Congress gave patrons a boost yesterday with the approval of a new Patronage Law that includes tax reductions for individuals and companies that promote musical, architectural, artistic cultural initiatives with their donations...
With the current regulations, which dated from 1994, although they had been reformed in 2002 and 2014, individuals who gave financial aid to non-profit cultural foundations were already entitled to deductions when making their income statement.
The first 150 euros had a deduction in the IRPF quota of 80% and the rest of the donation had a discount of 35% also in the tax quota. With the new law, which has been promoted by the PDeCat, it will be the first 250 euros of the donation that will enjoy an 80% deduction. And the rest of the amount contributed will have a 40% tax relief, according to what Sergi Miquel, the PDeCat deputy who has promoted the legislative reform, explained to La Vanguardia.
Something similar happens when companies make contributions to non-profit cultural entities. Until now, these donations enjoyed a 35% deduction in the Corporate Tax fee. When the new Patronage Law comes into force, that discount will rise to 40%.
"The tax situation of faithful donors is also improved," adds Miquel. The law already provided for a "fidelity award" in such a way that if a taxpayer made contributions to the same entity for four years in a row, that fourth year they would get an additional discount of 5%. With the new regulation, this award can be enjoyed for the third year and it will also increase another 5%, that is, the deduction will be 45% for individuals and 50% for companies.
“We have also struggled so that the deductions reach the provision of services. Until now, they were only applied when the donation was in cash, but it is not unusual for, for example, an architectural studio to contribute to the renovation of a museum facility with a project, for a press office to give away a promotional campaign to a artistic entity or that a law firm provides legal advice to a cultural entity for free ”, adds the PDeCat deputy in Congress.
For this reason, the legislative reform has incorporated the idea that services that are not charged are also considered donations and can have the same tax advantages as monetary contributions: "It is like a payment in kind and it will be considered as if it had been donated the equivalent in money”, adds the parliamentarian.
The novelties do not end there, because until now, the law prohibited any kind of consideration for a donation. "This forced entities not to be able to resort to the Patronage Law if they wanted to have some kind of courtesy with patrons, for example, give some tickets to a show or offer a free guided tour."
The new regulations incorporate the idea of consideration and this will allow "beneficiary entities to have a detail with their patron as long as its value does not exceed 15% of the amount donated and with a cap of 25,000 euros per year." This will allow, for example, initiatives such as becoming a friend of a museum to be made more appealing because the art gallery will be able to respond to its partner by giving them a couple of tickets.
Finally, the reform contemplates that entities dedicated to I D I, educating children with high capacities and those dedicated to caring for people at risk of social exclusion can also benefit from these provisions, which was not the case with the current regulation.
The new Patronage Law, which already has the approval of Congress, will now go through the Senate and will enter into force on January 1, 2024, coinciding with the start of the new fiscal year.
