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Save on taxes
You can support charitable causes by making a donation that you can deduct from your tax bill. Read about what you need to consider when making donations and giving money as a gift.
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Doing good cannot always be simply deducted from your taxes. However, this is often the case with donations. Some requirements must be met for you to deduct donations from your taxable income. The most important thing is that only institutions in Switzerland that have a charitable or public purpose can be recipients – the cantons are responsible for deciding which ones. This rule on donations is intended to promote the financing of charitable organizations.
Ensuring only charitable organizations can be recipients means there is a difference between a donation and a simple cash gift. You can give a cash gift to anyone, but you can only make a donation to certain institutions recognized by the cantons, provided that the donation deduction is to be claimed.
In addition to selecting beneficiary organizations, the federal government and the cantons set further guidelines for what constitutes a donation for the donation deduction, namely the type and amount of the donation and proof it was made. If all the requirements are met, the donation can be deducted from taxable income on the annual tax return.
Keep all documents in the event that the tax authorities request them. If you do not have a receipt, you cannot deduct your donation.
Ensure that your gifts really go to a tax-exempt organization. For example, donations to churches can only be deducted if they are specifically made to their charitable foundations. Many cantons, though not all of them, have lists of recognized associations and foundations that you can donate to and thus reduce your tax bill. Look out for the Zewo Foundation quality seal: organizations with the are permitted to issue receipts for tax-deductible donations.
In principle, membership contributions do not qualify as tax-deductible donations. However, tax authorities make exceptions in the case of relief organizations and political parties. Find out what applies in your canton. In contrast, contributions to political parties are a separate category in the tax return and do not count as monetary donations.
Donations are sometimes confused with gifts because both of them involve assets being transferred without consideration. They are similar, but not the same. In the case of gifts, possible recipients can be chosen freely. There are also significant differences from a tax perspective. While charitable donations help you save taxes, recipients of larger cash gifts are actually subject to tax. If you give money to family members, friends or other private individuals, you may incur gift tax. Donations to public authorities and Swiss institutions that serve only public, charitable, or non-profit purposes are exempt from gift tax.
If the recipient does not pay the required gift tax, you may be asked to pay it instead. The tax administration must be notified of gifts exceeding the cantonal tax-exempt amounts by specific deadlines.
The amount of tax due varies depending on the canton in question. The cantons are free to decide how they handle this. It ranges from gifts being fully exempt, for example in the Cantons of Schwyz and Obwalden, to municipality-level provisions on exemptions and tax rates. As a rule, the amount of gift tax depends on the size of the gift and how close the relationship is between the giver and the recipient (in most cantons, gifts between spouses and to children are exempt from gift tax).
In the case of gift tax, the following applies: the closer the relationship between the parties involved, the lower the tax rate.
Only very few of the people who make donations actually reach the maximum limits that they are allowed to deduct. A typical donation to a charity or aid organization is around CHF 100. For many people, making a donation is more about helping a good cause than benefitting from maximum tax savings. Whatever the reason, the amount people donate has increased over the years. In 2023, donations in Switzerland amounted to CHF 2.25 billion.
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