Save tax with expense donations
Many people engage in voluntary work in clubs and associations, organisations, and churches. This applies to board members, club members, freelancers, and other service providers. They not only volunteer their time and effort but also cover related expenses themselves. If you have a contractual or statutory claim for reimbursement of expenses and waive it, you can claim your expenses as so-called expense donations and at least receive a tax refund from the tax office (§ 10b para. 3 sentences 5-6 EStG). Currently, the Federal Ministry of Finance has revised and tightened the rules for expense donations (BMF letter dated 25.11.2014, BStBl. 2014 I p. 1584):
- The tax authorities generally assume that voluntary members of a club work without payment for the club and provide their services without a claim for reimbursement of expenses. HOWEVER, you can refute this assumption. For example, a voluntary conductor of a music club, who does not receive a fee for their work, may at least have their travel expenses to rehearsals and performances reimbursed. The same applies to a sports club coach.
- You must have a legal claim to reimbursement of expenses from the club, allowing you to request reimbursement of your expenses from the club. This claim must be granted through the club's statutes, an agreement, or a legally valid board resolution, provided the board is authorised to do so by a regulation in the statutes. This "statutory authorisation" is new and only required for new establishments from 2015. A verbal promise from the club chairman to reimburse costs is no longer sufficient. The claim must be granted before the relevant activity begins.
- You must waive the claim for reimbursement of expenses, unconditionally and promptly. This is the case if the waiver is declared within three months for one-off claims and every three months for regular activities.
If a club established before 1.1.2015 grants reimbursement of expenses based solely on a legally valid board resolution without explicit statutory authorisation, the statutes do not need to be amended solely to grant this authorisation.
An expense donation is not a donation in kind (in the form of self-borne expenses) but a (shortened) cash donation. This is because it is not the expense that is donated, but the monetary amount corresponding to the expense reimbursement. It is not necessary for money to flow between the donor and the club. Therefore, the underlying expense does not need to be specified in the donation receipt, only the corresponding monetary amount. However, the club must document this in its records. The donation receipt must include the following confirmation: "This is a waiver of reimbursement of expenses".
If there is no legally valid claim for reimbursement, the following option is available: Have your expenses reimbursed and then pay them back into the club's account as a cash donation. Ensure that the payout and payment do not occur simultaneously, as the tax office might otherwise assume a sham transaction in accordance with § 42 para. 2 AO and not recognise the donation. In this case, money must actually flow.
