Tax relief on charitable giving: how to get part of your gift back

An individual who pays income tax has the right to include in the tax relief the amount of funds or the value of property transferred as donations or charitable gifts to non-profit organisations. The provision is subparagraph 166.3.2 of paragraph 166.3 of Article 166 of the Tax Code.

The amount is limited: no more than 4 percent of the total taxable income for the reporting year. That is, it is not a refund of the whole gift but a reduction of the base from which your tax was calculated.

And right away a limit worth knowing before you count: the amount of tax relief cannot exceed the annual total taxable income accrued as salary. That is, the mechanism works for those who receive a salary.

The first condition is about the organisation: it must be registered in Ukraine and entered in the Register of Non-Profit Institutions and Organisations on the date of the transfer of funds or property. Not “entered at some point”, but exactly on that date.

The second condition is about documents: copies are submitted together with the tax declaration of property status and income. If the expenses are confirmed by an electronic payment document, it is enough to state its details in the declaration, and no copy needs to be attached.

A simple rule follows from this: keep the receipt or the payment service's confirmation right away, rather than searching for it in your email a year later. This applies especially to monthly gifts, where there are twelve such documents.

The grounds for relief are shown in the annual tax return, which is submitted up to and including 31 December of the year following the tax year being reported. That is, for this year's gifts the return is submitted by the end of next year.

And separately, the thing for which people lose money: if the payer has not used the right to claim the relief by the end of the following year, this right is not carried over to subsequent tax years. The provision is subparagraph 166.4.3.

That is, a missed deadline is not “I'll do it later” but a lost sum. No one will send you a reminder about this deadline.

The declaration of property status and income is submitted in electronic form through the Taxpayer's Electronic Cabinet at cabinet.tax.gov.ua, and also through the Diia portal.

Some of the fields are filled in automatically: from the payer's registration data, from information on received income in the State Register of Individuals, and from data on property. This takes away most of the work.

If you have never filed a return, the longest step is not filling it in but the electronic signature. It is worth getting it in advance, not on 30 December.

Since the register condition applies to the date of the transfer, it makes sense to check before the gift, not after. The Register of Non-Profit Institutions and Organisations is kept by the tax authorities, and it can be looked up in the open part of the Electronic Cabinet at cabinet.tax.gov.ua.

The easiest way to search is by EDRPOU code. While you are at it, it is worth checking the very existence of the organisation in the Unified State Register of Legal Entities: a free search is at usr.minjust.gov.ua.

Our details for such a check, including the EDRPOU code and non-profit code, are collected on the transparency page. It is the same check we advise making of any fund, including us.