ABSTRACT
In many countries, donations to philanthropic organisations are rewarded with a tax incentive that reduces personal income tax liability. However, a tax incentive does not always apply when a donation is made to a foreign philanthropic organisation.
Depending on the cross-border situation, it might be possible to obtain a tax benefit for donations made across borders. Countries can allow a tax benefit on a cross-border donation in several ways. One example could be through legislation in the donor’s country, a tax treaty, or a supranational agreement, for example, relying on the fundamental freedoms in the European Union. Furthermore, philanthropic organisations can use workarounds that circumvent the cross-border situation, such as using a foreign organisation or a giving intermediary.
In theory, these, along with associated tax incentives, are effective in facilitating foreign donations. However, in practice, not all are as efficient. This chapter discusses the experiences of philanthropic organisations, specifically arts organisations, with respect to existing options for tax-efficient cross-border giving. It highlights the challenges arts organisations face when relying on these options. The giving intermediary is currently considered the best solution, until the time comes when legislation enables tax-efficient cross-border giving based on home country control.
