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Can I make donations in kind without adverse tax implications?

Thursday 23/04/2020
Schenking medisch materiaal

TheAdministration published a circular pertaining to temporary measureson 24 March 2020. These are fiscal measures relating to VAT and corporation tax on donations in kind to specific institutions.

This measure was further extended on 21 April 2020 by means of an additional circular letter.

1. VAT

The government has noted that many healthcare institutions in Belgium are facing shortages of certain goods as a result of the fight against the Coronavirus, whilstsome taxpayers are prepared to donate available stocks of these goods to the institutions in question. However, the levying of VAT on a diversion of this kind could be an obstacle to such donations when it comes to identifying potential and actual needs.

Which types of goods does this relate to?

Medical devices and their accessories as referred to in the Royal Decree of 18.03.1999 on medical devices. Such as e.g.

  • any instrument, apparatus, appliance, software, substance or other article, whether used alone or in combination, including the software specifically intended by the manufacturer to be used for diagnostic and/or therapeutic purposes and necessary for its proper functioning, intended by the manufacturer to be used in human beings for the diagnosis, prevention, monitoring, treatment or alleviation of disease; 
  • devices intended for clinical research; 
  • any medical device which is a reagent, reagent product, calibrator, control material, kit, instrument, apparatus, appliance, or system, whether used alone or in combination, intended by the manufacturer to be used in vitro for the examination of specimens, including donated blood and tissue, derived from the human body, solely or principally for the purpose of providing information; 
  • if, due to market shortages, goods are donated at the request of an institution as referred to under point 3 that are to be used as medical devices when they were not originally intended for this purpose by the manufacturer, they will be assimilated to a medical device as referred to in the Royal Decree referred to above.
  • Protective equipment for carers and patients (mouth masks, protective clothing, soaps and grips, ...)  
  • Computers and laptops 

Which organisations can these goods be donated to?

The goods, with the exception of computers and laptops, may be donated to public institutions and other public law bodies (e.g. Federal Public Service Health, police services, emergency zones, prisons) which will be responsible for their further distribution or provision according to the needs. 

To the extent that they have not yet been intended above, goods under this scheme may also be donated directly to

a. health care institutions referred to in the coordinated law of 10.07.2008 on hospitals and other health care institutions, the services of which are normally exempt by virtue of Article 44, § 2, 1°, of the VAT Code; 

b. the following institutions as referred to in Article 44, § 2, 2°, of the VAT Code: 

  • institutions whose purpose is the care of the elderly; 
  • child care centres and infant homes; 
  • institutions for the care of the disabled; 

c. institutions providing school and university education

The goods may also be donated to humanitarian aid organisations to cover their needs for the duration of their intervention during the period in which they provide assistance to persons affected by or at risk of the Coronavirus and more generally to provide emergency services. 

Bodies that, at the time the goods are donated, are recognised by the General Administration of Customs and Excise under which they can import certain relief goods into Belgian territory exempt from VAT and import duties when the European Commission Decision (EU) 2020/491 of 03.04.2020 is applied.  

These institutions can only use these goods to distribute or make them available free of charge to infected persons, persons at risk of being infected or persons or organisations involved in the fight against the Coronavirus. 

The computers and laptops can only be donated to schools and universities.

Who can donate goods?

VAT payers who have purchased or produced the goods where the VAT on the goods or their component parts is entirely or partly deductible

Which VAT obligations do donors have to comply with?

As proof that the taxpayer-donor has donated the goods in question free of charge, a duplicate document should, in principle, be drawn up for each donation made, in which the recipient confirms that the goods in question were obtained free of charge and undertakes either to use the goods in question himself as part of the provision of care or to make them available free of charge to another care institution. 

The document shall contain at least the following information for each donation

a. the date; 

b. the (corporate) name, address and VAT identification number of the taxable donor; 

c. the (corporate) name, address and company number of the beneficiary of the donation; 

d. a complete and correct description of the donated goods; the administration has granted a tolerance for this, i.e. the grouping of donations and the addition of the cash register or the scanning list. 

e. an indication of the quantity of goods. 

The administration accepts that the taxpaying donor may choose one of the two following methods instead of indicating on the aforementioned document the complete and correct description and the quantity of the goods in question per gift: 

a. entry on the above mentioned document of the groups obtained by donation (blankets, mouth masks, respirators, etc.) and the corresponding quantities. This allows several donations to be grouped together. 
b. Attaching the receipt or scan list as an annex to this document. 

In addition, the administration accepts that, if desired, a single collection document will be drawn up by the fifteenth day of each month at the latest, in which all donations of the products concerned of the previous month are included. 

The administration accepts that, in the given circumstances, an entry of this document in the accounts of the taxpayer donor is also not required. 

2. Corporate tax

The assumption will be that the donor has not received any benefit and that the donated goods are acquired solelyfor beneficiary institutions. In such cases the donated goods will not be considered extraordinary or gratuitous advantages. In principle any costs associated with the donated goods shall be tax deductible. The measures referred to above shall only apply providing all VAT related conditions are complied with.

3. Personal income tax

Self-employed persons

For self-employed persons, the same rules apply as for companies, the donated goods are not considered as an abnormal benefit and the costs related to the donated goods are in principle tax deductible.

Tax relief for donations in kind

What does the measure consist of?

The Minister of Finance has decided, on an exceptional and temporary basis, to allow donations in kind to specific institutions to benefit from the tax relief for donations.This is a tax reduction for donations in kind to specific institutions with a value of at least EUR 40 (indexed amount).

The tax reduction is equal to 45 % of the value of the donations in kind actually made.

Who qualifies for these measures?

The tax reduction applies to taxpayers, natural persons subject to personal income tax and, in specific cases, to non-residents/natural persons (1) who make gifts in kind to specific institutions.

Which institutions?

Donations in kind must be made exclusively to Belgian university hospitals, public social welfare centres (including CPAS hospitals) or the Belgian Red Cross. These institutions are included as institutions authorised to issue tax certificates for the donations they receive. 

The computers and laptops can be donated to schools. 

Which donations are involved?

These donations consist of all kinds of medical materials and products used in the fight against the Coronavirus and are considered as such by the institutions. 

These include (non-exhaustive list): mouth masks, disinfectants, Coronavirus test kits, respirators, protective clothing, safety goggles, diving goggles, waterproof ponchos, etc. 

How is the value of donations determined?

The value of donations in kind is determined: 

  • either on the basis of a purchase invoice for the medical equipment or medical products donated. This invoice must be submitted by the donor to the hospital, 
  • or, in the absence of a purchase invoice, on the basis of an estimate of the value of the donated material by the institution receiving the gift. That estimate shall be based on the market value of the goods donated. 

This estimate is based on the market value of the goods donated at 29.02.2020. 

Tax certificate

The hospitals draw up the certificates necessary to allow the taxpayer to claim the tax reduction within the framework of his income tax return (assessment year 2021 - income of 2020). They send these certificates to the tax authorities in accordance with the appropriate procedures.

4. Temporary measure

This measure, taken in the context of the fight against the Coronavirus, applies to donations in kind and to donations of medical supplies made between 01.03.2020 and 30.07.2020. 

For donations of computers to schools, this measure would apply until 1 September. 

If you have other questions regarding the Corona crisis, please visit our special FAQ

Last update: 26/05/2020

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