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1. Deduction from income of cash donations up to €2,065.83 or up to 2% of income
Free donations (art.13 L.D. 460/97), made since 1st January 1998, may be deducted from the business income (art. 65 comma 2 letter c-sexies of D.P.R. 22 December 1986, no. 917 – single text) up to a limit of 2% of said income. However, deductibility is guaranteed up to 4 million lire (€2.065,83) even if this sum is over the limit of 2%.
The deduction is allowable as long as payment of the donation or contribution was made through a bank (by banker’s order) or Post Office (postal order or payment into current postal account) or by other methods of payment accepted under art. 23 of L.D. 241/97. Cash in hand contributions are not deductible even if the Association gives a receipt, as, at this moment in time the Finance Ministry has not yet issued the decree outlined in art. 13, which recognises other methods of payment
Deduction from income up to 10% of declared income up to a maximum of €70.000,00
For donations made since 17/03/2005, in accordance with article 14 of Law Decree no. 35 of 14 March 2005, later converted to Law no. 80 of 14 May 2005, the sum allowed for deduction from the income of the donor is limited to 10% of declared income with a maximum of €70,000.00 a year.
The provision remains as in article 100, comma 2, of the single text, for tax relief where deductions within the limit of 2% of declared income remain applicable up to 4 million lire (€2.065,83) if this sum is superior to the set limit of 2%. This means for example that if there is an income of €8,000,000.00, €800,000.00, or 10%, is the sum allowable as a deduction and over the maximum limit of €70.000,00, so an option can be made for the old regulations to be applied which permit deductions up to a maximum of 2% of business income that is € 160,000.00.
Methods of payment are as previously described.
3. Deduction of staff costs for free services up to a total of 5 per thousand of the total cost.
The costs of employees, employed on indefinite contracts, are deductible from income (art.13 L.D. 460/97), if they are used to provide services given for the non-profit organisation, up to a limit of 5 per thousand accruing inclusive of expenses for contract work, as they are shown in the tax declaration (art. 65 comma 2 letter c-septies of the single text on taxable income approved by decree of the President of the Republic on 22 December 1986, no. 917).
4. Comestibles and pharmaceutical products are not counted as income.
Comestibles and pharmaceutical products (art.13 L.D. 460/97), whose production or exchange is destined for the free use of the non-profit organisation as opposed to being sold in the usual market are considered as outside of the normal activities of the business in accordance with article 53, comma2, of the single text on taxable income approved by decree of the President of the Republic on 22 December 1986, no. 917.
Application of the previous concession is on condition that each grant has been notified in advance by receipted registered letter, to the appropriate office (grants of perishable goods or goods of little value are exempt from this condition) and that the non-profit organisation which is the beneficiary makes a declaration to be preserved in the company’s records, that the goods will be used only in accordance with the aims of the organisation and that, at the risk of losing any tax benefits, direct use of the goods will be made before the fifteenth day of the following month. A record must be kept in the VAT register of the quality and quantity of the gifted goods in each month. A company whose activities are directed to the production and exchange of freely gifted goods is exempt from paying VAT in line with the modifications made to article 10, no.12, of DPR 633/1972.
To freely gift comestibles and pharmaceutical products exceeding a cost of 10 million lire, the company must notify the VAT office and the finance inspectorate in advance and the non-profit organisation must certify receipt as detailed above with a “substitute declaration of notary act“.
5. Goods gifted freely up to a cost not exceeding 2 million lire (as in the limits given at point 1) are not counted as taxable income.
When a company whose production or exchange, other than comestibles or pharmaceutical products, is destined to be freely gifted to a non-profit organisation, it is not considered as falling within the normal business of the company in accordance with article 53, comma2, of the single text on taxable income approved by decree of the President of the Republic on 22 December 1986, no. 917.
The free giving of these goods is not counted as taxable income if, after deduction of the production or buying costs, the cost of the goods themselves does not exceed 2 million lire.
A company whose activities are directed to the production and exchange of freely gifted goods is exempt from paying VAT in line with the modifications made to article 10, no.12, of DPR 633/1972.
This free giving is considered a donation up to the limit as in art. 65, comma2, letter c-sexies of the aforementioned single text (the deduction limit of 2% of company income is applicable and therefore up to 4 million lire even if the total is more than the preceding limit of 2%)
Application of the previous concession is on condition that each grant has been notified in advance by receipted registered letter, to the appropriate office and that the non-profit organisation which is the beneficiary makes a declaration to be preserved in the company’s records, that the goods will be used only in accordance with the aims of the organisation and that, at the risk of losing any tax benefits, direct use of the goods will be made before the fifteenth day of the following month. A record must be kept in the appropriate tax register of the quality and quantity of the gifted goods in each month.
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