Are We in Need of a European Charity? How to Remove Fiscal Barriers to Cross-Border Charitable Giving in Europe
Intertax, Vol. 8-9, pp. 424-435, 2009
18 Pages Posted: 16 Nov 2011
Date Written: May 8, 2009
Most member states of the European Union only grant tax incentives for donations to resident charities. This restricts the free movement of capital and freedom of establishment and results in limiting the choice of donors to domestic charities and limits charities to resident donors in their fundraising. In the Stauffer case and the Persche case, the ECJ has forbidden this restriction. However, not only did most member states not adjust their legislation after the Stauffer case, the ‘host-state control’ solution of the ECJ may in fact still make it impossible for charities to attract funds from different member states. This paper first discusses an alternative solution at a decentralised level: home-state control through mutual recognition. However, it seems unlikely that this solution is politically feasible. Therefore, the paper addresses the question whether some form of harmonisation would be a solution, using the subsidiarity test derived from fiscal federalism theory as a theoretical framework. The application of this test indicates that some harmonisation would be appropriate. The suitable degree of harmonisation (a directive or a resolution) depends on political factors, such as the trust member states have in each other’s supervisory institutions of charities.
Keywords: tax law, free movement of capitial, charities, gift deduction
JEL Classification: K34, H24
Suggested Citation: Suggested Citation