Sponsorship and charity: tax features

The concept of charity

The concept of charitable activity is contained in Federal Law No. 135-FZ and is understood as providing “disinterested (free of charge or on preferential terms)” assistance to those who need it.

Assistance can be provided in the form of a voluntary “transfer of property, including funds, to citizens or legal entities, disinterested performance of work, provision of services, and provision of other support.” In addition, voluntary donations are permitted by Article 582 of the Civil Code of the Russian Federation.

Performers and characters

Article 5 of Law No. 135-FZ defines the concept of participants in charitable activities. These are recognized as philanthropists, volunteers and beneficiaries.

Philanthropists are persons who disinterestedly, that is, free of charge or on preferential terms:

• transfer of ownership of property, including funds and (or) intellectual property;
• granting the rights of ownership, use and disposal of any objects of property rights;
• performance of work, provision of services.

Philanthropists have the right to determine the purposes and use of their donations.

Beneficiaries are persons who receive charitable donations from philanthropists or the help of volunteers.

Volunteers are citizens who carry out charitable activities in the form of free labor in the interests of the beneficiary, including in the interests of a charitable organization. A charitable organization may pay the expenses of volunteers associated with their activities in this organization (travel expenses, transportation costs, etc.).

What are the goals of charitable activities?

Please note that the goals of charitable activities are enshrined in law. Their list is given in Art. 2 of Federal Law No. 135-FZ and looks like this:

• social support and protection of citizens, including improving the financial situation of low-income people, social rehabilitation of the unemployed, disabled people and other persons who, due to physical or intellectual characteristics or other circumstances, are not able to independently realize their rights and legitimate interests;
• preparing the population to overcome the consequences of natural disasters, environmental, industrial or other disasters, and to prevent accidents;
• providing assistance to victims of natural disasters, environmental, industrial or other disasters, social, national, religious conflicts, victims of repression, refugees and internally displaced persons;
• promoting the strengthening of peace, friendship and harmony between peoples, the prevention of social, national, and religious conflicts;
• promoting the strengthening of the prestige and role of the family in society;
• promoting the protection of childhood, motherhood and paternity;
• promoting activities in the field of education, science, culture, art, enlightenment, spiritual development of the individual;
• promoting activities in the field of prevention and protection of citizens' health, as well as promoting a healthy lifestyle, improving the moral and psychological state of citizens;
• promoting activities in the field of physical culture and sports (with the exception of professional sports);
• environmental protection and animal welfare;
• protection and proper maintenance of buildings, objects and territories of historical, religious, cultural or environmental significance, and burial sites;
• training the population in the field of protection from emergency situations, dissemination of knowledge about protecting the population and territories from emergency situations and ensuring fire safety;
• social rehabilitation of orphans, children without parental care, street children, children in difficult life situations;
• providing free legal assistance and legal education to the population;
• promoting volunteerism;
• participation in activities to prevent neglect and juvenile delinquency;
• promoting the development of scientific, technical, artistic creativity of children and youth;
• promoting patriotic, spiritual and moral education of children and youth;
• support for socially significant youth initiatives, projects, children's and youth movements, children's and youth organizations;
• facilitating activities for the production and (or) distribution of social advertising;
• assistance in the prevention of socially dangerous forms of behavior of citizens.”

At the same time, sending money and other material resources, providing assistance in other forms to commercial organizations, as well as supporting political parties, movements, groups and campaigns is not charitable activity. It is also prohibited to conduct pre-election campaigning or explanatory work on referendum issues simultaneously with charitable activities.

Concept and goals

In accordance with N135-FZ dated 08/11/1995. The definition of charitable activity means selfless provision of assistance to those who need it. Assistance can be expressed in the provision of sums of money, in free services, in the donation of food and other goods, in the performance of work at one’s own expense.

The same regulatory act specifies the goals of charitable activities:

1. Material assistance, social rehabilitation and support for citizens who are unable to independently defend their rights due to various life circumstances.
2. Providing assistance to the population in eliminating the consequences of natural disasters, accidents, catastrophes and in their prevention.
3. Support for victims of various types of disasters, military operations, repressions, religious and national oppression.
4. Activities to preserve and strengthen the peaceful interaction of peoples.
5. Participation in the formation of public opinion about the values ​​and role of the family.
6. Assistance on issues of protection of children and parents.
7. Providing assistance to children left without parents and guardians.
8. Assistance in the development of education, science, art and culture.
9. Activities aimed at promoting a healthy lifestyle, the need for disease prevention, physical education and sports.
10. Support for children's and youth organizations.
11. Promoting the moral education of the younger generation, the development of children's creativity, and the formation of patriotism among young people.
12. Assistance in the creation and distribution of social advertising.
13. Assistance in legal education of the population.
14. Activities related to the protection of culturally and naturally significant objects and territories.
15. Help with environmental protection and animal welfare.

In other words, gratuitous assistance must be aimed at good, socially and naturally significant goals in order to be considered charity.

Transferring funds or providing free services to commercial organizations, political parties and activist movements is not considered charitable activity. Also, gratuitous assistance to social institutions cannot be a tool in political struggle during election campaigns.

Who is involved in charitable activities?

Individual citizens or organizations that provide charitable assistance, as well as recipients of this assistance, take part in charitable activities. The legislation divides participants in charitable activities into three categories: philanthropists, volunteers, and beneficiaries.

1. Philanthropists are persons who carry out charitable activities in the form of “disinterested (free of charge or on preferential terms) transfer of ownership of property, including funds, provision of services to charitable organizations for the purposes of charitable activities.”
2. Volunteers are “individuals who carry out charitable activities in the form of gratuitous work or provision of services (volunteer activities).”
3. Beneficiaries are persons who receive assistance from philanthropists and volunteers.

Both private and legal entities can participate in charitable activities.

To encourage charitable activities, in addition to the Federal Law of August 11, 1995 N 135-FZ “On Charitable Activities and Charitable Organizations,” our state has adopted a number of tax regulations that provide tax benefits to taxpayer organizations and individual taxpayers. Let's look at their pros and cons.

Charitable foundation: legal aspects

Charitable organization is a general concept for specially created associations engaged in charity. According to the Law “On Charitable Activities and Charitable Organizations” dated August 11, 1995 No. 135-FZ, charitable organizations must be non-profit, without the participation of the state or its subjects. They can be created in the form:

• public organizations (associations) - Art. 6 of the Law “On Non-Profit Organizations” dated January 12, 1996 No. 7-FZ;
• funds - art. 7 of Law No. 7-FZ;
• institutions (if the founder is a charitable organization) - Art. 9 of Law No. 7-FZ, etc.

Charitable organizations must maintain accounting and reporting in accordance with paragraph 1 of Art. 19 of Law No. 135-FZ. The annual report must be publicly available; it is also submitted to the body that made the decision on state registration of such an organization, and to the tax authority (clauses 2–3 of Article 19 of Law No. 135-FZ).

What is a charitable foundation (hereinafter - CF)? This is a non-profit organization (NPO), which can be established by citizens or legal entities through voluntary contributions for charitable purposes (Article 7 of Law No. 7-FZ). The CF is the owner of the property that was transferred to it as contributions by the founders. The goals of the charitable foundation must be stated in the charter. The Board of Trustees is the main body of the Charitable Foundation.

Income tax

Current tax legislation requires organizations engaged in charitable activities to provide assistance to those in need only from net profits. In this regard, organizations are not exempt from paying income tax on amounts that were allocated to charity.

So, by virtue of paragraphs. 16 and 34 art. 270 of the Tax Code of the Russian Federation, when determining the tax base, expenses “in the form of the cost of gratuitously transferred property (work, services, property rights) and expenses associated with such transfer”, as well as “targeted deductions made by the taxpayer for the maintenance and management of non-profit organizations statutory activities."

The Ministry of Finance of the Russian Federation believes that expenses incurred by an organization as part of charitable activities do not meet the requirements of Art. 252 of the Tax Code of the Russian Federation and, therefore, cannot reduce the tax base for income tax (see Letter dated April 16, 2010 No. 03-03-06/4/42, Letter dated April 4, 2007 No. 03-03- 06/4/40). However, regional authorities, if desired, can reduce the tax rates at which the charitable foundation is taxed. This right is given to them by Article 284 of the Tax Code of the Russian Federation, according to which the legislative authorities of the constituent entities of the Russian Federation are given the right to reduce income tax rates in the part subject to credit to the regional budget (up to 13.5%) for certain categories of taxpayers.

Good intentions and taxes

General taxation system. Income tax and VAT

If you decide to engage in charity, then keep in mind that you can “do good” solely through pure profit. However, it will not be possible to reduce taxable income for such expenses.

The cost of gratuitously transferred property and expenses associated with such transfer are not taken into account for profit tax purposes in accordance with paragraphs 16 and 34 of Article 270 of the Tax Code. Explanations from the Finance Ministry on this matter can be found in letters dated April 16, 2010 No. 03-03-06/4/42, dated April 4, 2007 No. 03-03-06/4/40. The Russian Ministry of Finance believes that expenses incurred by an organization as part of charitable activities do not meet the requirements of Article 252 and, therefore, cannot reduce the tax base for income tax.

VAT

If the inability to take into account charitable expenses for profit tax purposes reduces your desire to help your neighbors, then we hasten to inform you that the situation in the legislation with value added tax is different.

According to subparagraph 12 of paragraph 3 of Article 149 of the Tax Code, the transfer of goods (performance of work, provision of services) free of charge within the framework of charitable activities in accordance with Law No. 135-FZ is not subject to VAT (exempt from taxation) on the territory of the Russian Federation.

The norm of subclause 12 of clause 3 of Article 149 of the Tax Code of the Russian Federation provides for an exception. When transferring excisable goods to a beneficiary, the benefactor becomes obligated to pay VAT.

To ensure that good intentions do not turn out to be a road to hell for you in proceedings with the tax authorities, be careful when preparing the relevant documents. Discuss in advance with the beneficiary what documents you need to receive from him to submit to the tax office.

To be exempt from VAT, you must submit to the tax authority:

• an agreement for the gratuitous transfer of goods (performance of work, provision of services), concluded by the benefactor with the recipient of charitable assistance;
• copies of documents confirming the fact that the beneficiary has registered goods received free of charge (work performed, services rendered);
• acts and (or) other documents indicating the intended use of goods (work, services) received (performed, provided).

Such a list of documents is given in the letter of the Federal Tax Service of Russia for Moscow dated December 2, 2009 No. 16-15/126825. The same letter states that if the recipient of charitable assistance is an individual, then a document is submitted to the tax office that confirms the actual receipt of goods (work, services) by the specified person.

It is important

From January 1, 2009, the cost of materials is recognized as expenses as they are taken into account, that is, the fact that they are written off for production no longer matters.

VAT benefits

But there is a benefit for philanthropists when paying VAT.

By virtue of paragraphs. 12 clause 3 art. 149 of the Tax Code of the Russian Federation, the gratuitous transfer of goods, works, services, property rights within the framework of charitable activities has been exempt from VAT since 2016. The main condition is that such activities must be carried out in accordance with Federal Law No. 135-FZ and not concern excisable goods.

In order to be able to apply the preferential VAT taxation of charitable donations, certain conditions must be met. As mentioned above, the main one is the provision of charitable assistance only for purposes specified by law.

Let’s say a construction organization carried out work on a free of charge basis to repair a school building and purchase the materials necessary for the repair. These works are exempt from VAT (see Letter of the Ministry of Finance of Russia dated May 10, 2012 N 03-07-07/49). Also, the presentation by the company of gifts to employees retiring relates to business transactions that pursue a goal such as “social support and protection of citizens, including improving the financial situation of the poor,” and are exempt from VAT (see Resolution of the Federal Antimonopoly Service dated July 4, 2012 N A14-2540/2011).

The free transfer of children's gifts to employees of an enterprise for their children in order to promote and strengthen family values, show concern for the younger generation, and promote the protection of motherhood, childhood and paternity is charitable assistance; preferential taxation is applied: the organization is exempt from VAT, since these actions cannot be characterized as the transfer of goods for the taxpayer’s own needs or as an operation for the sale of goods. (see Resolution of the Federal Antimonopoly Service of the Moscow Region dated 04/06/2009 N KA-A40/2403-09).

In addition to meeting its objectives, an organization that engages in charitable activities must document such transactions to qualify for the benefit. An approximate list of documents on the basis of which this can be done was provided by the Ministry of Finance of Russia in letter dated October 26, 2011 No. 03-07-07/66. Tax authorities, assessing the legitimacy of an organization’s claim to preferential taxation of sponsorship assistance, will take into account the following documents:

• an agreement with the recipient of charitable assistance for the free transfer of goods, performance of work, provision of services as part of charitable activities;
• copies of documents confirming the registration of the specified goods, works, and services by the recipient of charitable assistance;
• documents indicating the intended use of goods (work, services) received as part of charitable activities.

If an individual receives charitable assistance, it is sufficient to submit a document confirming the actual free receipt by the citizen of goods, works or services (see letter of the Federal Tax Service of Russia for Moscow dated December 2, 2009 No. 16-15/126825, letter of the Ministry of Finance of Russia dated October 26, 2011 No. 03-07-07/66).

If donations (not necessarily charitable) are made only in cash to non-profit organizations for the implementation of statutory activities not related to entrepreneurship, or to individuals, then there is no need to collect a package of documents at all. Moreover, in this case one should not claim a charitable benefit. The gratuitous transfer of funds in the form of a donation is not recognized as the sale of goods, works, services and, accordingly, is not subject to VAT from the transferring party on other grounds (clause 3 of Article 39, subclause 1 of clause 2 of Article 146 of the Tax Code of the Russian Federation). This position is also confirmed by decisions of arbitration courts (see resolution of the FAS Moscow Region dated January 26, 2009 No. KA-A40/13294-08, FAS PO dated January 26, 2009 No. A55-9610/2008).

And finally, if a benefactor carries out transactions both subject to VAT and exempt from taxation, he is obliged to keep separate records of them (Clause 4 of Article 149 of the Tax Code of the Russian Federation). In this case, the taxpayer develops the procedure for separate accounting of transactions independently and discloses it in the accounting policy.

So, a taxpayer-philanthropist has the right to apply an exemption from VAT on transactions carried out within the framework of charitable activities only if he complies with the above conditions.

Charitable fund and VAT

For VAT, taxpayers are any organizations (clause 1 of Article 143 of the Tax Code of the Russian Federation). The obligation to submit declarations lies with all taxpayers (clause 5 of Article 174 of the Tax Code of the Russian Federation), therefore zero declarations must be submitted even in the absence of taxable transactions.

Why are charitable activities not subject to VAT? If money is transferred free of charge as assistance, then an object of taxation for VAT does not arise according to Art. 146 of the Tax Code of the Russian Federation. If there is a transfer of goods or property rights, then subsection applies. 12 clause 3 art. 149 of the Tax Code of the Russian Federation, according to which such transactions (except for excisable goods) are not subject to VAT. To confirm such VAT-free transactions, you must:

• comply with the goals of the Charitable Foundation in accordance with the charter;
• have documents confirming the free transfer.

If the recipient of assistance is a legal entity, such documents may be an agreement with the recipient, acts of acceptance and transfer. For individuals, you need a document confirming that assistance has been received (letter of the Ministry of Finance of the Russian Federation dated October 26, 2011 No. 03-07-07/66).

CFs that carry out both taxable and non-VAT-taxable transactions are entrusted with the obligation to maintain separate accounting for them (clause 4 of Article 149 of the Tax Code of the Russian Federation), the rules of which are specified in the accounting policy. For purchases for charitable purposes, input VAT is taken into account in the purchase price and is not accepted for deduction (subclause 1, clause 2, article 170 of the Tax Code of the Russian Federation). For purchases for commercial purposes, VAT can be deducted, and sales will be subject to tax assessment.

According to paragraph 5 of Art. 149 of the Tax Code of the Russian Federation, when submitting a corresponding application to the tax authority, it is possible to refuse the VAT exemption for charitable transactions - then you can deduct the corresponding input VAT, which sometimes turns out to be more profitable.

Waiver of VAT benefits

Organizations can voluntarily refuse VAT benefits. This is stated in paragraph 5 of Art. 149 of the Tax Code of the Russian Federation: “refusal from preferential taxation can be carried out only in relation to those transactions that are provided for in paragraph 3 of this article.” In this case, the taxpayer must submit an application for refusal of the benefit to the tax authority at the place of registration no later than the first day of the tax period (year) in which he wishes to refuse the benefit or suspend its use.

Perhaps you have decided to engage in charity work seriously and for a long time and plan to purchase goods for this regularly. In this case, having refused the VAT benefit, in accordance with clause 1 of Art. 172 and paragraph 1 of Art. 171 of the Tax Code, you will have the opportunity to deduct the amount of “input” VAT. Sometimes this is more profitable than the tax exemption itself.

Restore VAT

Do not forget to restore VAT if, as a charitable donation, you transferred property that was previously acquired and used for activities subject to VAT. Obviously, you previously deducted the amount of “input” tax on the specified property.

The obligation to restore VAT follows from the requirement of the norm of subparagraph 2 of paragraph 3 of Article 170 of the Tax Code

The VAT amount should be restored to the amount previously accepted for deduction. In relation to fixed assets and intangible assets, VAT is restored in an amount proportional to the residual value without taking into account revaluations.

However, you have the right to refuse the VAT exemption benefit. In accordance with paragraph 5 of Article 149 of the Tax Code, the taxpayer has the right to refuse this benefit. To do this, you must submit a corresponding application to the tax office at the place of registration. The application deadline is no later than the 1st day of the tax period from which the taxpayer intends to waive the exemption or suspend its use.

It is important to note that you will receive the right not to use the VAT benefit for a whole year. Refusal or suspension of tax-exempt transactions for a period of less than one year is not permitted.

In addition, the refusal or suspension of the benefit will apply to all transactions carried out by you, provided for by one or more subparagraphs of paragraph 3 of Article 149 of the Tax Code. Exemption of any individual transaction depending on who is the buyer (purchaser) of the relevant goods (works, services) is not allowed.

Perhaps you have decided to engage in charity work seriously and for a long time and plan to purchase goods for this regularly. In this case, by refusing the VAT benefit, in accordance with paragraph 1 of Article 172 and paragraph 1 of Article 171 of the Tax Code, you will be able to deduct the amount of input VAT.

"Input" VAT

According to the norms of Art. 170 of the Tax Code of the Russian Federation, the amounts of VAT presented by the seller of goods donated as part of charity must be taken into account in the cost and are not subject to deduction. At the same time, VAT accounting requires that if the goods were originally purchased for activities subject to VAT, and the tax was accepted for deduction, then upon its transfer, the VAT previously accepted for deduction should be restored (paragraph 1, paragraph 2, paragraph 3, Art. 170 of the Tax Code of the Russian Federation). Tax amounts in relation to fixed assets and intangible assets are also subject to restoration in proportion to their residual value without taking into account revaluations.

Thus, if property on which the “input” VAT was previously accepted for deduction is transferred to charity, the tax must be restored in the tax period in which the transaction took place within the framework of charitable activities. In accordance with the procedure provided for in paragraph. 3 pp. 2 p. 3 art. 170 of the Tax Code of the Russian Federation, the restored tax is not included in the cost of the transferred property, but is taken into account as part of the taxpayer’s other expenses, as provided for in Art. 264 Tax Code of the Russian Federation.

Accounting and reporting

Charitable activities on behalf of the organization must be reflected in the accounting records and documented. The gratuitous provision of services and the transfer of goods is actually a donation. Therefore, in accordance with current legislation, it is necessary to draw up an agreement on the provision of charitable assistance, if the amount of costs exceeds 3,000 rubles, in writing.

In addition, an act of transfer of goods or an act of completed work stated in the contract is drawn up. The acts must be signed by the beneficiary.

Expenses for charitable activities in accounting are classified as “other expenses” and are recorded as a debit to account 91, and the transfer of financial assistance is reflected using account 76 “settlements with various creditors and debtors.” In this case, the resulting transactions must reflect a tax liability, since charity expenses are not taken into account when calculating income tax.

Invoice

From January 1, 2014, when performing transactions that are not subject to VAT in accordance with Art. 149 of the Tax Code of the Russian Federation, there is no need to issue invoices, keep logs of received and issued invoices, purchase books and sales books. Changes have been made to clause 5 of Art. 168 of the Tax Code of the Russian Federation and clause 3 of Art. 169 of the Tax Code of the Russian Federation. The mentioned obligations remain for taxpayers who apply tax benefits under Art. 145 of the Tax Code of the Russian Federation. Such persons draw up invoices without allocating the corresponding tax amounts (clause 5 of Article 168 of the Tax Code of the Russian Federation).

Accounting for charitable donations

Organizations that engage in charitable activities are required to reflect this in their accounting records. The general procedure for recognizing expenses in accounting has been established (hereinafter referred to as PBU 10/99).

Paragraph 17 of PBU 10/99 states that the expenses of a business entity are subject to recognition in accounting, regardless of its intention to receive revenue or other income, as well as the form of such expenses (monetary, in-kind and other). All expenses, according to paragraph 4 of PBU 10/99, are divided into:

• expenses for ordinary activities;
• other expenses.

According to clause 11 of PBU 10/99, other expenses include the transfer of funds (contributions, payments, etc.) related to charitable activities, as well as expenses for sporting events, recreation, entertainment, cultural events educational activities and other similar events. Thus, taking into account the provisions of the Chart of Accounts for accounting the financial and economic activities of organizations and the Instructions for its application, approved by Order of the Ministry of Finance of Russia dated October 31, 2000 N 94n, in the accounting records of the organization, the transfer of donations will be reflected using account 91 “Other income and expenses” .

In accordance with clauses 4 and 7, the organization must exclude from the calculation of the tax base for income tax for both the reporting and subsequent periods the costs incurred in connection with the provision of gratuitous charitable assistance. According to this indicator, a permanent tax liability is formed in accounting. The wiring is as follows:

Debit 76 - Credit 51 - funds were transferred in the form of donations; Debit 76 - Credit 41 - goods transferred as part of charitable assistance; Debit 91 - Credit 76 - donation expenses are included in other expenses; Debit 91 - Credit 76 - the cost of goods donated is included in other expenses; Debit 91 - Credit 68 - VAT is charged on the cost of goods transferred free of charge; Debit 99 - Credit 68 - reflects the permanent tax liability on the cost of transferred funds, transferred goods and the amount of VAT.

Charity from a legal entity

Income tax.

When creating the tax base for the Income Tax, no benefits are provided for charitable activities.

Value Added Tax

Direct transfer of funds or property to the beneficiary is not subject to VAT, with the condition that the assistance must be targeted and must not be related to business activities.

Documents ensuring the provision of benefits:

1. Charity agreement. It is drawn up if the recipient of the money must use it strictly for certain purposes.
2. A copy of the beneficiary's charter;
3. A letter from the recipient requesting assistance indicating the goals

Charitable assistance to an individual, upon provision of the following documents:

1. An agreement for the provision of charitable assistance, indicating the specific purpose for which the funds will be used.
2. The act of giving and receiving assistance.
3. Direct payment for goods or services (VAT is included in their price, it is impossible to deduct it).

Filling out a tax return

According to the Procedure for filling out a VAT return, approved. By Order of the Federal Tax Service of Russia dated October 29, 2014 N ММВ-7-3/ [email protected] , transactions that are not subject to taxation (exempt from taxation) are subject to reflection in section. 7 VAT returns. In column 1 on line 010 section. 7 of the declaration reflects the transaction codes established in Appendix 1 to this Procedure. For the gratuitous transfer of goods and/or property rights (for the gratuitous performance of work or provision of services) within the framework of charitable activities, code 1010288 is provided.

Charitable activities of individuals and personal income tax

The tax legislation of the Russian Federation also supports philanthropists - individuals. Article 219 of the Tax Code of the Russian Federation provides that citizens who are philanthropists have the right to a social tax deduction. This means that the taxpayer will be returned part of the funds spent on charity: taxes will be reduced by the amount of social tax deduction in an amount equal to this assistance. That is, he will receive from the budget part of the personal income tax (NDFL) he paid for the year, that is, in fact, 13% of the amount of his expenses for charity.

Who to help

Citizens can count on a reduction in personal income tax if they provide gratuitous assistance to organizations whose activities are socially oriented. So, according to paragraphs. 1 clause 1 art. 219 of the Tax Code of the Russian Federation, a taxpayer has the right to receive a social tax deduction in the amount of income transferred by him in the form of donations to the following organizations:

• charity organisations;
• socially oriented non-profit organizations (for their implementation of activities provided for by the legislation of the Russian Federation on non-profit organizations);
• non-profit organizations operating in the field of science, culture, physical culture and sports (except for professional sports), education, enlightenment, healthcare, protection of human and civil rights and freedoms, social and legal support and protection of citizens, assistance in protecting citizens from emergency situations , environmental protection and animal welfare;
• religious organizations (to carry out their statutory activities);
• non-profit organizations (in the matter of forming or replenishing endowment capital in accordance with Federal Law dated December 30, 2006 N 275-FZ “On the procedure for the formation and use of endowment capital of non-profit organizations”).

According to paragraph 2 of Article 11 of the Tax Code of the Russian Federation, organizations in this case mean all legal entities that are formed in the Russian Federation, as well as foreign legal entities, companies and other corporate entities with civil legal capacity, created in accordance with the legislation of foreign states, international organizations , branches and representative offices of these foreign persons and international organizations established on the territory of the Russian Federation. Thus, if financial assistance was provided to branches and representative offices of Russian organizations, it will not be taken into account when receiving a social tax deduction. Also, if a citizen provides financial assistance directly to an individual, he will also not be able to reduce his tax base.

Charity from an individual and personal income tax

Charitable expenses are included in the list of social expenses and, accordingly, give the right to a tax deduction. Benefits are provided if assistance was provided to a charitable organization in the field of education, culture, science, sports (except professional), healthcare, human rights protection, environmental protection, and religious organizations. All these organizations must have the status of a legal entity, and the transfer of funds must be documented. If assistance is transferred directly to the needy and without confirmation of payment, then benefits for such expenses are not provided.

When making charitable expenses, the correct formulation of the purpose of the payment is very important, since this determines whether benefits will be provided.

To provide charitable assistance and receive benefits, the following documents are required:

• tax return 3-NDFL;
• certificate 2-NDFL;
• payment documents confirming that the money was donated for charitable purposes (receipts, payment orders, bank statements);
• act of acceptance and transfer of property;
• donation agreement.

Other documents may be needed; they are asked to be provided on an individual basis.

Documentary confirmation of the transaction is not required (for example, if the recipient refuses assistance), but then there will be no tax benefits.

No more than 25% of the total amount of income taxed at a rate of 13% is accepted for personal income tax deduction.

In what form to provide assistance?

Tax authorities and financial departments (see Letter of the Ministry of Finance dated March 2, 2010 No. 03-04-05/8-78) believe that in order to receive a social deduction, a charitable donation must be made in cash.

Arbitration courts have a different opinion (see Resolution of the FAS UO dated 08.12.2008 N F09-9086/08-S2, Resolution of the FAS PO dated 28.06.2006 in case No. A12-29703/05-S51). The donation can be made by donating food, in which case the taxpayer retains the right to receive a social tax deduction. To substantiate their position, the courts rely on the norm of paragraph 1 of Art. 582 of the Civil Code of the Russian Federation, by virtue of which “a donation is recognized as the gift of a thing or right for generally beneficial purposes.”

In accordance with Art. 1 of Federal Law N 135-FZ “charity is understood as the charitable activities of citizens and legal entities through the disinterested (free) transfer of property, including money, to citizens or legal entities, the disinterested performance of work, the provision of services, and the provision of other support.”

From the meaning of these norms it follows that the transfer of funds is only one of the possible ways of providing charitable assistance.

In this regard, the tax authorities’ restrictive interpretation of paragraphs. 1 clause 1 art. 219 of the Tax Code of the Russian Federation contradicts paragraph 3 of Art. 39 of the Constitution of the Russian Federation. It says that “in Russia, voluntary social insurance, the creation of additional forms of social security and charity are encouraged.”

How to calculate the amount of deduction and tax refundable

The amount that the taxpayer spent from personal funds is subject to deduction. But the total benefit cannot exceed 25% of annual income, and this limitation generally applies to all expenses related to charity and donations.

However, only income taxed at a rate of 13% is taken into account. Therefore, taxpayers who are non-residents of the Russian Federation, for whom the personal income tax rate is different, cannot take advantage of the social deduction. At the same time, the balance of the social tax deduction for charity is not carried over to the next year. It remains unused.

Example: Citizen A. in 2021 donated 200,000 rubles for the statutory activities of a religious organization. They also received charitable assistance to a non-profit sports organization in the amount of 275,000 rubles.

The amount of the annual income of citizen A. for 2021 before applying all tax deductions amounted to 4,521,000 rubles, including non-taxable personal income tax - 300,000 rubles.

Thus, the total limit for charity and donations is RUB 1,055,250. ((4,521,000 - 300,000) rub. x 25%). The total amount of charity was 475,000 rubles. (200,000 + 275,000).

Since the amount of donations is less than the amount of the possible limit, all of it is taken into account when calculating personal income tax for the year.

How to transfer money to charity

Citizens can transfer their funds to charity in the following ways:

• through the accounting department at the place of work, submitting a corresponding application to the chief accountant;
• from a bank account or in cash through a bank;
• through the cash desk of the organization to which the citizen provides assistance.

Transfer through an organization

An organization that is a citizen’s source of income can transfer funds to charitable purposes only on the basis of his written application. The application can indicate the frequency of transfers, specific amounts or shares (percentages) of wages and other information. And be sure to provide the account details of the beneficiary organization. The application form is free.

In this case, the documents confirming the expenses incurred will be copies of payment orders for the transfer of money for charitable purposes with the bank’s mark on execution. When filling out a payment order, in the “payment purpose” field, you must indicate: “From full name to help the boarding school”, “From full name to carry out statutory activities”. Some tax authorities require, in addition to copies of payment receipts, to also submit a certificate from the organization about the transfers made.

Transfer via bank

If the taxpayer transferred funds from his bank account, then the expenses are confirmed by a bank statement confirming the transfer of funds for charitable purposes.

It is convenient to transfer money through branches of Sberbank of Russia. I draw your attention to the fact that when filling out a document according to form No. PD-4, in the line “name of payment” you should write “transfer of funds for charitable purposes.” A receipt for this form with a bank mark is submitted to the tax authority.

If a citizen deposits money directly into the cash desk of an organization to which he provides financial assistance, then the supporting document will be a receipt for the receipt order indicating the purpose of using the deposited funds. For example: “Charitable assistance for sporting events.”

Charity from legal entities to foundations

Among Russian businessmen, it is more common to provide assistance indirectly to those in need, through specially created structures - charitable foundations, one of which is the St. Petersburg charitable foundation AdVita (For Life). In most cases, this approach is driven by the desire to independently determine the circle of recipients of donations, as well as confidence in controlling costs. After all, a fund that collects and distributes funds, for example, for the treatment of cancer patients, is registered in Russia as an NPO, its activities are regulated by law, and the donor can be sure that his funds will be spent in the targeted manner. Such funds have a staff of employees responsible for searching for projects, and also submit reports to the tax authorities.

Although all charitable organizations, including foundations, are exempt from income taxation within the framework of their statutory activities, they are required to annually submit reports to the tax authorities on the expenditure of funds received as part of charitable contributions. If the Federal Tax Service considers such expenses to be inconsistent with the statutory goals, then all funds received will be recognized as income of the fund, subject to taxation. For example, a charitable foundation does not have the right to buy real estate or make other investments with donors’ money.

As for the charitable organizations themselves, as mentioned above, you can transfer money to a charitable foundation or transfer property only at the expense of your profits, if the taxpayer applies the general taxation system. Taxpayers under the simplified taxation system also cannot reduce their income by amounts of charitable assistance. A closed list of expenses by which organizations using the simplified tax system can reduce the income received is given in Article 346.16 of the Tax Code of the Russian Federation, and charity expenses are not included in it.