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IRS 2018 Expenses: Donations to Charity

This is a weekly series of articles about the rules and changes in the IRS system which will apply to the individual income tax declarations for 2019. The respective series about IRS income can be read in The Resident and the series about IRS procedures are to be found in Portugal News.

Donations to Charity

Tax Credits for charitable gifts for individuals are based on the “Estatuto de Mecenato” (Patronage Statutes), which divides contributions according to the nature of the charity. The amount of the gift is enhanced for tax purposes by a stipulated percentage, then a tax credit of 25% is conceded on that amount. Like other credits in 2017, the upper ceiling of the tax credit is limited, in this case to €100.  Donations above €200 should be made by cheque or bank transfer. 

                                       Charitable Gifts – (Estatuto do Mecenato . DL 74/99 de 16.03)
             Type of Organization                                      Amount        Tax Credit
• State • Autonomous Regions     (Azores / Madeira) • Town Councils • State Foundations • other recognized Foundations      social solidarity: 140%   educational, sports, scientific, cultural, environmental: 120%      25% of donation (no upper limit)
• non-profit organizations¹ • cultural and sport centres • recognized private charities¹   if charities support social solidarity:    infancy; old age   addiction; aids; cancer; diabetes   social reinsertion; job opportunity     120%   25% of donation²
    140%     25% of donation²
• cultural associations; cooperatives¹ • museums and libraries¹ • environmental organizations¹ • sport associations¹   120%    25% of donation²
• religious institutions¹     130%   25% of donation²

   ¹   organizations must be registered and recognized for any donations to qualify for tax credit.

 ²   up to 15% of tax

Question:  I give regularly to my church.  Can I get tax relief?

                    euroFINESCO: Yes, but only if you can substantiate your gift with a proper receipt.  In other words, if the donations that you put into the collection plate cannot be substantiated, they would not ordinarily qualify. On the other hand, if your church issues you a receipt, you can report 130% of that amount and receive a tax credit of 25% of that amount. It goes without saying that such a practice would be both in the best interest of the church as well as the donor.  Nevertheless, don’t forget to take into account the new upper limits to tax credits.

Question: I give to charities in my home country. Can I claim these donations in Portugal?

                    euroFINESCO: No, tax credits are only for Portuguese-based entities. If you are giving to an international organization, it must have an office in Portugal in order for the donation to qualify for a Portuguese tax credit.

This is the final article in the series

Dennis Swing Greene

info at madeira-weekly.com

Madeira Weekly