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The Persche case: Removing the barriers to cross-border charitable giving?

Briefing in cooperation with the European Foundation Centre

, 10 March 2009

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This briefing will provide practitioners an opportunity to analyse and discuss the consequences of the European Court of Justice’s judgment of 27 January 2009 in the Persche case (C-318/07).

The value to society of charitable giving and philanthropy is especially great in a time of economic uncertainty. Many EU Member States promote such giving by providing fiscal benefits, for example by allowing donors to deduct the value of their gifts from their tax returns. In most cases, however, such benefits are extended only to donations made to charitable or public-benefit organisations within the Member State concerned.

In the Persche case (C-318/07), a German national sought to deduct the value of a significant donation of linen and toys he had made to a public benefit foundation in Portugal. The German tax authorities rejected this application in line with German law because the beneficiary was established outside Germany. Mr Persche challenged this decision and the German court referred the case to the ECJ.

The Court ruled that the German authorities’ refusal to grant the same fiscal benefits to cross-border charitable donations as to domestic ones contravenes the principle of free movement of capital. The case raises a number of key questions, in particular how national tax authorities determine whether a beneficiary of a cross-border donation in another Member State is equivalent to an institution benefiting from tax-deductible status in the Member State of the donor.

The briefing will explore these issues in detail, including how certain Member States ? notably the Netherlands ? have already addressed them. It will also consider what role a European Foundation Statute, on which the European Commission published a feasibility study on 16 February 2009, might play.

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