Gift for Christmas? Not unless the EU changes the rules
This gifting season is a time to reflect on the joy of giving and the good we can do for others, wherever they may be; European and national policymakers would do well to take a New Year’s resolution to encourage a growing interest in donating to good causes far from home by extending the benefits of the European Single Market to philanthropy.
Along with the rapid (pre-Covid) growth in international trade and travel, cross-border cash flows have exploded during this century – unless you want to give it away.
Wealth gaps are widening in this interconnected world, making it even more vital to open new avenues for global philanthropy. Yet even in Europe, EU legislation aimed at removing barriers to transnational donation has yet to materialize.
The European Commission’s social economy action plan, published on December 9, offers a promising start.
Vice-President Margaritis Schinas acknowledged that “philanthropic organizations still face financial, legal and fiscal constraints in order to take full advantage of the single market”.
The EU executive is now planning guidance to clarify existing rules on the taxation of cross-border donations in Europe and on the obligation of member states not to discriminate against EU citizens and legal persons.
Recognition of the role played by philanthropy is welcome. More must now be done to dismantle national obstacles to the free flow of donations to good causes.
The economic crisis, increasing irregular migration, climate change and now the pandemic, have all put unequal pressures on communities – and have testified to the willingness of the people of our continent to reach out and help those most affected, however distant they may be.
Here in Brussels, we at the King Baudouin Foundation of Belgium aim to play our role in enabling cross-border donations – through Transnational Giving Europe, a network of European philanthropic institutions, and globally in a new partnership called Myriad.
But governments could do much more to facilitate international giving, which can offer speed, innovation, and diversity that complement state-funded aid efforts.
The situation is abnormal.
In the two decades leading up to the pandemic, international tourist travel and expatriate populations nearly doubled, global trade tripled, and daily currency exchanges around the world quadrupled. As with people and goods, money has traveled the world like never before.
Thickets of national regulations
Yet little has been done to reduce the thickets of national regulations governing philanthropy. Indeed, new obstacles have arisen.
These are ordinary citizens. The very rich have legal and accounting help to overcome obstacles.
Millions of more typical donors face enormous frustrations – well-intentioned but complex national legislation covering taxes, terrorism and money laundering in particular – not to mention governments in some places, making it more difficult for their families. citizens to accept donations from abroad, citing fears of hostility “foreign agents”.
We, the philanthropic institutions, can help. Inspired by TGE in Europe, KBF launched in September a global partnership called Myriad.
It enables individuals and organizations in Europe, North America, Asia and Australia to donate in nearly 100 countries simply, efficiently, and with legal and fiscal clarity. The intention is to forge sustainable global communities of support.
It may however seem surprising that the Myriad model, born in Europe, is still necessary here in the EU “without borders”. Charitable giving is a notable absentee from the single market for goods, services, labor and capital. If you want to donate your money to Europe, you better think twice before letting it cross a Schengen border.
TGE helps to make it as easy and economical for someone in Brussels or Brescia to donate to an association that is close to their heart, for example in Greece, Ireland or Estonia, as it is to support a charity closer to his home.
Put simply, if someone donates euros to a local charity, they will usually be able to deduct at least part of that donation from their taxes through national tax incentives.
By using TGE, they can achieve similar benefits while supporting a charity in another country covered by the network. Regulation at EU level would make this process much simpler and, certainly, contribute to even greater continental solidarity.
In recent years, we have become all too aware that few problems of modern society clearly lie within national borders.
It is heartwarming to hear the Commission talk about lowering barriers for those who want to cross borders to help solve these problems. At this time of year when we celebrate the giving and decide to make the New Year better than the last, it is time for all European leaders to step up their efforts to keep this promise.