Advocaten / Avocats / Lawyers

Tuesday, 28 April 2020

In what situations and under what conditions can I donate goods for charity, without negative VAT consequences?

:: UPDATE - 17/06/2020 :: 

When VAT payers donate goods, this can have adverse tax consequences. As far as VAT is concerned, this may mean that VAT has to be paid on a "fictitious" supply (withdrawal) or on an alleged sale of these goods (legal presumption). Over the years, the position of the VAT legislator/administration has eased somewhat in this respect.

Under the generally applicable rules, subsequent donations/gifts should not have a harmful VAT impact:

  • Goods donated in exceptional circumstances to victims of a disaster. At present, however, we have no indication that the VAT administration will regard the Covid-19 crisis as a disaster, which makes this path anything but certain.
  • The donation of food/drinks (excluding spirits) of which the expiry date is very close or of which the usual packaging is damaged to needy persons, the food banks registered with the Belgian federation of food banks, the local or supra-local authorities (such as CPAS and municipalities) and the local charities recognised by the aforementioned local or supra-local authorities.
  • The donation to recognised charities or distribution platforms of essential non-food products including essential hygiene products such as soap, shampoo, toothpaste and toothbrushes; beauty and basic care products such as cleaning creams, razor blades and shaving foam; basic medicines for the home pharmacy such as aspirins, bandages and disinfectants; household products such as floor cleaners, laundry products and garbage bags; products for babies and small children such as diapers, appropriate soap and shampoo; school and office supplies such as ballpoint pens, pencils and book bags; in addition, toilet paper and disposable towels; games and toys; clothing and shoes; kitchen utensils such as cooking pots and pans and basic household utensils such as household linen.

Specifically in the context of the COVID-19 crisis, it was decided not to require a VAT correction in respect of certain gratuitous supplies to certain organisations that are made between the 1st of March 2020 up to and including the 31st of December 2020. This arrangement concerns more specifically:

  • The donation of medical equipment and medical devices for diagnostic and therapeutic purposes, clinical research and in vitro research, as well as protective equipment for healthcare providers and patients to hospitals and care institutions (all institutions qualifying under the VAT exemption for hospital and medical care, including hospital groups, associations and networks). We note that this special scheme is limited and, for example, cannot be applied to the donation of such goods to retirement homes; and
  • The donation of computers by a VAT-taxable person to schools located in Belgium.

If your company is considering a donation, it should be carefully considered whether you can qualify under one of the aforementioned categories in order to avoid negative VAT consequences. 

Finally, it is important that the VAT taxable donor who has enjoyed the right of deduction for the above-mentioned donated goods keeps the necessary documentation. The current regulations provide for different possibilities to do this per transaction (per donation a document, collection document, specific entries, etc.). It is important to pay sufficient attention to this in order to avoid discussions during future audits.

If you have any questions on this subject, please contact the authors of this article or via covid19@tiberghien.com.

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