Taxation of associations and deductibility of donations

Introduction

When dealing with non-profit organisations, a distinction is drawn between the law on tax relief for charitable donations and the law governing non-profit organisations. The rules on tax relief for charitable donations  regulate the conditions under which donors can offset charitable donations against their tax bill. On the other hand, the law governing non-profit organisations concerns the taxation of the beneficiary corporations themselves.

General information on how non-profit associations are taxed

Associations are corporations and are subject to (unlimited or limited) corporate income tax (→ USP). In the case of entrepreneurial activities, value added tax (→ USP) may also be incurred.

The Bundesabgabenordnung (BAO) stipulates that in the case of activities for charitable, benevolent or ecclesiastical purposes and if the corporation concerned operates exclusively and directly to serve such purposes according to its legal basis and according to its actual management, preferential treatment is granted in individual tax provisions, in particular in the corporate income tax and the value added tax.

General information on donations

Donations to certain institutions that are either named in the relevant law or are on the BMF’s list of institutions qualifying as beneficial recipients of donations are deductible as business or special expenses from income or corporate income tax. Such entities include certain charitable associations, the voluntary fire brigades, universities, museums, etc.

People who have donated out of their private assets to an Austrian organisation eligible for tax privileges, and who wish to deduct the donation from tax, are no longer able to enter this donation as a special expense on their tax return (specifically, as part of the employee assessment). Instead, the organisations receiving the donations have to report the donations to the tax authorities. The donated amount is then automatically taken into account when assessing the donor's tax liability, and shown in the income tax assessment. This does not apply to donations from business assets (claiming as business expenses in the tax return).

For this system to work, the donors must provide the organisations receiving the donations with their full name and date of birth. Donors must ensure this data is correct. In particular, the spelling of the name must match the spelling in the Central Register of Residents. The name on a donation cannot be corrected when assessing tax liabilities.

Deducting donations can result in a tax credit, which may in turn trigger an "employee assessment without application".

Further links

• Further information on the taxation of associations and the deductibility of donations (→ BMF)^{German text}
• Fact-file: "Deducting donations from tax after 1/1/2017 - it's automatic" (→ BMF)^{German text}
• Explanatory video "Deducting donations from tax after 1/1/2017" (→ BMF)^{German text}
• List of beneficial recipients of donations (→ BMF)^{German text}
• FinanzOnline (→ BMF)^{German text}

Legal bases

• Sections 34 - 47 Bundesabgabenordnung (BAO) 
• Sections 4a, 18 para 8 Einkommensteuergesetz (EStG)
• Sonderausgaben-Datenübermittlungsverordnung (Sonderausgaben-DÜV)