Danish tax deduction rules for donations to the IRCT
Beginning in January 2012, the Danish tax authorities (SKAT) allows a deduction of 14,500 Kr. for donations to charity organizations, including the total amount of your donation, irrespective whether the sum is paid as one or several donations throughout the year. Previously tax deductions were only allowed for the amount of the donation exceeding the first 500 Kr. This lower limit has been cancelled.
For example, if a person supports three charity organizations X, Y and Z as follows:
- charity X 400 Kr.
- charity Y 500 Kr.
- charity Z 14,000 Kr.
Total: 14,900 Kr.
The max. tax deduction will still be 14,500 Kr., as mentioned above.
Specially favourable tax deduction rules
A gift letter (“gavebrev”) is an agreement with the IRCT about donating a fixed amount of your choice, from at least 50 Kr. per year over minimum 10 years. Such an agreement may result in very favorable tax deduction advantages, and can only be entered if you pay income tax in Denmark. The gift letter expires by death and is not passed on to descendants.
Signing a gift letter agreement implies the following tax deduction advantages:
- The maximum limit for tax deduction due to gift letters is 15% of your total taxable income. For example: if you have a total taxable income of 1 million Kr. and choose to make the most out of the tax deduction rules, you may choose to make a gift letter of the fixed amount of 150,000 Kr. yearly (15% of your taxable income), thus obtaining 150,000 Kr. tax deduction.
- The minimum limit for tax deduction is 15,000 Kr. This means that even though the gift giver has a total taxable income of less than 100,000 Kr., she or he, if donating 15,000 Kr. yearly, will always be able to benefit from deducting this full amount, even though 15,000 Kr. is more than 15% of the gift givers total taxable income.
- Cf. SKAT’s general tax deduction rules for donations to charities, your total contribution is deductable from your income tax without any lower limit.
How do you get tax deduction?
Reporting your donation to SKAT is the obligation of the IRCT (you are no longer allowed to do so yourself). For this purpose, we need your name and CPR number, which will be used exclusively for informing SKAT of your donation. You can inform Donor Service by e-mail DonorService@irct.org, by calling (+45) 33.76.06.00, or by adding your CPR number on signing up for NETS (PBS).
