Cross-border giving, and a new tax ruling

There is good news for donors who want to make gifts across borders in the EU. The European Court of Justice, in a judgement dated 27th January 2009 has found in favour of a German citizen who wanted to make a gift to a Portuguese charity. Mr Hein Persche wanted to make a gift in kind valued at about €18,180, to the Centro Popular da Lagoa, in Portugal (a retirement home to which a children’s home is attached). The Finanzamt (District Tax Office) refused the deduction sought on the grounds that the beneficiary of the gift was not established in Germany and that Mr Persche had not provided a donation certificate in proper form.

The Court ruled that such gifts come within the compass of the Treaty provisions on the free movement of capital, even if they are made in kind in the form of everyday consumer goods. The free movement of capital precludes legislation of a Member State by virtue of which, as regards gifts made to bodies recognised as having charitable status, the benefit of a deduction for tax purposes is allowed only in respect of gifts made to bodies established in that Member State.

The ruling means that if the German government, and presumably other national governments, do not change their national laws, the European Commission could bring an action for breach of Community law and, eventually, that Germany could be fined for this breach.

For the press release on the ruling, click here.
For the original ruling, click here
For the European Court of Justice home page click here.
For contact details of the Centre Popular da Lagoa, click here.

This is an important ruling for all philanthropists who wish to give cross-border, and for fundraising organisations who are working with donors outside their own country.

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