Gift deduction

Corporate tax: consequences of abolishing gift deduction ANBIs

Loic Weissglas,
Johan Loo
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The gift deduction for non-profit organisations (ANBIs) in corporate income tax is about to be abolished. At least, if it is up to the outgoing State Secretary of Finance. The abolition should simplify the treatment of donations by BVs to ANBIs. Why this proposed abolition and what are the possible consequences?

Why does the gift deduction exist?

BVs can deduct donations to ANBIs and Steunstichtingen sociaal belang behartigend instellingen (SBBIs) within certain limits and requirements. Moreover, the tax authorities currently view non-businesslike donations to ANBIs, without a direct business interest, as a deemed profit distribution to the shareholder. On the other hand, the shareholder can, under conditions, deduct the donation from its personal income tax. However, this gift deduction is cumbersome and has certain conditions and limits.

What does the proposed abolition of gift deduction look like?

In the Tax Plan 2024, the outgoing State Secretary of Finance proposes to abolish the gift deduction in the Dutch corporate income tax act. This should simplify the treatment of donations by BVs to ANBIs. Simultaneously with this measure, an adjustment will take place in the personal income tax, as a result of which the tax authorities will not tax a donation from the company in box 2 and not with dividend withholding tax.

This rule applies to donations made from your company and arising from the personal charitable wishes of the shareholder. Does the company make a business expense to an ANBI or SBBI? Then this expense remains deductible from its profits as usual. This also applies to expenses such as: advertising costs, sponsorship and expenses related to Corporate Social Responsibility.

What are the advantages of abolishing the gift deduction? 

On the one hand, abolishing the gift deduction offers advantages:

  • Simplifies the treatment of donations by BVs to ANBIs.
  • Reduces the administrative burden.
  • Simplifies the process for BVs.
  • Makes the boundary between the shareholder and the BV clearer, ensuring less discussion about deemed profit distributions.

What are the disadvantages of abolishing the gift deduction?

The abolition of the gift deduction may also have drawbacks:

  • May lead to a decrease in the willingness of BVs to make donations to ANBIs. This is because the current gift deduction is an incentive for BVs to support charities.
  • There may be discussion as to whether the donations have a sufficient business character. 

Want to know more about this abolition?

Do you want more information on the gift deduction for ANBIs and related topics? Our specialists are happy to help and advise you on your tax issues.

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