Recently, the Donations to Voluntary Organisations Rules, 2024 (the “Rules”) were published by means of Legal Notice 86 of 2024.  The ultimate aim of the Rules is to encourage and incentivise companies to make donations to enrolled voluntary organisations that operate in the field of social, environmental or animal welfare by granting them a tax credit, and also to increase the amount of donations granted to such organisations.  

Under these Rules, when a company makes a donation to which these rules apply, and when that donation has been listed and confirmed as provided in rule 5 of the Rules, the company shall be entitled to a tax credit for the year of assessment in question in respect of that donation.

To which donations do the Rules apply?  They apply to cash donations made by companies on or after 1st January 2024 to voluntary organisations that are enrolled with the  Commissioner for Voluntary Organisations (the “CVO”) in accordance with the Voluntary  Organisations  Act, Chapter 492 of the Laws of Malta and operating directly in the field of social, environmental or animal welfare.

If a company intends to claim a tax credit it must provide the CVO with such information and documents as the CVO may deem necessary to be satisfied that the said company has made a donation to which these Rules apply.

Rule 5 of the Rules states that the CVO shall send to the Commissioner for Tax and Customs by not later than the end of January of each year (or such later date as may be agreed between them), a list of companies which would have proven to his satisfaction that in the year immediately preceding the year of assessment commencing on 1st January of that year, they made donations to which these rules apply.  Together with the said list, the CVO shall send to the Commissioner for Tax and Customs a confirmation in writing that it is satisfied that the donations listed therein have been made and that those donations are donations to which these Rules apply.

The tax credit which may be given to a company for any year of assessment shall be the lesser of the following 2 amounts:

1. 35% of the total of the donations made by it in the year immediately preceding that year of assessment, to the extent that they have been listed and confirmed as aforesaid; or
2. €500.

It is important to note that no part of a tax credit which may be given to a company for any year of assessment, shall be refundable or given as credit against the tax on the income of that company for any other year of assessment or the tax on the income of any other person.

Authors: Christine Borg, Rebecca Micallef