Public Benefit and Private Sector Interaction: Why Should You Donate?

Donations are an essential way for individuals and businesses to contribute to society while benefiting from tax incentives. Latvia, Estonia, and Lithuania offer different mechanisms for encouraging donations, but their purpose remains the same – to provide assistance to those in need and strengthen collective well-being.

In Latvia, individuals can recover part of their personal income tax (PIT) by declaring donations as deductible expenses. In 2024, the maximum refundable amount is €120, which will increase to €153 in 2025 due to changes in the PIT rate. Businesses can benefit from three corporate income tax (CIT) relief options, optimizing their tax payments while making a significant contribution to societal development.

Compared to neighboring countries, Estonia and Lithuania provide more favorable tax incentives for donations. For instance, in Lithuania, businesses can double the amount of their donation as a deduction from the CIT base. However, this does not diminish the importance of donations in Latvia. Even without extensive tax incentives, donations play a vital role in supporting healthcare, education, culture, and environmental preservation.

By donating, everyone can make a meaningful contribution, fostering societal well-being and strengthening solidarity. For businesses, donations represent not only financial support but also an opportunity to build stronger relationships with society and support specific causes. For individuals, donations offer a way to help create an environment that benefits everyone.

While tax incentives are an important motivator, the true value of donations lies in their ability to help and drive positive change. Get involved in donation initiatives throughout the year – it’s a practical and symbolic action that fosters unity and prosperity. Together, we can make the world a better place!

Author: Edgars Voļskis, Head of Management and Risk Advisory Department, BDO Latvia
Read the full article here: Public Benefit and Private Sector Interaction: Why Should You Donate?

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