Benefits of the Geefwet (Dutch Cultural Donations Act)
As a Tomoko Mukaiyama Foundation (TMF) friend and donor, you can take advantage of the fiscal benefits offered by the Geefwet, a government stimulus to the Dutch cultural sector. This cultural donations act allows for the application of a ‘multiplier’ (a factor of 1.25), adding 25% to the income tax exemption on the donated sum. This multiplier will remain in force until the end of 2017.
The Tomoko Mukaiyama Foundation is a registered charity organisation with special status as a cultural ANBI (Public Benefit Organisation). The benefits of this status include the following:
– your donation will entitle you to attractive tax deductions – as a rule you will be able to deduct the total sum from your income tax, sometimes with an additional fiscal stimulus (see below) that means you will be donating TMF a sum greater than your net costs.
– TMF pays no gift tax or inheritance tax on legacies received.
The Geefwet makes a distinction between regular and one-time donations. See below for more information.
Single, one-time donations are eligible for limited tax exemption. In order for your donation to qualify for this incentive, it must comprise no less than 1% of your total personal income (the initial 1% being non-deductible) and no more than 10% of your total personal income (you are not permitted to deduct more than 10%). This means that the portion of your total gifts that is greater than 1% of your total income on an annual basis, is eligible for tax exemption (to a maximum of 10%). Using the multiplier you can claim a 25% additional exemption on the total gifted sum, which can be up to €5000. The maximum additional exemption is therefore €1250 in the case of one-time donations.
These constraints in deductibility increase the attractiveness of regular donations.
Regular donations are fully tax exempt. They are not subject to any thresholds or maximum sums. In the case of a regular donation made over at least 5 years, the application of the multiplier factor of 1.25 means you will be able to deduct completely a sum equal to 125% of your donation from your taxable income. As a regular donor, you therefore gain maximum benefit from these tax incentives.
Initiating your regular donation is easy: simply download the authorisation form (in Dutch language) and complete it to fix your regular donation for a period of 5 years or more.
Example calculation for a donation of €200
Suppose that your personal taxable income is €45,000 – meaning that you are in the 42% tax band – and that you want to donate €200 to TMF.
For a one-time gift, the threshold for entitlement to tax exemption is 1% of your income, in this case €450. Your gift of €200 plus multiplier amount (1.25 x €200 = €250) is lower than this threshold and is therefore non-deductible unless you make additional donations to cultural and ANBI organisations that total more than €450. If were to donate an additional €250 to other charities, for example, you would still be eligible for a modest tax exemption (€250 + €250 – €450 = €50), even though your actual donations do not exceed the threshold.
No limitations apply to regular gifts of €200 annually. This €200 multiplied by a factor of 1.25 to add 25% produces a total tax deductible amount of €250. For donors in the 42% tax band, this yields a tax benefit of €105. This means that using the multiplier your annual gift to TMF of €200 made through a regular donation will have an annual net cost to you of only €95 (€200 – €105). Donors in the 52% tax band pay even less, in this case €70 (€200 – €130) per year.
Example calculation for a donation of €1000
Suppose that your personal taxable income is €60,000 – meaning that you are in the 52% tax band – and that you want to donate €1,000 to TMF.
For a one-time gift, there is a 1% threshold for tax exemption, in your case amounting to €600. Applying the multiplier brings the donated sum of €1000 above the threshold by €650 (1.25 x €1000 – €600 = €650). For those in the 52% tax band, this yields a tax benefit of €338, so the €1000 gift will cost you only €662 (€1000 – €338 = €662). However, if you are already donating more than €600 to cultural and ANBI organisations, the entire gift will be deductible and cost you only €480 net.
No limitations apply to regular gifts of €1000 annually. The deductible amount is therefore €1000, increased using the multiplier by 25% to €1250. For those in the 52% tax band, this yields a tax benefit of €650. Using the multiplier, your annual gift of €1000 to TMF through a regular donation will cost you only €350 annually (€1000 – €650).