Tax incentive for individual income tax donations
- Piva Advogados
- May 27, 2024
- 2 min read
Individuals resident in Brazil can make a donation in their DIRPF and receive a discount. Remember that the declaration must be filed by May 31st.
As announced by the Brazilian Federal Revenue Service (RFB), individuals who are tax residents in Brazil have until May 31 to submit their respective Individual Income Tax Returns (DIRPF). The declaration will cover asset movements throughout 2023, as well as a snapshot of assets and any liabilities as at December 31, 2023.
In addition to the usual issues associated with the DIRPF, the federal tax incentives legislation offers an opportunity for taxpayers who use the full tax return model: the possibility of donating part of the income tax due to projects in the cultural, social, sports and health areas, or to projects approved by the Funds for the Rights of Children and Adolescents and the Funds for the Rights of the Elderly.
These donations can be deducted from the income tax due by the donor, respecting the established limits which vary according to the time of the donation and the project chosen.
How to Donate:
When filing the tax return: When filling in the DIRPF, taxpayers can choose to donate directly to one of the registered funds, indicating the desired amount. The IRS program automatically calculates the deduction limit of 3% of the tax due for each fund selected.
Donations Throughout the Year: Donations made during the current year to entities registered in tax incentive programs can be deducted from the tax due in the subsequent year's return. For example, donations made in 2024 can be deducted from the income tax declared in 2025, with a limit of up to 7%, depending on the project benefiting.
The deduction limits vary according to the area of the project or entity benefiting, and can range from 1% (for the health area) to 3% or 6% (for other areas), reaching 7% for sports and para-sports projects.
To encourage this practice of high social impact, the Brazilian Federal Revenue Service has drawn up a Guide detailing the stages of the procedure for allocating income tax when filling in the DIRPF and declaring donations made throughout the year.
Consult here: GOV.BR - chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.gov.br/receitafederal/pt-br/centrais-de-conteudo/publicacoes/passo-a-passo/destinacao-de-imposto-de-renda.pdf
Take this opportunity to contribute to projects that make a difference and deduct part of your income tax. Don't leave it to the last minute and file your tax return now!
OTHER SOURCES: GOV.BR
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