B Law & Tax
03 July 2023

Tax advisor: Ways to take advantage of donations to reduce the tax burden on the Personal Income Tax return

Donations can have a positive impact on your tax burden, as they not only contribute to charitable causes, but also provide significant tax benefits. When filing your income tax return, we can use donations to reduce the amount you have to pay. Below, we will explain the requirements and steps to take full advantage of this benefit. In Spain, donations to certain non-profit entities can benefit from tax deductions. Depending on the type of entity and the amount donated, it is possible to obtain a direct reduction in the tax burden. It is important to know the applicable deduction rates and the limits established by the legislation to maximize the tax benefits.

It is essential to keep in mind that not all donations are tax deductible. Therefore, it is crucial to ensure that the entities to which donations are made are properly registered and qualified as charitable entities. Non-profit organizations must have the corresponding certification in order for all donations made to be considered tax deductible.

What documents do I need to keep?

It is also important to keep proper documentation of your donations. This means having receipts for donations made, receipts issued by the charities and any other documents that support your contribution.

These documents will be critical when filing your tax return. In addition to charitable donations, there are other options for tax deductions. For example, donations to research, cultural or technological development projects may provide you with additional deductions.

Conditions for deductions to entities

It is important to keep in mind that the tax deduction may vary depending on the amount donated and the receiving entity. Therefore, it is essential to be properly informed on this subject. For example, according to the Tax Agency of the Ministry of Finance and Public Function, its website establishes deduction percentages for non-profit entities. These percentages are divided into two cases: a) general deduction, where an 80% deduction is applied if the base is up to 150 euros, and b) increased deduction for repeated donations to the same entity.

In addition, the form of the donation is also relevant. Whether in the form of money, goods or rights, these donations enter into the tax deduction base. The information provided by the Ministry can help you review what types of donations are eligible for tax deduction, which will allow you to be better informed when contributing to a charitable cause and optimize your tax burden.

By helping charitable causes, both in terms of social reason and development projects, you will not only experience the satisfaction of supporting worthy causes, but you will also generate an impact on your tax burden.

B Law & Tax International Tax & Legal Advisors.


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