Brussels, 27/01/2009 (Agence Europe) - For tax purposes, donations to charitable organisations in another member state should, in principle, be treated in the same way as donations to home-based organisations. According to the Court of Justice of the European Communities, a member state can require proof that the body receiving the donation is a charitable organisation, but any legislation which denies cross-border donations the tax benefits enjoyed by donations to nationally-based charities infringes the free movement of capital (case C-318/07).
In 2003, German national Mr Hein Persche made a donation in kind to a Portuguese organisation, on which he claimed a tax reduction of over €18,180. The donation, the Court says, was bed linen, Zimmer walking frames and toy cars for children, which Persche sent to the Centro Popular de Lagoa, a retirement home to which a children's home is attached. The German tax authorities refused the deduction sought, solely on the grounds that the beneficiary was in another member state.
The Court's judgment was in response to questions put by the Bundesfinanzhof, the highest German tax court, sitting as the court of final appeal in the case: a member state may not make deductions for tax purposes subject to the condition that the beneficiary is established in that state. Steps may have to be taken to prove that the beneficiary really does have charitable status in the other member state, but these are not so onerous as to justify restricting the right of free movement of capital by preventing donors from claiming tax relief on cross-border donations. In any event, there is no reason to prevent, as German law does, the taxpayers themselves from proving that the beneficiaries of the donations are charitable organisations. This judgment follows on from the Advocate General's ruling of 15 October 2008 (see EUROPE 9762). Additionally, the Court stated that member states were not required to accept other states' definitions of “charitable”. National tax authorities, however, must apply their criteria consistently to all bodies in the EU, and not exclude some simply because they are established in another member state. (C.D./transl.rt)