The Bundesfinanzhof (BFH) has decided that a monetary donation can be deductible, even if it was shown as a donation in kind. In the specific case, there was also the problem that the money was not paid to the tax-advantaged institution and the donation contained a specific earmarking. We explain how the BFH argues.

The distinction between a monetary donation and a donation in kind is relevant. This is based on the fact that the special requirements applicable in the case of a grant in kind according to § 10b III S. 1 to S. 4 EStG can be checked. Therefore, in particular the valuation of the donation in kind can be checked. On the other hand, this check is not necessary for monetary donations.

According to the BFH, a monetary donation should even be deductible, even though it is shown as a donation in kind. In the case, a woman had made a donation to a shelter, which was to finance the accommodation costs of a dog in a commercial animal board. The donor had handed over the money directly to the animal board. Subsequently, the animal shelter had issued a grant confirmation about a donation in kind for the service provided. The subject of the donation, however, was the acceptance of a claim to be fulfilled in money. This was a financial contribution and not a grant in kind. The reason for this is that the object of the donation was the expiration of a claim to be fulfilled in money. Therefore, the animal shelter had wrongly issued the grant confirmation via a donation in kind.

According to § 50 (1) EStDV, donations are generally only deductible if a donation confirmation is available. However, the BFH has now decided that the grant confirmation issued according to official model text for a donation in kind does not prevent the deduction possibility of the monetary donation. This only requires that the certificate contains all the necessary information. This includes the amount allocated, the intended purpose, the tax-advantaged status of the recipient of the donation and the time of the donation. All this information is essential for the deduction of a monetary donation. In addition, the special conditions for donations in kind do not have to be checked for monetary donations. Therefore, it cannot make a difference whether the donation was declared as a donation in kind or as a monetary donation.

Another problem is that the donation of money went directly to the animal board. The tax office was of the opinion that the money first had to be paid to the animal shelter and not immediately to the animal board. Since the money was paid directly to the commercial animal pension, there is no contribution to promote tax-advantaged purposes. The shelter only served as a transit point, as it had no right of decision regarding the use of the money. The BFH objected to this. He pointed out that the money paid a claim of the animal pension against the animal shelter. Accordingly, the donor has paid the debt of the animal shelter. This has saved the animal shelter expenses. Therefore, it does not matter that the money first went to the animal pension.

Furthermore, the tax office argued that a monetary donation may not be provided for a specific purpose. This is against the fact that the animal shelter does not have to accept the donation. It therefore also has the right of final decision. In addition, the legislator assumes that tax-advantaged recipients will also use the donation for tax-advantaged purposes. Such recipients can also fulfill this task if the donation is intended for purpose. The actual use for tax-advantaged purposes can also ensure in this case, since he does not have to accept the earmarked donation. Therefore, he retains the right to decide whether he wants to promote tax-advantaged purposes. In addition, the recipient is liable for the lost tax if he at least grossly negligently issues a donation certificate for a donation that is to be used for non-tax-advantaged purposes. Therefore, BFH assumes that purpose limitation is not harmful as such.