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

See all articles by Sigrid Hemels

Sigrid Hemels

Erasmus University Rotterdam (EUR) - Erasmus School of Law; Lund University School of Economics and Management

Date Written: May 8, 2009

Abstract

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

Hemels, Sigrid, Are We in Need of a European Charity? How to Remove Fiscal Barriers to Cross-Border Charitable Giving in Europe (May 8, 2009). Intertax, Vol. 8-9, pp. 424-435, 2009, Available at SSRN: https://ssrn.com/abstract=1959837

Sigrid Hemels (Contact Author)

Erasmus University Rotterdam (EUR) - Erasmus School of Law ( email )

3000 DR Rotterdam
Netherlands

HOME PAGE: http://www.esl.eur.nl/profile/profiel_metis/1112068

Lund University School of Economics and Management ( email )

Lund

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