Tax Credits for Donations to Voluntary Organisations

by , on May 03, 2024 10:52:39 AM

Donations to Voluntary Organisations Rules – Explained

The recent publication of Legal Notice 86 of 2024 introduced the Donations to Voluntary Organisations Rules, 2024 (referred to as “the Rules”). Such is aimed at fostering corporate donations to registered voluntary organisations involved in social, environmental, or animal welfare causes. These rules seek to incentivize companies through tax credits while simultaneously boosting the support received by the aforementioned organisations.

According to these regulations, companies are eligible for tax credits in the year of assessment for donations meeting the criteria outlined in Rule 5 of the Rules. The timeframes for such must be on or after January 1st 2024, directed to voluntary organisations registered with the Commissioner for Voluntary Organisations (CVO) and operating directly in the specified areas. The CVO’s composition is governed by the Voluntary Organisations Act (Chapter 492 of the Laws of Malta).

Tax Credit Incentive

To claim a tax credit, a company must furnish the CVO with necessary information and documents verifying the donation’s eligibility. Furthermore, the CVO must provide written confirmation to the Commissioner for Tax and Customs regarding the eligibility of the listed donations.

Moreover, the tax credit awarded to a company for any assessment year is capped at the lesser of two amounts: either 35% of the total qualifying donations made in the preceding year, as verified and listed, or €500.

Consequently, any tax credit granted to a company for a given assessment year is non-refundable. Companies cannot avail of a credit against the company’s or any other entity’s tax liabilities in different assessment years.