Tax regime for donations and emergency Covid-19

In the last weeks, following the worsening and spread of the epidemic from Covid-19, fundraising initiatives have multiplied in our country in support of hospitals and institutions directly committed to deal with the current health emergency, in the activities of treating people who have contracted the virus, or in other scientific research activities for the creation of the vaccine for coronavirus.

Law Decree n. 18 on March 17, 2020, under art. 66 provides that donations, made by individuals and non-commercial entities, for the benefit of State, regions, local authorities, public entities or institutions, foundations and legally recognized non-profit associations, aimed at to finance interventions relating to the containment and management of the epidemiological emergency from Covid-19 are deductible in the amount of 30%, with a threshold of 30,000 euros.
For companies and other entities subject to corporate tax, charitable contributions in support of the measures to fight the epidemiological emergency from Covid-19 are fully deductible, without any maximum limit. For the purposes of Irap, these donations are deductible in the year in which the payment takes place.

Furthermore, it should be remembered that in addition to the emergency measures just adopted, the Italian tax system provides for a different tax treatment of the grants for individuals and for corporate tax subjects, which varies depending on the type of entity receiving it.

For individuals, the donations are mainly governed by article 10, paragraph 1, lett. l-quater of the Tuir, which provides for total deductibility for IRPEF purposes of the donations made in favor of universities, university foundations and other public university institutions, including University-Hospital Institutions, hospitalization and scientific care institutions, both public and private, or public research entities and research entities subject to MIUR supervision, including the Istituto Superiore di Sanità.

Gifts by companies are deductible, in a maximum limit of 2% of the declared business income, when the beneficiaries are entities who pursue exclusively scientific research and social and health care purposes (article 100, paragraph 2, lett. a) of the Tuir).

The 2006 Finance Law (Law no. 266 of December 23, 2005) provided for the full deductibility of the donations made by companies and other IRES entities to universities, university foundations and public universities, research entities, as well as of other subjects that carry out statutory scientific research activities.
Specific benefits are provided for donations to non-profit organizations, as well as for voluntary organizations involved in scientific and health research, governed by the Third Sector Code.

In particular, donations to non-profit organizations can benefit from a deduction for personal income tax purposes equal to 30% of the related amount (increased to 35% if the beneficiary of the same are Voluntary Organizations), for a total amount not exceeding 30,000 euros in each tax period.
Alternatively, cash gifts in favor of ONLUS and ODV entitle to a deduction from the total income, for IRPEF and IRES purposes, within the limits of 10% of the same.

Finally, in according to art. 14 of Legislative Decree no. 35/2005, the donations provided by individuals as well as by companies in favor of ONLUS – which have as their statutory purpose the performance of health care activities or social and socio-health assistance – are deductible from the total income in the lower amount between 10% of the declared income or 70,000 euros per year.

We specify, in any case, that the benefits require the payment is made through banks, post offices or other systems that permit the traceability of payments.
Finally, it is recommended to keep the receipt certifying the bank or postal payment, or any documentation as a proof of the gift payment (i.e. the indication of the beneficiary entity’s tax code).

Alessandro Poli