To encourage people to support public benefit organisations with donations, Latvian legislation supports donors by allowing them to partially recover the amount they have donated. However, there are some specificities: the donation must be made in the correct form so that the State Revenue Service can reimburse part of the money donated when the annual declaration is submitted.
In any case, there is of course no limit to the amount you can donate to charity – it just depends on people’s own means and willingness to participate. However, donations to an official public benefit organisation, i.e. an association or foundation whose public benefit status has been approved by the state, may qualify for at least a partial tax refund. The Latvian Association of the Blind has had this status since 2006. In addition, the SRS will include the donated amount in the total limit of eligible expenses, alongside medical and education costs, which currently total EUR 600 per year for any taxpayer.
According to the explanation provided by the SRS specialists, in order for the donation to be at least partially compensated, it must be made as follows:
1) The money should be transferred to a public benefit organisation (Latvian Society of the Blind or other), indicating in the transfer that it is a “Donation for general purposes”. According to the SRS, only donations made to fulfil the general charitable purposes of the organisation in question will allow you to subsequently recover part of the money as a personal income tax refund. If any specific purpose is stated, this will not work (I understand that there have been cases where donors ask recipients to make a specific “return”, e.g. to commercially promote the donor and their good heart).
2) The following spring, when you submit your income tax return for the previous year, you should also include details of the donation in the same way as for medical receipts: ‘When you submit your annual income tax return for the current calendar year, you may attach any document (e.g. payment order, receipt, etc.), or copies thereof, that shows the amount of the donation and the donor and recipient of the donation. If the document contains all the identifying information, no further explanations or other information need be provided. However, if the State Revenue Service has any questions, our staff will be sure to contact the person submitting the annual income tax return.” The SRS writes in its explanation.
3) However, everyone should note: under the current law, all eligible expenses together (including both medical and education costs and donations made) are capped at €600 per person per year for personal income tax purposes. If the expenses claimed were actually higher, the limit can be automatically carried forward in the electronic return, but currently €600 of eligible expenses can be recovered in one year. In practice, this means that a maximum of €120 will be recovered.
It should be noted that these considerations apply to cash donations in the form of a transfer, not, for example, donations of property or volunteer work.
Donation account for the Latvian Society of the Blind:
LV87UNLA0050024259179
Information was prepared by: Imants Liepiņš