Query results: December, 2020

[updat­ed 2023-01-01]

If you are pay­ing rev­enue tax in Ger­many, the Ger­man fed­er­al gov­ern­ment can sup­port you finan­cial­ly with your dona­tions, in the form of reduc­tions in your rev­enue tax. The process is not par­tic­u­lar­ly com­pli­cat­ed, but not well doc­u­ment­ed in Eng­lish on the Inter­net. Here is how it works, based on my read­ings online, my under­stand­ing, and my own experience.

(I am not a lawyer. I share this infor­ma­tion in good faith. It may not be accu­rate.)

Which donations are eligible?

Dona­tions to non-prof­it orga­ni­za­tions work­ing for the pub­lic good in the Euro­pean Union are eli­gi­ble for tax deduc­tions in Ger­many. Either the orga­ni­za­tion is eli­gi­ble, or it is not; there is no grid or grad­u­a­tion. The gov­ern­ment must con­sid­er every dona­tion you declare for eli­gi­bil­i­ty; it may then accept or refuse them.

Mem­ber­ship fees to non-prof­it orga­ni­za­tions work­ing for the pub­lic good are con­sid­ered as a dona­tion. In gen­er­al, if you receive a dona­tion receipt from the receiv­ing orga­ni­za­tion, it is safe to assume the dona­tion is eli­gi­ble. If in doubt, con­tact the receiv­ing orga­ni­za­tion to check their eli­gi­bil­i­ty sta­tus with them.

How much help will you get?

The sum of your dona­tions is sub­tract­ed from your year­ly tax­able income. The dona­tions will there­fore result in a decrease in both your income tax (Lohn­s­teuer) and sol­i­dar­i­ty tax (Sol­i­dar­ität­szuschlag).

For rel­a­tive­ly small dona­tions (e.g. 100 euros), this means that the amount of help received from the Gov­ern­ment cor­re­sponds to your mar­gin­al tax rate (the tax rate at which the last 100 euros were earned). As a researcher in a pub­lic uni­ver­si­ty, my mar­gin­al tax rate reach­es up to about 35% when work­ing full-time. For my first dona­tion of 200 euros, I get approx­i­mate­ly 70 euros back as a tax deduction.

Deter­min­ing your mar­gin­al tax rate (Gren­zs­teuer­satz) is not par­tic­u­lar­ly easy. The Ger­man mar­gin­al tax rate depends on the tax­able income, an amount which is nei­ther indi­cat­ed in your pay slips, nor on your year­ly tax bul­letin (the Lohn­s­teuerbescheini­gung). The tax­able income (zu ver­s­teuern­des Einkom­men) is your gross income minus a num­ber of social con­tri­bu­tions (retire­ment pen­sions, social secu­ri­ty), minus a stan­dard thresh­old sum. As a researcher in a pub­lic uni­ver­si­ty, my tax­able income is close to 80% of my gross income when work­ing full-time.

The mar­gin­al tax rate varies con­tin­u­ous­ly with the tax­able income, which has two inter­est­ing con­se­quences. First, the more you earn, and the larg­er the amount of sup­port you receive from the gov­ern­ment. If your income varies with time, then it is in your inter­est to make those dona­tions on the years when you earn the most. Sec­ond, the more you donate, the small­er the amount of sup­port you receive (suc­ces­sive dona­tions are sub­tract­ed from slices of your income which are pro­gres­sive­ly less taxed, e.g. the first donat­ed 5000 euros were taxed at 35%, the next 5000 euros at 32%, and so forth). 

Ulti­mate­ly, dona­tions can only be deduct­ed up to 20% of your tax­able income for any one giv­en year. Dona­tions over that amount are car­ried for­ward to the fol­low­ing years with­out any lim­it in time (this process is automatic).

How is the deduction carried out in practice?

Wait until the fis­cal year is over. Dur­ing this time, your employ­er declares and pays your tax­es for you, assum­ing no dona­tions took place.

Once the year is over, con­nect to Elster, the Ger­man fed­er­al tax web­site. Note that your “Steuer­liche Iden­ti­fika­tion­snum­mer”, which is suf­fi­cient to login, is not your “Steuer­num­mer”, which is not always giv­en to you by the Ger­man admin­is­tra­tion. Car­ry out a mod­i­fi­ca­tion to your tax dec­la­ra­tion. Dona­tions are entered in the rubrics “zur Förderung steuer­begün­stigter Zwecke an Empfänger im Inland” and “zur Förderung steuer­begün­stigter Zwecke an Empfänger im EU- / EWR-Aus­land”.

For dona­tions pri­or to 2017, once your dec­la­ra­tion is com­plete, you must send the orig­i­nal dona­tion receipts to your local tax office (if you only send copies, they will write back ask­ing for the orig­i­nals). For all dona­tions over 200 euros, you must also sent a proof of pay­ment (e.g. an excerpt from a bank state­ment). A short let­ter with your per­son­al infor­ma­tion and a sen­tence sim­i­lar to “Anbei find­en Sie die Belege, die zu meinen Steuer­erk­lärun­gen für 2015 und 2016 gehören” suf­fices. In the case of dona­tions out­side of Ger­many, I like to include a short, half-page descrip­tion of the orga­ni­za­tion to which the dona­tion was made, to help offi­cials assess whether the orga­ni­za­tion qual­i­fies for a tax reduction.

For dona­tions made after Jan­u­ary 1st, 2017, you must be ready to send dona­tion receipts and proofs of pay­ment in case the tax office requests them. There is no oblig­a­tion to send those doc­u­ments spontaneously.

If your dona­tions exceed 20% of your tax­able income, the part of dona­tions beyond that amount (called the Verbleiben­der Zuwen­dungsvor­trag) is car­ried for­ward into the fol­low­ing years. The cal­cu­la­tion is car­ried out auto­mat­i­cal­ly by the fed­er­al tax office. The fol­low­ing year, you sim­ply need to check the tick box that says “Es wurde ein verbleiben­der Spenden­vor­trag fest­gestellt” in your declaration.

The Gov­ern­ment is prompt to act and will issue a refund, togeth­er with a com­plete tax bill sent by paper mail, with­in a few weeks fol­low­ing your dec­la­ra­tion. You can work on tax dec­la­ra­tions for the past five years, declar­ing any dona­tions for which you have kept receipts. The Ger­man gov­ern­ment will treat them equal­ly quick­ly, and even pro­vide inter­est on the refunds from for­mer years.

Conclusion

The sup­port pro­vid­ed by Ger­man gov­ern­ment when you make char­i­ta­ble dona­tions is real­ly sub­stan­tial. It is in prac­tice hard to pre­dict exact­ly the amount of sup­port you will receive. Nev­er­the­less, the amount of required paper­work is small. I hope this can encour­age you to increase dona­tions correspondingly!

In the sum­mer of 2020, I rent­ed a drone and took pho­tos and videos of Magde­burg, Ger­many. The pho­tos are now all pub­lished on Wiki­me­dia Com­mons and some serve to illus­trate Wikipedia arti­cles. I intend to use the videos as dec­o­ra­tive fea­tures in the videos of course in engi­neer­ing flu­id dynam­ics. In the mean­time, I pub­lish them here, under a CC-by license: this means you are free to use them for all pur­pos­es, includ­ing com­mer­cial pur­pos­es, as long as you cred­it me (Olivi­er Cley­nen).
It was a lot of fun play­ing with the drone, and cap­ture shots of my beloved city. The files linked here are 2160p H264 videos embed­ded in Matros­ka con­tain­ers, usu­al­ly less than a minute long.

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