‘Payroll Giving’ Popular with Neighbors: Can you also donate to a charitable cause in a tax-efficient way? | My guide

Giving salaries, also known as a “salary donation” or “wage donation”, is a type of illegal benefit that first appeared in the United Kingdom in the 1980s. The idea is simple and the implementation is very successful: employees are given the opportunity through which their employer must donate a portion of their salary directly to a charity of their choice, without any hassle or additional administration, before their wages are taxed. Because you don’t pay gift tax, you donate more.

Why do people choose to donate through their paycheck? It’s a simple, organized and automated way to make a difference as a person. There is no need to worry about this, and for the charity in question, it is very important that the cash flow is consistent and not a one-off. In the US and UK it is Giving salaries Fixed value. Recent figures from the British Association of Payroll Donor Organizations confirm the huge popularity: more than a million employees will be involved in the scheme by 2022. This has resulted in £134 million (€155 million) of financial support being provided to various charities.

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Giving salaries It has now leaked to the Netherlands. In our neighboring country, for example, employees can donate tax-deductible through The Social Handshake, an Amsterdam startup that now partners with thirty charities. The company has already raised 1.1 million euros from employees of more than a hundred companies. Donated funds go directly to causes like the Red Cross or UNICEF, because the employer pays for Social Handshake to make this possible — and easy. Some companies are also doubling the donations made by their employees.

Founder Sandra Van Best hopes The Social Handshake will become as popular as bike rentals, for example. According to Dutch platform De Ondernemer, millennials and Gen Z employees are currently fans of the concept, but since companies are so committed to their employer brand and want to offer great benefits to attract people, there’s a good chance it will continue to advance in the Netherlands.

According to Sandra Van Best, he wins Giving salaries It is also gaining popularity in France and Belgium, but at first glance there is not much to note. You’ve probably never heard anyone talk about that. The agreements concluded by Van Best with the Dutch tax authorities are not available to us. In the Netherlands, different rules apply regarding the extent to which a donation is tax-deductible – which is why filing payroll may be more interesting there than in our country.

This is understandable. The current Belgian system already makes donation affordable. In Belgium, you must donate at least €40 per calendar year and per association to qualify for a 45 percent tax reduction. As a result, you will only pay €22 at the end of the trip, while the charity will receive €40. If you want to read more about exactly how this works, you can take a look at the Federal Public Service (FPS) Funding website.

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