1. Would a corporate legal entity in your jurisdiction be entitled to make a corporate income tax deduction in respect of donations made in favour of a public benefit organisation based in the EU outside of your jurisdiction (“EU PBO”)? Are there restrictions/conditions for such tax deductibility (e.g. maximum cap per annum for the deductibility of the donations, etc)?
    1. Ordinary regime (non-RUNTS entities) – Art. 100 of the Italian Tax Code (T.U.I.R.) 
    2. Special regime (RUNTS entities) – Art. 83 of Legislative Decree No. 117/2017 
  2.  Would an individual in your jurisdiction be entitled to make an income tax deduction in respect of donations made in favour of an EU PBO? Are there restrictions/conditions for such tax deductibility (e.g. maximum cap per annum for the deductibility of the donations, etc)?
    1. Ordinary regime (non-RUNTS entities) – Art. 10 and Art. 15 of the Italian Tax Code (T.U.I.R.) 
    2. Special regime (RUNTS entities) – Art. 83 of Legislative Decree No. 117/2017 
  3.  Would an EU PBO be entitled to the same treatment as a national non-profit organisation (charity) in your jurisdiction based on the EU law principle of equal treatment of EU entities? Is an EU PBO obliged to pay gift tax in your jurisdiction if it receives a donation from a donor who is resident in that country?
  4.  Would it make sense to channel the donations from your jurisdiction to a third country-based charitable foundation (in e.g. the US or Ukraine) rather than to an EU PBO?

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Donations made in favour of non-profit entities gives, to a corporate legal entity, the right to a detraction from the corporate income taxable base under two different regimes, depending on whether or not the beneficiary non-profit entity is registered in the National Register of Non-profit Entities (i.e. “RUNTS entities”, established by Legislative Decree No. 117/2017). 

Ordinary regime (non-RUNTS entities) – Art. 100 of the Italian Tax Code (T.U.I.R.) 

In respect of donations made in favour of entities that pursue specific meritorious purposes provided by law (e.g. education, instruction, charity, social or health care), corporate legal entities are entitled to a detraction from the taxable base for a total amount not exceeding 2% of the declared income taxable base. 

According to Italian Tax Authorities guidelines (Tax Ruling no. 76/2002), this tax detraction is also applicable to donations made in favour of non-resident entities if it can be proven that they are compliant with the conditions required by Italian legislation for comparable resident non-profit entities, such as: 

  • articles of association specifically providing for (among others) the following requirements: 
    • institutional purpose of the entity 
    • non-profit nature of the same 
    • devolution of the assets in case of extinction or liquidation in favour of similar non-profit entities
    • management of funds as well as the functioning of different corporate bodies  
  • registration in an appropriate register of non-profit entities in the country of residence.

Special regime (RUNTS entities) – Art. 83 of Legislative Decree No. 117/2017 

In respect of donations made in favour of RUNTS entities, corporate legal entities are entitled to a detraction from the net taxable base for an amount up to the limit of 10% of the declared total taxable base. Moreover, any amount exceeding the 10% can be detracted from the total taxable base of the following fiscal years (not exceeding the fourth). 

According to Italian Tax Authorities guidelines (Tax ruling no. 406/2021), these special rules are applicable for donations made in favour of non-resident entities as well, as long as they are registered in the RUNTS which assumes that all conditions for registration are met (almost similar to those better specified under the first bullet point above). 

2. Would an individual in your jurisdiction be entitled to make an income tax deduction in respect of donations made in favour of an EU PBO? Are there restrictions/conditions for such tax deductibility (e.g. maximum cap per annum for the deductibility of the donations, etc)?

An individual’s donations made in favour of non-profit entities gives the right to a detraction from the income taxable base or from income tax under two different regimes, depending on whether or not the beneficiary non-profit entity is registered in the RUNTS. 

Ordinary regime (non-RUNTS entities) – Art. 10 and Art. 15 of the Italian Tax Code (T.U.I.R.) 

In respect of donations made in favour of those entities that pursue specific meritorious purposes provided by the law, individuals may benefit from a: 

  • detraction from the net income taxable base: this depends on the nature and scope of the non-profit entity specifically identified by law provisions; there is no specific provision allowing detraction from the income taxable base related to non-profit organisations or charity foundations in general 
  • detraction from personal income tax: a detraction is allowed from income tax for an amount equal to 26% of the donation – up to EUR 30,000 of disbursement – made in favour of non-profit entities pursuing inter alia humanitarian and social purposes. 

As far as donations made in favour of comparable non-resident entities are concerned, the same rules and principles stated above are also applicable (see Q1, Ordinary regime). 

Special regime (RUNTS entities) – Art. 83 of Legislative Decree No. 117/2017 

In respect of donations in cash or kind made in favour of RUNTS entities, individuals may alternatively benefit from a:  

  • detraction from the personal net income taxable base: within the limit of 10% of the declared total taxable base. Moreover, any amount exceeding the 10% can be detracted from the total taxable base of the following fiscal years (not exceeding the fourth) 
  • detraction from personal income tax: for an amount equal to 30% of the donation (35% if the donation is made in favour of a volunteer organisation), up to EUR 30,000 of disbursement. 

As far as donations made in favour of comparable non-resident entities are concerned, the same rules and principles stated above are also applicable (see Q1, Special regime). 

3. Would an EU PBO be entitled to the same treatment as a national non-profit organisation (charity) in your jurisdiction based on the EU law principle of equal treatment of EU entities? Is an EU PBO obliged to pay gift tax in your jurisdiction if it receives a donation from a donor who is resident in that country?

In case of registration in the RUNTS, the EU entity would be treated the same as an Italian entity. In any case, the EU Law principle of equal treatment of EU entities should be applied. 

Donations made in favour of non-profit entities that pursue certain purposes (such as education, instruction, social, charity or healthcare) are expressly excluded from gift tax also in the case such donations are made in favour of non-resident entities, provided that they pursue the purposes mentioned and that they are EU- or EEA-based. 

Entities registered in the RUNTS are expressly excluded from gift tax as well. Even though there are no Tax Authorities guidelines on the matter, there should be sound arguments for non-resident entities registered in the RUNTS, including non-EU or non-EEA entities, to benefit from gift tax exclusion based on the same principles already established for direct taxes (see above), since no territorial requirement is specifically provided in this regard. 

4. Would it make sense to channel the donations from your jurisdiction to a third country-based charitable foundation (in e.g. the US or Ukraine) rather than to an EU PBO?

Under respect of the conditions set out above, except as specified with reference to gift tax under Q3, no particular items arise in case donations are channeled from Italy to an EU/EEA or non-EU/EEA-based resident.