Donations to nonprofit organizations outside Germany remain a focal point of donation law. The German Federal Fiscal Court (BFH) has now ruled in the case of a Swiss foundation that while a tax deduction of donations might basically be possible, it failed in this specific case due to a lack of documentation.
What is particularly noteworthy is that, despite Section 10b(1), Sentence 2, No. 3 of the German Income Tax Act (EStG), the BFH leaves open the possibility of a donation deduction for entities in third countries.
The introduction of the new charity register in 2025 further complicates the situation. We explain what this means for nonprofit organizations and donors.
Proof of charitable status in Germany
In the case at hand, a German taxpayer made a substantial donation to a Swiss foundation in 2017. Crucially, in 2017 – that is, before the introduction of the charity register – the old donation law still applied. Under that law, the donor was required to prove that the foreign organization met all German requirements for charitable status.
The tax authorities denied the donation deduction because Switzerland is neither an EU nor an EEA member state and the requirements of Section 10b(1), sentences 3–5 EStG (administrative assistance, recovery assistance, domestic connection) were not met. However, contrary to many expectations, the BFH first examined whether the foundation was substantively and formally charitable within the meaning of the German Fiscal Code.
Here, the foundation lacked clear statutory purposes, proper proof of activities, and documentation regarding actual management. Thus, the tax deduction of donations failed at the very basic requirement: the verifiability of charitable status.
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It is worth noting that the Federal Fiscal Court left open the question of whether the general exclusion of donations from third countries under Section 10b(1), sentence 2, no. 3 EStG is truly compatible with the free movement of capital – meaning it could theoretically have ruled differently if all the evidence had been available.
German donation law and the drafting of articles of association
The BFH clarified that donations to foreign entities are subject to the same strict requirements under nonprofit law as those applicable to German institutions.
This means that two sets of evidence are crucial:
1. Formal compliance with the articles of association (Section 60 of the German Fiscal Code)
The articles of association must clearly indicate the purposes the organization pursues and how these are achieved. In the case in question, however, there was a lack of clear information regarding charitable purposes as well as exclusivity and directness. The articles of association also referred to a set of “rules,” which were not submitted. Consequently, it was not possible to verify whether the foundation actually pursued tax-privileged purposes.
2. Substantive compliance with the articles of association and actual management (Section 63 of the German Fiscal Code)
For foreign donations, the donor must provide evidence of actual management – e.g., through activity reports, statements of use of funds, or financial documents. This was not possible because the foundation did not disclose internal documents. A pie chart in the annual report naturally did not meet the BFH’s requirements.
The ruling expressly states:
The German legislature is not required to recognize a foreign charitable status. The only decisive factor is whether the entity would qualify as a nonprofit under German law.
New legal framework with the charity register since 2025
For donations made before 2025, nothing will change: The donor must provide all supporting documentation, even if the foreign organization is not permitted or unwilling to issue it. In practice, this is often impossible to fulfill.
However, a completely new legal framework applies starting in 2025: With the introduction of the charity register, donations to foreign countries will only be tax-deductible if the foreign organization is listed in the registry. This replaces the donor’s previous obligation to provide proof – but at the same time effectively and significantly restricts the possibility of claiming a tax deduction for donations to third countries.
For nonprofit organizations and donors, this means: If a donation is to be made abroad, it must be verified early on whether an entry in the German charity register is possible and whether the entity can even meet the German requirements regarding articles of association and actual management.
Comprehensive consulting on German donation law
Are you a foreign nonprofit organization looking to receive donations from donors based in Germany in the future? If so, you may be wondering whether registration in the new charity register is possible and advisable. We are happy to assist you with the application process and provide comprehensive advice on all requirements of German donation and nonprofit law so that your organization can generate donations from Germany in a legally compliant manner.
Our NPO Team is happy to assist you with any questions regarding charitable status, donation law, and grant law.
BFH, Judgment of October 1, 2025, X R 20/22
