Donations made to different entities share the 80% deduction limit

Individuals making donations to entities covered by the regime of Law 49/2002 must consider how the tax benefit of their contributions is calculated. A recent binding ruling from the Dirección General de Tributos (DGT) has specified the scope of the limit that allows for the application of the highest deduction rate.

What the DGT has ruled

The question raised was to determine whether the 250-euro limit, to which the 80 percent deduction rate applies, applied individually to each recipient entity or if it was a global limit. The DGT has ruled that said limit applies to the total of the donations, gifts, and contributions entitled to the deduction made during the tax year.

According to the interpretation of Law 49/2002 and the Personal Income Tax (IRPF) regulations, the calculation works as follows:

• Up to 250 euros: The total of all contributions made during the year will enjoy a deduction rate of 80 percent.
• Excess over 250 euros: The remainder of the deduction base, i.e., what exceeds that total amount, will have a deduction rate of 40 or 45 percent, as applicable.

What this means for you

If you make donations to different non-profit organizations throughout the year, you cannot apply the 80 percent deduction independently to each of them. The 250-euro limit is a single ceiling for the taxpayer in the tax year. For example, if you make a donation of 200 euros to one entity and another of 100 euros to another, you can only apply the 80 percent to the first 250 euros of the total sum, and the lower deduction rate will apply to the remaining 50 euros.

What you should do

It is necessary to keep track of all contributions made to entities covered by Law 49/2002 to ensure that the tax return correctly reflects the applicable percentages. Since the application of this limit is global, it is advisable to evaluate the strategy of your contributions to optimize their tax impact. It is recommended to analyze each particular case to verify compliance with the requirements of current regulations.