Questions and Answers

What is the tax position with making donations to charity?

I run my own business and would like to make a donation to a charity. What is the tax position when making donations?

There are 2 scenarios to look at when considering the tax position on making donations to charity;

PAYE workers or self-employed individuals
Companies

1. PAYE workers or self-employed individuals

If you are a PAYE worker or you are a self-employed individual, and you contribute more than €250 to a charity, the charity you donate to can get some extra money back from tax you have already paid. The extra amount the charity can reclaim is set at 31%. You will need to contact your chosen charity and give them some of your information so that they can get this extra money back. Let’s look at the below example:

Lucy, a standard-rated taxpayer, makes a donation of €250 to the Red Cross. On top of this €250 the Irish Red Cross is also allowed to reclaim €112 (€250 x 31/69). Provided Lucy pays income tax of at least €112, the charity can obtain repayment of that amount.

Lucy fills in this form and sends it into the Red Cross to make sure they can get the extra money from the Revenue Commissioners.

2. Companies

Limited companies can claim a normal trading deduction so long as they donate at least €250. So, the donation will go through your accounts in the same way printing or any other expense would.

Date published 9 Mar 2022 | Last updated 9 Mar 2022

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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