Cap for donor tax relief will harm giving, say Netherlands charities

The Dutch Government’s plans to limit tax deductions for charitable giving could reduce donations and harm charities, says a group of charities.

Currently in the Netherlands, there is no maximum for tax deductibility with donations. However, a new law will cap the deduction of regular gifts at €250,000 per household per calendar year from 1 January 2023.

While an announcement on the Government website suggests that it is “undesirable” for donors’ taxable income to be “greatly reduced or even reduced to zero”, it also says that the new law will impact only a “very small group of taxpayers”.

However, in a letter to the Government 21 charities, co-ordinated by EFA member Goede Doelen Nederland and sent on 27 October, say that this is “a measure that, perhaps unintentionally, will have harmful consequences for the work of charities.”

The letter adds: “Since the group of wealthy Dutch people is responsible for a substantial part of the donations in our country, limiting the donation deduction could therefore mean a substantial loss of donations.”

The letter also cites research showing that 40% of wealthy Dutch people would donate less if the gift deduction level were reduced, and argues that the new rule contradicts the government’s own philanthropy policy.

Opposition politicians were also firmly against the law, according to an article by philanthropy advisor Rien van Gendt.

In a piece in the newspaper Financieele Dagblad, he argued it was essential “that citizens have the freedom of choice to strengthen the public good… the government has no monopoly on public interest”. Van Gendt also expressed a concern that the move could lead to further erosions of the gift deduction rules.

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