Tax relief on charity donations

The Israeli government want to encourage you to donate and support charitable organizations in Israel. To do so, they introduced a tax relief on charity donations for individuals and companies. So, if you donate money to an Israeli approved charity, you’ll be eligible to get a deduction on your tax bill.

How much is the tax relief on charity donations?

Individuals – can claim 35% of the amount donated. Companies can claim 23% (2020) of the amount donated. For companies, the relief will always be at the same rate as corporation tax.

So, if an individual donates ILS 1,000 to an eligible charity, they’ll receive a tax credit of (1,000*35%) ILS 350.

If a company donates ILS 1,000 to an eligible charity, they’ll receive a tax credit of (1,000*23%) ILS 230.

To claim tax relief on donations, to which charities can I donate?

Donations must be made to Israeli organizations and charities. When donating, it is important to check that the organization is approved under “Section 46” of the Tax Ordinance as an eligible charity. Donations to organizations which are not approved will not provide any tax relief for you on your tax bill.  You can check the approval status of the charity on the Tax Authority website here.

How much can I donate in one year?

Whilst you are allowed to donate as much as you wish, there are a few points that should be considered regarding how much tax relief you’ll be eligible to receive.

– Charitable donations can reduce your tax liability to zero but will not create a negative liability. Therefore, if you donate to charity when your tax liability is already zero, the Tax Authority will not refund to you part of the donations made.

– Your total donations during the tax year must be at least ILS 190 (2020) for you to be eligible to make a tax relief claim.

– There is an upper limit to how much charitable donations you can claim relief on:
      –  Donations up to 30% of your taxable income, and
      –  Total donations not more than ILS 9,350,000 (2020)

Tip – if you donate too much in one year, you can use the unclaimed relief for up to three years following the tax year.

Read: The Osek Patur Guide

Israeli tax relief on charity payments abroad

Generally, you will only be eligible to Israeli tax relief on donations made to Israeli charities. However, if you have foreign incomes, you can sometimes claim Israeli tax relief for charity payments made to organizations which are recognized in the country where your income is earned. For more information, don’t hesitate to get in touch with us.

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