Tax treatment of aid

Enterprises have the option of writing off as operating expenses for tax purposes any aid in cash or in kind that they provide in connection with acute disasters at home or abroad. Disasters include natural disasters (e.g. floods, landslides, mudslides, avalanches, snow and storm damage as well as damage caused by wildfires, radiation, earthquakes, rockfalls or falling rocks), technical disasters (e.g. fire or explosion disasters), acts of war, terrorist attacks or other humanitarian disasters (e.g. epidemics, famines, refugee disasters). There is no limit on the possible amount to deduct in this way as a donation. The prerequisite for assessing such expenditures to be operating expenses is that they have advertising effectiveness, i.e. terms of content they do not represent any "benefits" or donations, but rather advertising expenses, and the requirements for defining something as having advertising effectiveness are not too high.

For example, the following things fulfil this criteria:

• media coverage of the donation,
• reporting on the donation in letters to customers or clients,
• donation notices on posters, in displays, at customer checkouts or on the company's website,
• affixing a sticker visible to clients in the business premises or on a company motor vehicle, or
• if the entrepreneur refers to the donations as part of his/her company's self-promotion activities.

For the deductibility of promotional "disaster donations", it does not matter who the recipients are (e.g. aid organisations, municipalities, own employees, other families or individuals).

Further links

Margin note 4836 et seq. of the Einkommensteuerrichtlinien (→ BMF)^{German text} (expert information)

Legal bases

Section 4 paragraph 4 (9) of the Einkommensteuergesetz (EStG)

Donations are, as a rule, not a tax-deductible use of income. However, pursuant to section 4a of the Einkommensteuergesetz (EStG), generous donations for beneficial purposes to beneficiary institutions can be claimed for tax purposes. No advertising effectiveness is required here.

The donations discussed here are deductible both for enterprises (as operating expenses) and for private individuals (as special expenses) up to a maximum of 10 per cent of profits (as operating expenses) or the total amount of income (as special expenses).

It should be noted that, as a rule, only monetary donations are considered beneficial in the case of private individuals, while donations in kind are also considered beneficial in the case of enterprises.

A distinction is drawn between beneficiary organisations that are expressly listed in the law and beneficiaries that have a valid donation benefit notice at the time of the donation and appear in the list of beneficiary organisations on the website of the Federal Ministry of Finance (BMF) (see link below).

The beneficial purposes may include, for example, national and international disaster relief, but also charitable purposes and non-profit purposes such as education, sport, art and culture, development cooperation or environmental, nature and species protection.

In certain cases, beneficiaries of donations are listed directly in the law, such as universities, the Austrian Academy of Sciences, public schools, the Austrian National Library or museums of public corporations. Donations to voluntary fire brigades and regional fire brigade associations are also deductible. In these cases, no entry in the list is required as a prerequisite for the deduction.

Since the year 2017, private donations to beneficiary organisations have been subject to electronic data transmission and are automatically regarded as special expenses in the income tax assessment. This does not apply to donations from business assets.

Further links

• List of favoured donation recipients (→ BMF)^{German text}
• Donations and non-profit organisations (→ BMF)^{German text}
• Margin note 1330 et seq. of the Einkommensteuerrichtlinien (→ BMF)^{German text} (expert information)

Legal bases

Section 4a of the Einkommensteuergesetz (EStG)

Supplying relief supplies by enterprises in the context of national or international support programmes in emergency situations can be treated as non-taxable turnover. The prerequisites for this are:

• That the relief supplies are destined for a country listed in section 5 of the ordinance on VAT relief for aid supplies abroad (e.g. Ukraine).
• Proof is provided that the goods have been transferred to the beneficiary state in accordance with their intended purpose.
• The tax office must be notified of the delivery in advance and a declaration must be made that no VAT will be charged to the customer. This declaration must include the type and quantity of the relief supplies as well as the exact name and address of the recipient of the donation in kind or delivery against payment.

In the case of supplies against payment, it is also a prerequisite that the supply is made to a public corporation or to any corporation, association of persons or asset pool that pursues charitable, benevolent or ecclesiastical purposes and that there is no right to input VAT deduction.

The relief supplies can be provided as part of both domestic and foreign support programmes. Typically, deliveries and donations in kind to domestic charitable organisations (e.g. Nachbar in Not, Rotes Kreuz, Caritas, Diakonie, Volkshilfe, Ärzte ohne Grenzen, SOS-Kinderdorf, UNICEF, Arbeiter-Samariter-Bund) will be subject to a domestic support programme. When the relief supplies are handed over to these organisations for the appropriate purposes of on-site aid (e.g. aid to Ukraine), it must be reasonable to assume that they have been transferred to the country of destination (e.g. Ukraine) in accordance with their intended purpose (obligation to provide evidence). Furthermore, all forms of evidence are acceptable as means of fulfilling the obligation to provide evidence.

Legal bases

• Verordnung des Bundesministers für Finanzen für eine Umsatzsteuerentlastung bei Hilfsgüterlieferungen ins Ausland, Federal Law Gazette number 787/1992
• Charitable, benevolent and ecclesiastical purposes: sections 34 to 47 of the Bundesabgabenordnung (BAO)