Cross-border Philanthropy in Europe

I came across a blog recently from Guidestar International which was commenting on a conference held in December last year at the Academy of European Law concerning cross-border philanthropy in Europe. For a long time now, national barriers and complicated legal and fiscal frameworks across Europe have not only provided little incentive for donors to give to other countries, but in some cases, has made it very difficult.

Giving overseas is not free at all in many countries because income tax deductibility is not granted for donations made by individuals and corporate donors to foreign beneficiaries and cross-border donations, while legacies are frequently taxed at the highest applicable gift and inheritance tax rates.

Having researched giving in Europe more and more over the past year (trusts and individuals), the one question I’ve been asking myself is when is this situation likely to change? It seems ridiculous in this age of globalisation that we can purchase goods from anywhere in the world, but we can’t give our money away to charities in other countries. Well, that’s not strictly true, but we just wouldn’t get any tax benefits (which let’s face it, can be a huge incentive if you’re wealthy and the tax man likes taking a big bite anyway).

Well it seems at last that the shackles of European law on philanthropy is beginning to change. The Academy of European Law, together with the European Foundation Centre, the King Baudouin Foundation, Transnational Giving Europe and the Fondation Fournier Majoie pour l’Innovation held a conference in Brussels in December to highlight ways in which the existing hurdles to cross-border philanthropy in Europe can be overcome, notably through the creation of a European Foundation Statute.

Sounds exciting I know, but as with most conferences, you’re never quite sure whether the outcome is largely rhetoric or an actual action plan. Unfortunately, the answer to that question may have to wait as there isn’t any post-conference material yet available (that’ll be the lawyers writing everything up in complex long sentences no one can understand).

Still if you want to take a look at the conference programme or press release, click here. If you’re really into your law, you can check out two cases which are considered legal milestones in the development of cross border giving – The Stauffer Case and the more recent Hein Persche v Finanzamt Lüdenscheid  case.

While it seems that the law is beginning to realise the importance of cross-border philanthropy, in Germany they’re paving the way for legal reform. In December 2009 the German Government issued a law proposal, which would introduce the tax deductibility of cross-border donations. The draft law now needs to pass Parliament (Bundestag) and second chamber (Bundesrat), which is expected to happen in the coming weeks. The law proposal can be downloaded here.

This German initiative follows law revisions in other EU Member States such as France, Luxembourg, Bulgaria, Slovenia, Poland, Finland, Denmark, The Netherlands, which have recently introduced the tax deductibility of cross-border donations if they are given to “comparable” organisations.

So to the future then, and it looks like at long last that the barriers to cross-border philanthropy are beginning to be eradicated after years behind bars. Let’s just hope Germany passes the law and other EU countries swiftly follow to allow philanthropy in Europe to thrive and give all of us involved in fundraising more opportunities (and challenges)!

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