Cross-border donations: a decision by the Brussels Court of Appeal opens up prospects for foreign associations
The judgment of 9 February 2023 of the Brussels Court of Appeal could open up prospects for donations by Belgian residents to institutions in a non-EU or EEA country.
Foreign institutions can only benefit from the tax reduction provided for in Article 145-33 ITC 92 if they are established in the EEA and meet the equivalence conditions provided for by law. They are not required to be recognized in Belgium.
Do non-EEA institutions (including UK after Brexit) which are therefore excluded, have other ways of receiving deductible donations? So far, the answer has been no.
It should be remembered that in order to be authorized in Belgium, an institution must have legal personality and be established in Belgium (Article 63/18/1, § 3, 1° Royal Decree/ITC 92). But what is meant by "established in Belgium"?
This is the question answered by the Court of Appeal, which pointed out that in the case submitted to it, the Peruvian association did have legal personality and had applied for recognition in Belgium. The Court specified that "being established in Belgium" does not mean "having its registered office there" or its "principal establishment", as claimed by the tax authorities. It is sufficient to have an establishment or an office. In this case, this condition was met, since the State found that the association had legal personality and allowed it to open an "operations centre" in Belgium. The Court therefore ruled in favour of the association.
Approval procedure or equivalence test? Legal systems of some other EU countries
Most European countries have introduced a recognition procedure allowing local associations to receive tax deductible gifts.
Some Member States have extended the possibility of using this procedure to foreign bodies (including those outside the EEA), provided that such bodies have an establishment in their territory and certain conditions are met. This is the case for Sweden and Italy. The decision of the Court of Appeal leads to a solution comparable to that provided for by the legislation of these two countries.
In the Netherlands, the law provides for a recognition procedure (ANBI status "Algemeen nut beogende instelling" institution for public benefit). This procedure is open to all foreign organizations. To benefit from this status, it is not necessary to have an establishment on Dutch territory, nor in the EU, but a few conditions must be met. Obtaining the "ANBI" status is the only way for an organization located in an EEA Member State to allow its donors resident in the Netherlands to benefit from tax deductibility.
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