Tax benefits for donations to nonprofit organizations will improve in 2024.
On January 10, the Congress of Deputies approved the amendment to Law 49/2002 on the tax regime of non-profit organizations and tax incentives for patronage. The changes to the tax bases and deduction percentages improve tax benefits and will apply to donations made from January 1, 2024.
What are the main changes?
1. The deduction percentages for donations made by individuals or legal entities are increased:
For individuals, the base on which 80% of the donation can be deducted from personal income tax has been increased from €150 to €250. For the amount exceeding €250, the deduction percentage has increased from 35% to 40%. And, if a donation has been made to the same entity over three years for an equal or greater amount, a 45% deduction can be applied, instead of the current 40%, provided the donation exceeds €250. For example, if you donate €30 per month to the CODESPA Foundation in 2024, for a total of €360 per year, you will be able to deduct €244 in your 2025 personal income tax return.
For legal entities, the deduction percentage for Corporate Tax has increased from 35% to 40%. And if, over the course of three fiscal years, donations have been made to the same entity for an equal or greater amount, the deduction percentage increases to 50%. Furthermore, when determining the deduction base, the limit on the taxable base has been raised from 10% to 15%. For example, if a company makes a donation of €100 per month, or €1,200 per year, it will be able to deduct €450 from Corporate Tax. Or €600 if it has donated the same amount or more over the last three years.
2. Improvements are included in the scope of application of incentives, such as:
The transfer of the use of movable or immovable property for a specific period of time and without compensation.
Recognition in the form of goods or services to the donor, provided that it is symbolic and in a manner that cannot be considered compensation. For example, if a person makes a monetary donation to an event and the entity that received it gives them tickets to the event.
Collaboration with companies is encouraged through business collaboration agreements with the beneficiary entities of the sponsorship. In this case, the aid can be monetary or in kind, and services rendered in the course of the collaborator’s economic activity are also included. For example, when a law firm provides consulting services or a media outlet provides the entity with an advertising page free of charge. In this case, the dissemination of the collaboration is permitted, regardless of whether it is the collaborator or the beneficiary entities of the sponsorship
All of these changes can be applied to personal income tax (IRPF) or corporate tax returns, as applicable, starting in 2025, for donations made after January 1, 2024.
Now your generosity in helping the most vulnerable people has additional benefits. And, thanks to your collaboration, through the CODESPA Foundation’s social development cooperation projects, we will ensure that more and more people have the opportunity to become self-sufficient and earn a decent and stable living.
