Extension of the increased deduction limit for donations to Ukraine until 2026

At the end of October, we informed you about a proposal to extend the increased limit for deducting donations related to the conflict in Ukraine until 2026 (more here). This amendment has now been published in the Collection of Laws and came into force on 11 February 2024.

Laws passed in support of Ukraine allow taxpayers to deduct up to 30% of the tax base for donations made. In addition, these laws also allow flexibility in tax application, as expenses related to the donation can be directly included as tax deductible expenses under certain conditions. This means that the taxpayer can choose whether to use the gift as a deductible item or to claim it directly as an expense reducing the tax base as a tax expense.

The extended increased limit applies not only to future years but also to gifts made in 2024. This means that taxpayers who have already made gratuitous gifts in the previous year can still benefit from the favourable tax treatment. Corporations can apply the increased gift deduction limit for periods ending before February 28, 2027.

In addition, this extension is announced well in advance for the first time, allowing taxpayers to make donations up to the increased limit with the certainty of the validity of that limit. In previous years, the increased limit was always approved after the fact, which created considerable uncertainty for donors as to whether or not the donations made would be deductible.

If you have any questions regarding the application of the gift in your particular case, please do not hesitate to contact the PKF APOGEO Tax team who will be happy to provide you with further information.