When your organization supports Friends for Africa Foundation, you demonstrate the importance of community involvement at the welfare level in Malawi. In many cases, your donations are tax deductible. Below you will find more information about the tax benefits.

a tax-free donation may be fully deductible if it is a business expense and the donation in any form makes a positive, useful contribution to your business operations. Think of advertising, sponsorships and donations of man-hours. This expense is also deductible if a tax loss is incurred in the year in question (the loss is then magnified).

Corporate tax and donations

A company that pays corporate income tax can deduct donations to charity from its taxes. There are specific rules for this that differ from the donation deduction for individuals. Donations to a non-profit organization (ANBI) are tax deductible in the year in which they are made. The amount of gift deduction may not exceed 50% of the profit and must remain below €100,000. The profit may not become negative due to the tax deduction and the donations must be demonstrable in writing. The regulations surrounding gift deductions are complex. Get advice from a tax advisor or check the website of the Tax Office for more information.

Income tax and donations

The amount of the non-business gift deduction depends on the aggregate income, the threshold calculated on that basis and the cap applicable to the individual in question. The income of the tax partner co-determines the final gift deduction. If the gift is made over a period of five years or more, it may be eligible for full deduction under certain conditions. Read more about it on the Tax Office website.

Gift

If you make a donation with your company, it is a matter of generosity. There is no quid pro quo. The donation must be to a (cultural) ANBI or a support foundation. An ANBI is an institution for general benefit, an institution that is at least 90% committed to a public interest or non-commercial. Also, the institution may not have a profit motive with the whole of its generally useful activities The donation is exempt from VAT. We are also an ANBI foundation.

Sponsorship

Sponsorship does involve a quid pro quo. It usually involves financial support in exchange for name recognition. The institution receiving the sponsorship may issue an invoice to your company. VAT is then levied on sponsorship contributions. For donations in kind, the fair market value at the time the donation is made is decisive.