- Would a corporate legal entity in your jurisdiction be entitled to make a corporate income tax deduction in respect of donations made in favour of a public benefit organisation based in the EU outside of your jurisdiction (“EU PBO”)? Are there restrictions/conditions for such tax deductibility (e.g. maximum cap per annum for the deductibility of the donations, etc)?
- Would an individual in your jurisdiction be entitled to make an income tax deduction in respect of donations made in favour of an EU PBO? Are there restrictions/conditions for such tax deductibility (e.g. maximum cap per annum for the deductibility of the donations, etc)?
- Would an EU PBO be entitled to the same treatment as a national non-profit organisation (charity) in your jurisdiction based on the EU law principle of equal treatment of EU entities? Is an EU PBO obliged to pay gift tax in your jurisdiction if it receives a donation from a donor who is resident in that country?
- Would it make sense to channel the donations from your jurisdiction to a third country-based charitable foundation (in e.g. the US or Ukraine) rather than to an EU PBO?
jurisdiction
1.Would a corporate legal entity in your jurisdiction be entitled to make a corporate income tax deduction in respect of donations made in favour of a public benefit organisation based in the EU outside of your jurisdiction (“EU PBO”)? Are there restrictions/conditions for such tax deductibility (e.g. maximum cap per annum for the deductibility of the donations, etc)?
Yes, a corporate legal entity will be entitled to a tax deduction for monetary donations made to an EU PBO, provided that the EU PBO qualifies as a “public benefit organisation” under the Norwegian Tax Act (the “NTA”), section 6-50.
The gift must be a minimum of NOK 500 (for each recipient), and the maximum tax deduction which may be given is NOK 25,000 (across all qualifying recipients). The amounts may be paid in increments, provided that the EU PBO receives the minimum of NOK 500 over the course of the year. The main condition is that the EU PBO is registered as an approved organisation under the tax scheme, and that the deduction is claimed in the annual income tax return.
2. Would an individual in your jurisdiction be entitled to make an income tax deduction in respect of donations made in favour of an EU PBO? Are there restrictions/conditions for such tax deductibility (e.g. maximum cap per annum for the deductibility of the donations, etc)?
Yes. The same rules and conditions apply as in relation to a corporate legal entity. Individuals should note that the donation to a foreign organisation would not be part of the automatic pre-drafted tax return, and that this amount would have to be added manually upon receiving the first draft tax return in the year following the year when the donation was made.
3. Would an EU PBO be entitled to the same treatment as a national non-profit organisation (charity) in your jurisdiction based on the EU law principle of equal treatment of EU entities? Is an EU PBO obliged to pay gift tax in your jurisdiction if it receives a donation from a donor who is resident in that country?
In principle, yes. The EEA rules on equal treatment would apply. No gift tax would apply to an EU PBO in this instance as Norway does not levy gift taxation on monetary donations for the time being.
4. Would it make sense to channel the donations from your jurisdiction to a third country-based charitable foundation (in e.g. the US or Ukraine) rather than to an EU PBO?
We see no benefit in channelling the donations via the US. In practice, it will be significantly easier to register an EEA recipient organisation than a Ukrainian one for the above purposes.
The general requirements in order to register an EU PBO as a qualified recipient organisation under the Norwegian tax scheme are as follows:
(i) Statement explaining that the organisation does not run a commercial business.
(ii) Statement explaining the type of activity the organisation engages in, and that it falls under approved purposes in section 6-50 (a) to (f) of the NTA.
The following are approved purposes under section 6-50 of the NTA:
- care and health promotion work for children or youth, and for elderly, sick, disabled or other vulnerable groups
- work focused on music, theatre, literature, dance, sports, outdoor recreation, or other similar activities for children and youth
- religious or other philosophical activities
- activities aimed at protecting human rights or providing development aid
- disaster relief and activities aimed at preventing accidents and injuries
- cultural, environmental, nature, or animal conservation work
(iii) Statement and documentation proving that the organisation has a national scope as of 1 January of the year in which the gift is received, e.g. a description of the activity’s scope and location, number of members/donors, and the geographical distribution of these
(iv) Documentation proving that the foundation receives public support in the year the gift is received.
(v) Bylaws including the object and purpose provision and a dissolution/liquidation provision stating that excess funds, in the event of dissolution/liquidation, will go towards the same approved purpose annual financial statements and annual report.
