Tax breaks in Ireland for donations to sports clubs

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Tax breaks in Ireland for donations to sports clubs

Tax breaks in Ireland for donations to sports clubs

This is a good way to pay less tax while supporting your local qualifying sports club.

What are the benefits to the tax paying entity and/or club?

Sports clubs can reclaim tax from revenue on behalf of the donor. For PAYE workers, who contribute a minimum of €250 per annum, this contribution is paid from post-tax income and it is this tax payment that is reclaimed by the sporting body. It does not cost the donor anything additional but provides a huge benefit to the sporting body. Section 41 of the Finance Act 2002 provides for a scheme of tax relief for relevant donations to an approved sports body for the funding of approved projects.

How does the scheme work for PAYE Taxpayers?

Example – Donation of €590 per year
A donation of €590 to a club from a PAYE taxpayer will be treated as having being received ‘net’ of income tax. This means that a donation from an individual who pays income tax at the higher rate of 41% is worth an additional 72% to the Club. The amount received by the club is calculated as follows:

– Donation / Cost to Donor € 590
-Tax rebate reclaimed by club € 410
-Club receives € 1,000

The individual PAYE donor must complete an “Appropriate Certificate” and forward it to the approved sports body, to allow it to claim the grossed up amount of tax associated with the donation.

How does the system work for self-employed tax payers?

If an individual pays any tax under the self-assessment scheme they can claim tax
relief on the amount themselves.
For example, an individual who pays income tax at the higher rate of 41% contributes a sum of €1,000 to the club, the value of that donation to the Club is €1,000 and the actual cost of the donation to the individual may be calculated as follows:

– Donation received by the Club €1,000
– Tax relief available to the donor € 410
– Actual cost of donation to the donor € 590

Scheme as it relates to Company Directors:
In the case of a company donation, the company is allowed to claim a deduction for the donation as a trading expense. An example would be as follows – a company makes a donation of €2,000 to a club, the value of that donation to the Club is €2,000. However the cost of that donation to a company that pays tax at the 12.5% rate may be calculated as follows:

– Donation received by the Club €2,000
– Tax relief available to the donor € 250
– Actual cost of donation to the donor € 1,750

Additional information

– The minimum qualifying total donation amount by a single donor in any year is €250.
– Donations made in instalments qualify for Tax Relief.
– Where sufficient tax has not been paid to cover the donation made, the refund of
tax will be limited to the amount of the tax actually paid by the donor
– The donations must be in the form of money and must not be repayable.

How to proceed:
Complete the form: Application for Approval of a Sports Capital Project for Tax Relief Purposes

This is available as a PDF from the revenue website
www.revenue.ie

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