TAX OPTIMIZATION FOR DONATIONS IN SWITZERLAND

With the beginning of the full-scale Russian invasion of Ukraine, citizens of the entire developed civilized world united in providing both humanitarian and financial aid to our country. Therefore, we will consider the most optimal option for such donations.

Donations in Switzerland can be deducted from taxable income if they are given to Swiss institutions for charitable or public purposes. Businesses are subject to the same rules as individuals.

The Swiss cantons determine which organizations are considered charitable and public. Many cantons publish their respective lists of organizations, which are usually also accepted by the rest of Switzerland.

What is considered a charitable purpose or a public purpose?

In tax terms, an organization is considered charitable or public if its statutory or real activity contributes to public welfare. The organization or its members must not pursue any primary personal or economic interests.

How to prove that you made a donation?

Confirmation of donations must be made by the taxpayer. The cantons treat it quite differently. While some cantons only accept donations that are certified as taxable by a donation certificate, others accept stamped payment receipts or bank debit notes. And other cantons accept a list of donations worth up to several hundred Swiss francs.

Up to what amount of donations are subject to deduction?

Switzerland in accordance with Art. 33a of the Federal Tax Act accepts donations to Swiss organizations if they exceed 100 Swiss francs per year and limits them to 20% of the net income of the person concerned. Most cantons follow this federal rule. Exceptions are the cantons of Neuenburg (maximum limit of 5% of net income) and Baselland, which do not define a Maximum.

Exception: donations to political parties.

Switzerland established this in Article 33, para. 1, clause i. Membership fees or donations of up to 10,100 Swiss francs per year are deductible. This is limited to political parties entered in the relevant register of the Swiss Federation, parties submitted to the Land Parliament, or parties that received more than 3% of the cantonal vote in the last election.

Cantons deal with this issue in different ways. In order to avoid trouble, it is advisable to check in your specific case with the relevant tax authority whether a donation to a political party is accepted by the canton.

Can church tax be deducted?

Donations made expressly to national church charities or charities are deductible, while church taxes cannot be found deductible.

Donation recommendation:

If you donate to many different organizations, it can often be difficult to find out if they are tax-accredited. We recommend deducting all donations and then checking the tax assessment to see if they have been accepted. If this is not the case, you can first consult with your tax inspector, and in the "worst case" you still have the opportunity to file an objection and challenge the decision.