Donations

In principle, donations to the institutions listed in Section 4a of the Income Tax Act (= beneficiary institutions) are deductible up to an amount of ten percent of the profit in the case of business expenses (if made from business assets) or of the total amount of income in the case of special expenses (Section 18 of the Income Tax Act, in the case of cash donations from private assets). Donations to beneficiary institutions for beneficiary purposes are thus capped in terms of the amount they can be claimed for. Donations in kind are generally only deductible if they are made from business assets. In the case of donations by private individuals, the name and date of birth of the donor must also be disclosed to the charitable organization in order to be deductible. The institution then transmits the data to the responsible tax office. Only then can the donation be taken into account accordingly in the employee tax assessment.

However, there is a special rule for donations in connection with acute disaster situations in Austria and abroad: If such aid is provided to a company in a promotional manner in connection with acute disaster situations, it can be fully deducted as a promotional expense for income tax purposes in accordance with Section 4(4)(9) of the Austrian Income Tax Act. Media reports, mailings to customers or donation notices on the company website or on posters or in the business premises are suitable as proof of the advertising effect. The recipients of the aid can either be directly affected by the disaster or help in this context.

Donations in kind

In the case of donations in kind, sales tax must be taken into account in addition to the income tax aspect. The removal of an item from the company and its subsequent transfer free of charge constitutes own consumption if there was at least partial entitlement to input tax deduction with regard to the donated item. Only gratuitous donations of low value for business reasons are exempt from own consumption taxation. The own consumption of goods is to be treated as a supply; the basis of assessment is the purchase price (or cost price) for the donated items at the time of the transaction.

Supplies of auxiliary goods

However, according to the Ordinance of the Ministry of Finance on VAT relief for aid supplies abroad (BGBL 787/1992 as amended), supplies of aid goods by companies for consideration or free of charge (own consumption) within the framework of national or international aid programs in emergency situations are to be treated as non-taxable transactions if the following conditions are met:

The destination of the supply is in a state explicitly named in the regulation. Ukraine is mentioned by name in § 5.

The supplies (to Ukraine) must be notified in advance to the tax office responsible for the entrepreneur and a declaration must be made that no VAT will be charged to the recipient. The declaration must contain the type and quantity of the aid goods as well as the exact name and address of the recipient of the donation in kind or the delivery against payment.

Proof must also be provided that the goods were shipped for the intended purpose (= obligation to provide proof). A transfer for a specific purpose is also deemed to have taken place if the donation is sent abroad via a domestic charitable organization for the purpose of providing local aid.

Supplies against payment must also be made to a corporation under public law or to a corporation, association of persons or estate pursuing charitable, benevolent or ecclesiastical purposes.

According to § 2 of the Ordinance, the exemption from the obligation to pay VAT does not apply in the case of supplies against payment if the customer is entitled to deduct input tax and VAT relief for the transaction can be obtained by way of input tax deduction.

The willingness to help people in need in their worst moments is thus not only acknowledged in human terms, but is also rewarded in terms of taxation in compliance with the statutory provisions.