Charitable Donation Deduction
If you donate money to charities, you may be able to deduct these donations from your taxable income. There are two types of donations: regular gifts and periodic gifts. For regular gifts, there is a threshold of 1% of your threshold income (minimum €60) and a maximum of 10% of your threshold income. For periodic gifts – recorded in an agreement for at least 5 years – there is no threshold and no maximum. Periodic giving is therefore much more tax-efficient. The charity must have ANBI status (Public Benefit Organization).
Example
You donate €1,200 annually to a charity. As a regular gift, you can deduct: €1,200 minus the threshold (1% of €40,000 = €400), so €800. But if you set up a periodic donation agreement for 5 years, you deduct the full €1,200. That saves you an extra €148 in tax refund per year (€400 × 36.97%).
Why does this matter?
Do you donate to charities? Check if you're doing it smartly. A periodic donation agreement costs nothing extra but yields significantly more deductions. Don't forget that donations to cultural ANBI organizations also provide extra benefits – you can multiply those by a factor of 1.25.