Donors across EU borders still face barriers to getting tax reliefs, report says

The European Foundation Centre and Transnational Giving Europe examined rulings by the European Court of Justice and now recommend policy changes

New report from the European Foundation Centre and Transnational Giving Europe
New report from the European Foundation Centre and Transnational Giving Europe

People and institutions that make donations across European Union borders are still finding it difficult or impossible to get the tax reliefs they are entitled to, according to a new report by the European Foundation Centre and Transnational Giving Europe.

The report, Taxation of Cross-border Philanthropy in Europe after Persche and Stauffer: from landlock to free movement?, examines the difficulties that donors face when trying to give across national borders and recommends policy and legal changes.

Since the 1990s, it says, there has been a trend of increased tax incentives for individual and institutional donors. Only four EU nations – Finland, Hungary, Lithuania and Slovakia – have no tax incentives for individual givers; Slovakia is the only member state with no tax incentive for corporates that give money, the study says.

The EFC and TGE looked at the implementation of a series of rulings by the European Court of Justice – including the Stauffer ruling and the Persche case – which together set out the "non-discrimination principle".

This principle is that an EU member state must be given the same tax concessions on donations to a charity based in another EU country as it would to a domestic charity, as long as the foreign charity can be shown to be comparable to the local organisation holding charitable tax status.

The report says, however, that barriers continue to exist. "Several member states have not yet removed discrimination and, even where they have, problems remain," it says. "Public benefit organisations and their donors encounter a lack of legal clarity, long and complicated procedures, and significant additional translation and consultancy costs to show their comparable status."

The report says there is a lack of overarching comparability principles, which means that comparability decisions are usually taken by a single tax authority in one country on a case-by-case basis.

The EFC and TGE propose practical and policy solutions to the issue, including the use of model statutes, tax treaties and a set of common core principles for determining comparability.

"The main problem in finally resolving the landlock is still the issue of control and trust among member states," the report says.

Gerry Salole, chief executive of the EFC, said: "Cross-border philanthropy should be straightforward, but in practice it can be both complex and costly. With this study, we aim to raise awareness of the difficulties donors and foundations face when carrying out their invaluable work outside their home countries and to push for effective solutions to facilitate cross-border philanthropy in Europe."

The EFC and TGE said they would continue to work with European and national institutions to press for change.

The EFC is a membership association of corporate funders and foundations, has more than 200 members, including the Big Lottery Fund, the Joseph Rowntree Charitable Trust, the Wellcome Trust and 10 others in the UK. TGE is a network that provides secure and tax-effective cross-border giving frameworks, covering 16 European countries. Its UK member is the Charities Aid Foundation.

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