UK charities closer to cross-border tax relief from Euro donors

UK charities are a step closer to benefiting from tax relief on donations from other EU countries after an opinion published by the European advocate-general.

The opinion, which is expected to be upheld by the European Court of Justice, said that Hein Persche, a German donor, was rightfully successful in claiming tax relief on a donation of about £15,000 to a Portuguese nursing home - setting a precedent for donations throughout the European Union.

Currently, most countries only allow tax relief on gifts to charities based within their own borders.

"The principle this has set is that you should be able to get tax relief on donations to charities across the EU," said Clive Cutbill, a partner at law firm Withers LLP.

"This follows on from a number of earlier rulings that have suggested this was the case, dating back to a case against the Belgian government in 2002."

Some European countries had already changed their laws to mean that foreign charities could claim donations, said Cutbill, but the UK only allowed tax relief on donations to charities based in Britain.

For tax relief to apply, however, organisations must prove that they have charitable aims and objectives in the donor's country of origin.

Simon Weil, a partner at law firm Bircham Dyson Bell, said that the European Commission had previously been considering taking the matter to the ECJ, but had delayed legal action while it negotiated with member states.

"It's now incumbent on the UK and other governments that are under notice from the commission that they must comply with the law to respond," he said. "Previously, the UK government had been challenged and just hadn't responded.

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