The President signed an amendment that significantly expands the options for deducting donations made directly to Ukraine. The new measure concerning donations may be applied retroactively for the entirety of 2022.
For example, it will now be possible to deduct donations to Ukrainian public benefit organisations or Czech and Ukrainian state organisational units (e.g. the Ukrainian embassy) intended to support the defence efforts of Ukraine. On the other hand, direct financial support to refugees who have arrived in the Czech Republic or other non-monetary contributions, such as the transport of refugees from the border, will not be eligible for deduction, the same as before. However, entrepreneurs and companies will be able to deduct such gratuitous non-monetary expenses from their tax base as a tax-deductible expense. The option to deduct the donations from the tax base made for purposes designated by legal regulations in the amount of up to 30% of the tax base has also been extended for 2022.
The new regulations will allow tax deductions of up to hundreds of millions of Czech crowns donated by Czech companies in recent months. This option is likely to help tens of thousands of companies, and it may motivate others to donate. Without this amendment to the regulations, many companies would not be able to deduct their donations from the tax base intended for the direct defence of Ukraine. Thanks to the government’s flexible response, there is likely to be an increase in donations related to this conflict in the coming months, as the donations for such purposes will be deductible in the same way as regular donations.
Overview – how to donate, and what does the amendment change?
Now you can safely deduct
- Monetary contributions to public collections (legal entities) under special legal regulations.
- Donations to public benefit organisations based in the Czech Republic, EU or EEA for social, medical, humanitarian or charitable purposes.
- Donations to Czech municipalities, regions and state organisational units for social, medical, humanitarian or charitable purposes, education, policing, support and protection for young people or fire protection.
- Donations to legal entities (commercial companies) based in the Czech Republic, EU or EEA for social, medical, humanitarian or charitable purposes, education, policing, support and protection for young people or fire protection.
- Donations to individuals residing in the Czech Republic, EU or EEA who are providers of medical services or education at schools or educational institutions.
- Donations to individuals residing in the Czech Republic, EU or EEA who receive a disability pension or who are minors dependent for their care on other persons in accordance with special legal regulations for medical devices not covered by health insurance companies, for special aids not covered by the state budget contributions or for assets facilitating their education and employment.
The amendment will allow tax deductions for the following donations
- Donations to public benefit organisations based in Ukraine for social, medical, humanitarian or charitable purposes.
- Donations to the state of Ukraine (e.g. the Ukrainian embassy) or to Ukrainian local authorities for social, medical, humanitarian or charitable purposes, education, policing, support and protection for young people or fire protection.
- Donations to legal entities (commercial companies) based in Ukraine for social, medical, humanitarian or charitable purposes, education, policing, support and protection for young people or fire protection.
- Donations to individuals residing in Ukraine who are providers of medical services or education at schools or educational institutions.
- Donations to individuals residing in Ukraine who receive a disability pension or who are minors dependent for their care on other persons in accordance with special legal regulations for medical devices not covered by health insurance companies, for special aids not covered by the state budget contributions or for assets facilitating their education and employment.
- Donations to public benefit organisations, municipalities, regions, country or state organisational units (both Czech and Ukrainian) or legal entities based in the Czech Republic, EU, EEA or Ukraine for the support of Ukrainian defence efforts (e.g. donations to the Ukrainian embassy for the purchase of weapons, ammunition or military equipment).
All of the above donations will now also be deductible for tax residents of Ukraine if they file their tax returns in the Czech Republic.
The following donations will not be tax-deductible even after the adoption of the amendment
- Direct donations to any individuals in Ukraine who do not receive a disability pension or who are not minors dependent for their care on other persons in accordance with special legal regulations, for example, direct donations for accommodation, clothing, food, defence, ammunition for specific individuals, etc.
- Direct donations to any individuals who do not receive a disability pension or who are not minors dependent for their care on other persons in accordance with special legal regulations – for example, a direct contribution to a refugee in the Czech Republic for accommodation, clothing or food.
- Donations to employees of Ukrainian nationality for humanitarian or charitable purposes (in the event that such donations are stipulated in an employment contract, collective agreement or internal regulations, they may be claimed as tax-deductible expenses by the employer).
- Non-monetary donations in the form of accommodation provided to refugees (according to the amendment, it is likely that it will be possible to claim such donations not as tax-deductible items but as tax-deductible expenses in the case of entrepreneurs and companies).
- Non-monetary donations such as the provision of services, e.g. transporting of refugees from the border (however, according to the amendment, it is likely that it will be possible to claim such donations not as tax-deductible items but as tax-deductible expenses in the case of entrepreneurs and companies).
