Legal registration of donations

The word "donate" has become widespread due to the popularity of computer games. "Donate" means to fund your account to buy game resources. Donates should not be associated exclusively with esports. This phenomenon exists in business and means a voluntary donation for public benefit.

When it comes to computer games, donations are accepted by gamers who broadcast online. With financial support, professional players have more resources to showcase their skills and entertain audiences. The same goes for bloggers who write online courses. Entrepreneurs invite subscribers to support the project financially in exchange for useful information contained in the online course. In these cases that nuances appear. If an entrepreneur receives donations in exchange for advice, then this cannot be called a donation. In fact, this is a payment for information services.

If we are talking about a gratuitous donation as a gift, that is, without a counter-offer from the recipient, then taxes will not be collected from the funds received. If any services are provided in return, then the donation is regarded as payment for commercial activities. This means that the amount received is taxed in the manner prescribed by law.

Taxation of donations

Donation recipients can be:

1. Physical person.
2. Business entities (individual entrepreneurs, organizations).
3. Non-profit organizations.

Depending on the purpose of receiving donation, it can be regarded as a gratuitous donation, that is, a gift, and payment for services.

It follows that a donation is a donation only in two cases: if the recipient is an individual or an NPO. If the recipient is officially engaged in business, then any donations will be regarded as payment for services. For example, a person offers a free online course or has a YouTube channel. People who watch the video or study the materials can support the project financially in exchange for a counter offer, that is, information. At first glance, the author of the video blog does not sell anything, but the tax authorities will probably think otherwise. In fact, users pay to watch videos or useful information from an online course, so they have to pay business tax.

If the recipient does not have the status of an individual entrepreneur, but he regularly receives donations, then this will also raise questions from the tax authorities. Serious arguments are needed to prove the socially useful nature of their activities.

Here's one example. A team of authors has created a site for the popularization of computer games and regularly post articles for readers on it. Users can support the project with gratuitous financial donations. The tax authorities regard such activities as generally useful, since the authors of the articles do not provide counter offers in exchange for money. It follows from this that the income is received as a gift and is not subject to taxation.

What does the law say? 

All issues related to the payment of taxes for donations are regulated by paragraph 18.1 of Article 217 of the Tax Code of the Russian Federation. According to the current requirements, income in cash and in kind received as a result of donations from individuals are exempt from taxation. The exception is expensive property: real estate, vehicles, a share in a business, securities. If the donor is a legal entity, then donations to an individual in the amount of more than 4,000 rubles entail tax consequences for the payment of personal income tax. In this case, a legal entity becomes a tax agent.

Currency regulation provisions and donations

If the recipient is a natural person, he can receive donations from foreign citizens in foreign currency. Questions arise if an anonymous donor transfers amounts from 600 thousand rubles and above. Banks are required to oppose money laundering, so the recipient of generous donations from anonymous foreign senders will have to explain the origin and purpose of such transfers.

If you are a blogger and receive currency on a regular basis, this should not be hidden from the bank. If you have any questions, you should be open about your generally useful online activities. If you have an individual entrepreneur status, then it is better to have two accounts: for donations and income from commercial activities. This will make it easier to explain the origin of the funds to the controlling authorities. In addition, the bank will have no reason to require documents confirming the legal origin of your income if you want to withdraw money from a foreign currency account.

From all of the above, it follows that receiving donations without paying tax is legal if there is sufficient evidence of generally useful activity and there is no counter offer from the recipient of the donation.

You can find out more about the legal component of the process of receiving donations from the specialists of A4 Law firm.