How much will I pay CIT if I pay EUR 1m in dividends?

Some contacts asked for a translation of this blog originally posted in Latvian, so here we go.

The distribution of EUR 1m in dividends results in a payment of EUR 250k CIT, in addition to the aforementioned dividends.

How much of the EUR 250k CIT can I replace with a donation?

No more than 30% of dividend CIT (EUR 75k) can be replaced by 85% of the donation – EUR 63 750. After a strange understanding of SRS and MoF, what could be disputed if the parliament really thought so, the difference between the donation (75k) and the share of the donation (63,750) replacing CIT is taxable. Thus, from dividends of this EUR 1m, in order to provide EUR 64k in support to NGOs with the status of a public benefit organisation, the shareholder’s costs are EUR 11 250 in real donation and CIT on it – EUR 2810. EUR 63 750 of the donation just replaces the tax.

So, out of each EUR 1m dividend company paid, the cost is EUR 14k for it to donate 75k to an NGO, as around EUR 64k of the donation replaces the CIT payable to the state, as shown in the drawing.

And here are a number of good projects to donate to:

  • Entrepreneurs for Peace – quick and safe channels assistance in Ukraine to those who are fighting for the peace and freedom of us all;
  • Latvian Golf Federation – based on the LGF strategy in 2023, LGF wants to show the public what many in the West have discovered for a long time – walking with sports elements in the fresh air is the basis of human health – help attract more players to this great sport, develop competitive youth and organize higher-level competitions;
  • Mental Health Support Fund ESI – paid psychological counselling for young people from 18 to 25; partnering with the Teen Resource Center; etc. projects;
  • Vecpiebalga gnomes – regularly buy food parcels for those who need them very much; refers to requests to cover some daily payments, such as the supply of firewood for the winter; buys clothes for children;
  • Riga TechGirls, which ensures the development of digital skills for the entire Latvian society and especially provides and training for girls and women on STEM and technology topics;
  • Tennis Talent Foundation – support for children and young people under the age of 25 who cannot afford all the costs of this expensive sport; has the status of SLO, which can be verified in this SRS database; reģ.nr. 40008191846, account no. LV58HABA0551033129517
  • Foundation Viegli – various great projects in memory of Ziedonis and Purvis, as well as to implement a mission close to the patron of the foundation – poet Imants Ziedonis: “Latvia is a land of wonder, but the beautiful must help to appear”.

I have already written about the other nuances related to donations above. Write your charity project in the comments or report to me – I will be happy to add to this list.