in company formation in Ireland can provide assistance on the documents that must be completed for each type of donation

What are the current statistics of the Irish charities? 

Businessmen who want to open a company in Ireland that can operate as a charitable organization are legally required to register with the Irish Charities Regulator. This is the institution that provides the Charitable Status for such organizations and the one which maintains the annual reports on the charitable activities developed here. Some of the most relevant data referring to this field are presented below: 

  • • the Irish Charities Regulator registered a total of 9,799 charitable organizations at the level of 2018;
  • • at the end of 2018, there were 60,866 charities trustees registered in Ireland;
  • • in the same year, a total of 1,321 organizations received the Charitable Status in Ireland;
  • • the online portal of the institution had a total of 118,673 visitors;
  • • the Irish Charities Regulator approved 150 new charities at the level of May and June 2019. 

Businessmen interested in receiving further information on the manner in which donations can be used as a way to reduce taxes in Ireland can address to our specialistsOur consultants can advise on the procedure on opening a company in Ireland and can explain the local tax system and the available procedures through which businesses can reduce their level of taxation