Doing your one percent to support the Robert Burns Foundation
Donating 1% of your personal income tax is an easy way to support the Robert Burns International Foundation and, as it comes out of your total tax payment, costs you nothing extra. But how does the system work?
Since the mid-1990s, successive Hungarian governments have indulged in what is, for them, a most untypical example of tax largesse. In doing so, they have provided a vital infusion of cash to charity foundations and religious establishments across the country.
It works in an extremely simple way, at least in theory. The state agrees to forego 1% of your total personal income tax payment, and pass it on to a charity foundation of your choice, and to do the same with another 1% to a registered religious establishment.
All this happens at no extra cost to you, the taxpayer; it comes from the money you have already paid tax authority APEH. Nor is it dependent on nationality. There are only two qualifiers: one, you must be legally resident and pay your taxes in Hungary; two, you must nominate the bodies to receive the tax benefit. If you don’t do so, or are late with your payment or file a faulty tax return, the money goes into the general state budget.
The religious element of tax relief is not new. Mike Birch, former Assurance Partner for the Robert Burns International Foundation’s accountants PricewaterhouseCoopers (PwC), recalls that, years ago, when he first moved to Germany, the church tax was deducted automatically, unless you opted out.
The Hungarian charity element was new, however. “I think the government philosophy was that if the money came from a tax donation, it wouldn’t have to dip directly into its coffers to support such NGOs, and, in the 1990s, the need for support was absolutely dire,” Birch says.
The law was introduced here in 1996, although, unlike in the German example, taxpayers have to opt in. Passed in 1997, it came into effect for the first time in 1998.
The law covers all 3.5 million people who are liable to pay tax in Hungary.
For you to boost the numbers of those giving their 1% could not be simpler. All you need to do is ask your accountant to include the details of the foundation in a special form attached to your tax declaration. It is only 1%, and it costs you nothing, but with the foundation’s help, it really can make a difference.
By Robin Marshall