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Coronavirus - Tax relief measures for volunteers and donations – Germany

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  • Tax planning and consultancy


Tax relief for volunteers and donations in the Corona crisis

The Corona crisis poses enormous challenges for the whole society. In order to mitigate the spread of the pandemic, a wave of helpfulness and solidarity has been raised to assist the fellow citizens who are particularly affected by the Corona crisis. In order to ensure that this aid in this exceptional situation is not reversed by the tax regulations in force, the Federal Ministry of Finance (BMF) released a guideline on 9 April 2020 on tax measures to promote aid for people affected by the corona crisis.

The rules contained in the guideline explicitly serve only to promote and support the commitment of society as a whole to help those affected by the Corona crisis, in particular to promote social cohesion, to mitigate the spread of the pandemic and to support those who are threatened by the Corona crisis in their daily lives.

The following simplification rules apply to support measures in the period between 1 March 2020 and 31 December 2020:

1. Simplified proof for donations

For the tax deduction of donations paid into special accounts by German legal entities under public law, public services or an officially recognised charity organisation or its member organisations for the support of those affected by the Corona crisis, the presentation of the paying-in slip or account statement is sufficient, irrespective of the donation amount. Upon request, the proof of payment must be submitted to the tax office and kept for one year after the tax assessment notice has been issued.

2. Tax relief for help rendered by non-profit organisations

Non-profit organisations must, in principle, use their revenue exclusively for the purposes provided for in their statutes, otherwise they risk losing their status as tax-exempt entity. This rule has been suspended by the Federal Ministry of Finance during the Corona crisis to the extent that the non-profit organisation provides support to persons affected by the Corona crisis. The Federal Ministry of Finance recognises the following help measures of non-profit organisations as not detrimental to their tax-exemption even if they are not covered by the statutes of the non-profit organisation:

| utilization of the income from fundraising campaigns to help those affected by the Corona crisis

| utilization of existing own resources to support those affected by the Corona crisis

| provision of personnel and premises

| provision of purchasing services and comparable services or reimbursement of costs to its members for such services

| transfer of own funds to other tax-privileged entities for the support of victims of the Corona crisis

However, as a matter of principle, the charitable organisation must prove the purpose of the donations and prove that the persons supported are in need, unless it can be assumed that they are in obvious need of physical or financial assistance (e.g. persons in quarantine, elderly persons, homeless persons).

Nonetheless, any form of aid provided to companies particularly affected by the Corona crisis, self-employed persons or to corresponding municipal aid funds, which is not covered by the statutory purpose of the respective non-profit organisation will not be considered tax-privileged.

3. Donations out of a business

If taxable companies make the following supporting services to those affected by the Corona crisis, they are permitted to deduct these donations as business expenses for tax purposes:

| donations as sponsoring measures

| free of charge services to business partners who are directly and not insignificantly affected by the Corona crisis (for an interpretation of the terms, see our newsletter dated 06.04.2020) to maintain the business relationship

| in-kind contributions of assets or other operational benefits and services to companies and institutions which are directly and significantly damaged by the Corona crisis or are involved in crisis management, such as hospitals,

4. Donation of salary and supervisory board remuneration

If employees waive parts of their salary, wages or accumulated assets in favour of a payment into a donation account of a tax-privileged institution, these donations remain free of wage tax. However, it requires the employer recording this waiver in the payroll account, unless the employee has declared it in writing and the employer fulfils and documents the conditions of use of the donation. The donated wages are not to be stated in the wage tax certificate. Nor may the employee claim the waiver as a donation in his income tax declaration.

The same applies to the waiving of Supervisory Board remuneration, which remains a non-deductible operating expense for the company regardless of the reclassification as a donation.

Practical advice

The Easter gift from the Federal Ministry of Finance for the helpers and supporters to overcome the Corona crisis is most welcome and shows the appreciation for the commitment of all taxpayers in this exceptional situation. However, as with all other tax benefits and tax relief granted in connection with the Corona crisis, the provisions of general tax law, which continue to apply, must also be observed, in particular the obligation to provide documentation and evidence.