Spain has developed a tax incentive system for patronage that, while not as sophisticated as those of some other European countries, still offers substantial advantages for individuals and legal entities that support initiatives of general interest.
Law 49/2002, of December 23, on the tax regime for non-profit entities and tax incentives for patronage provides the main legal framework in this area. It offers tax benefits to both donors and recipient organizations.
Thanks to this regime, individuals and companies can obtain significant tax reliefs on their annual tax returns for making contributions— either in cash or in kind —to qualifying institutions, such as foundations, NGOs, universities, museums, or public cultural projects, among others.
What is considered patronage?
According to Article 17 of Law 49/2002, the following actions qualify for tax incentives :
- Monetary donations of goods and rights.
- Membership fees to associations, as long as they do not entitle the member to specific benefits.
- The establishment usufructs or free use of movable and immovable property, rights or securities.
- Donations of assets belonging to the Spanish Historical Heritage to museums.
How are donations valued?
To calculate the applicable tax reliefs, the value of the donation must be determined, since this value forms the basis for the relief :
- Monetary donations: They are valued at their amount in euros; if made in a foreign currency, the official exchange rate applies.
- Donations in kind: They are valued at their net book value (if the donor is subject to keeping accounting records) or by the provisions of Law 19/1991, of June 6, on Wealth Tax.
- Usufructs:
- On real estate: 2% annually of the cadastral value
- On securities: based on the annual income they generate
- In general: by applying the legal interest rate to the value of the usufruct by the Royal Legislative Decree 1/1993.
- Transfers of use: Based on the expenses incurred during the transfer period (excluding taxes and financial costs).
What tax advantages are available?
For resident individuals (Personal Income Tax – IRPF)
Donors subject to IRPF are entitled to the following deductions :
- 80% on the first €250 donated annually to the same entity
- 40% on the remaining amount
- 45% in the case of multi-year donations (for at least three consecutive years to the same entity for the same or a higher amount).
Example : A one-time €1,000 donation to a foundation under Law 49/2002 allows for a tax relief of €200 for the first €250, plus €300 for the remaining €750 – a total saving of €500.
For donations to foundations or public utility associations not covered by Law 49/2002, the deduction will be 10%.
Limitation: The total tax relief may not exceed 10% of the taxable income (after reductions) on the IRPF return.
For companies and permanent establishments (Corporate Income Tax – IS)
Legal entities may apply :
- A 40% relief of the donation amount
- A 50% relief if the donation is during three consecutive fiscal years to the same entity and for the same or a higher amount.
Limitation: Tax Reliefs may not exceed 15% of the company’s taxable.
Beyond the fiscal benefit, patronage can be part of the company’s Corporate Social Responsibility (CSR) or Environmental, Social and Governance (ESG) strategy, enhancing its public image.
For non-residents without a permanent establishment (Non-Resident Income Tax – IRNR)
Non-residents subject to IRNR who do not operate through a permanent establishment in Spain may apply the same tax reliefs as resident individuals. These must be included in returns relating to taxable events occurring in the year following the donation.
Limitation: The tax relief base may not exceed 15% of the taxable income reported during that period.
Practical considerations
- Donations in kind may generate taxable capital gains for the donor.
- However, Law 49/2002 exempts income derived from donations, gifts, and other gratuitous contributions.
- To apply the special tax regime, donors must obtain a donation certificate from the beneficiary entity.
Conclusion
Tax incentives for patronage in Spain foster collaboration between private entities and civil society. Whether driven by personal conviction, reputational strategy or fiscal optimisation, more and more individuals and companies are embracing patronage as an effective and value-aligned tool for impact.
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