Since the 2024 tax year, Spain has introduced an important change to its tax legislation that makes donations to non-profit organisations significantly more attractive from a tax perspective, particularly for companies. The key aspect of the new rules is that both individuals and companies can deduct qualifying donations directly from their tax liability (“deducción en cuota”), rather than merely treating them as an expense when calculating the taxable base. The aim of the reform is to provide greater incentives for both private and corporate social engagement. These changes are based on the reform of Law 49/2002, introduced by Royal Decree-Law 6/2023 and effective as of 1 January 2024.

The following overview outlines the benefits for companies and individuals and explains the relevant tax framework.

1. Donations under Corporate Income Tax (Impuesto sobre Sociedades) – what has changed?

For Spanish companies (e.g. S.L., S.A.), the tax incentives for donations have been expanded as of 2024. Donations to qualifying non-profit organisations are not deducted as business expenses but instead qualify for a tax credit that is applied directly against the corporate income tax liability.

The general deduction rate is now 40% of the donation. This rate increases to 50% if the company has already donated to the same organisation in the previous three years and the amount donated in each year was at least equal to the amount donated in the preceding year (recurring or loyalty donations).

Limitation: As a general rule, the deduction base for donations may not exceed 15% of the company's taxable base (“base imponible”). If the donation exceeds this limit, the tax benefit is not lost: the excess amount may be carried forward for up to 10 years and applied in subsequent tax periods.

Why is this so advantageous?
A deduction from the tax liability directly reduces the amount of tax payable. The tax effect is therefore significantly greater than if the donation merely reduced the company's taxable profit. The reform consequently makes donations through a company a highly effective instrument for combining social commitment with efficient tax planning. For further information, please see our article Donations by companies instead of shareholders

Example: 

Donation of €10,000 by a company with a profit of €89,000

Without donation:

- Taxable base: €89,000

- Tax liability: €22,250

With donation (40% deduction):

- Taxable base: €89,000

- Maximum donation deduction base: €13,341.96 (15%) > €10,000

- Tax saving: €10,000 x 40% = €4,000

- Tax liability: €18,250

The actual financial cost of the donation is therefore only €6,000, while €4,000 is directly offset by the tax deduction.

Even more favourable in the case of recurring donations:

- Deduction: 50%

- Tax saving: €5,000

- Effective cost: only €5,000

2. Which organisations qualify and what documentation is required?

Qualifying donations include those made to non-profit entities specified in Law 49/2002, such as foundations, non-profit associations, international development NGOs, public universities, research centres, the Red Cross, ONCE and a number of cultural institutions.

For the donation to qualify for tax purposes, the organisation must issue a donation/tax certificate (“certificado de donación / certificado fiscal”) in accordance with the official requirements. Among other matters, the certificate confirms the organisation's qualifying non-profit status, the irrevocable nature of the donation and the amount or nature of the donation. In practice, the organisation also reports donations electronically to the Spanish Tax Agency (Agencia Tributaria) using Form 182 (“Modelo 182”).

A fundamental requirement is that the donation must be voluntary, definitive and made without consideration. If the donor receives a specific benefit in return (e.g. admission to an event, goods or a course), the payment will no longer qualify as a tax-deductible donation.

3. Donations under Personal Income Tax (IRPF)

Individuals may also continue to claim tax deductions for qualifying donations under Spanish Personal Income Tax.

The deduction rates are:

- 80% on the first €250 donated per year,

- 40% on the amount exceeding €250,

- 45% on the remaining amount if donations were made to the same organisation in the previous two years in amounts equal to or greater than those made in the preceding year.

Limitation: The deduction is limited to 10% of the “base liquidable” (taxable base). Donations exceeding this limit may be carried forward to the following four tax years.

 

Example: 

Donation of €10,000 by an individual with employment income of €42,000

Without donation:

- Taxable base: €40,000

- Tax liability: €9,383.45

With donation:

- Taxable base: €40,000

- Maximum donation eligible for deduction: €4,000 (10%)

€250 x 80% = €200

€3,750 x 40% = €1,500

- Tax deduction: €1,700

- Tax liability: €7,683.45

- Tax saving: €1,700

- Effective cost: €8,300

- Amount carried forward for the next 4 years: €6,000

The new rules introduced in 2024 have significantly strengthened the tax benefits associated with donations in Spain. In practice, it may often be more advantageous to make donations through a company, as higher deduction limits apply and companies typically have larger taxable bases. This means that donations can often be fully utilised for tax purposes in the same year, whereas individuals may reach the lower applicable limit more quickly, resulting in the tax benefit being spread over subsequent years. In addition, unused deduction amounts may be carried forward for a longer period in the corporate context.

However, whether it is more advantageous to make a donation privately or through a company will depend on the circumstances of each individual case. Relevant factors include, in particular, the amount of the individual's private income, the company's profit, the intended amount of the donation and whether, from an economic and legal perspective, the donation is more appropriately made from private or corporate assets.

Our law firm will be pleased to assist you in analysing your individual situation, carrying out any necessary administrative procedures and assisting you with the preparation and filing of the relevant tax returns. If you are interested or have any specific questions regarding this topic, please feel free to contact us by email or telephone.

Author: 

Rike Füllgraf
Tax Advisor
info@sspartners.es
Tel: (+34) 951 12 13 06
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