Let it flow: Italian charities seek end to spending cap on 5 per mille tax relief

Italian fundraisers have proposed major changes to a system that lets taxpayers divert a small share of their income tax to charities and other bodies.

The proposals come from L’Osservatorio ASSIF, a body set up by EFA member Associazione Italiana Fundraiser (ASSIF).

Italian residents completing a tax return can choose to divert small amounts of their tax payments to specific groups or causes:

• The 8 per mille (0.8% of tax owed), either goes to particular religious groups, or is allocated to government funds for specific social or humanitarian causes
• The 5 per mille (0.5%) goes to a specified nonprofit or community organisation
• The 2 per mille (0.2%), which is given to a specified political party

The 5 per mille option was taken up by 18m people or 42% of taxpayers in 2024, benefitting 97,000 organisations.

L’Osservatorio ASSIF’s five proposals are:

1. Scrap the spending cap on the 5 per mille

The 5 per mille is subject to an annual limit set by the Government. This means that €560m of intended donations have been held back from charities since 2006. L’Osservatorio says that Italy’s cap is unique among countries with this sort of scheme, and wants it removed or changed significantly.

2. Let charities know their supporters

Recipients of 5 per mille money only learn how many signatures they got, but not from whom. L’Osservatorio points to Slovakia, where taxpayers can choose to share their name and address with the charity.

3. Make the cultural 2 per mille permanent

An additional 2 per mille specifically for cultural associations was introduced into law in 2016. Although pilots were run, it has still not been made permanent.

4. Open the system to companies

In Slovakia and Spain, businesses have this option open to them. L’Osservatorio notes that Spain’s Casilla Empresa Solidaria allowed companies to direct €84m to nonprofits in 2024.

5. Support fundraising development

L’Osservatorio notes that nearly 14% of eligible nonprofits receive no donations, and asks for broader support to enable these organisations to improve their fundraising. It also asks for changes to rules so that 5 per mille recipients can spend these funds on promoting their own campaigns, which they currently cannot.

The organisation says that Government must face up to the large difference between the amount pledged to charity, and the amount actually given. It comments:

“Every year in which this gap widens, citizens’ trust in the instrument erodes, and with it, broader trust in the institutions’ ability to listen to and respect the decisions of those who fund them.”