On June 18, 2016, the Gazetta Ufficiale published Law 106/2016. This granted the government the authority to reform the Third Sector by issuing several decrees, including the Third Sector Code (Legislative Decree 117/2017). Among the new measures introduced by this reform was the Social Bonus, a tax credit available to taxpayers who donate to Third Sector Organisations (TSO) in projects to restore movable and immovable property. This article will explain what the Social Bonus is, how it works, and its eligibility requirements.

What’s in this article?

• What is the Social Bonus?
  
• Who is eligible for the Social Bonus tax credit?
  
• How does this tax credit work?
  
• What are the eligibility requirements for Third Sector Organisations?
  
• What are the compliance requirements for Third Sector Organisations?
  

What is the Social Bonus?

Article 81 of the Third Sector Code outlines the Social Bonus, with operational guidelines established by decree number 89 of 23 February 2022. This grants taxpayers credits on donations made to TSOs that carry out projects aimed at the restoration of unused public property, and movable and immovable property seized from organised crime.

Who is eligible for the Social Bonus tax credit?

The following groups are eligible for the Social Bonus tax credit:

• Individuals
  
• Entities not engaged in commercial activities
  
• All businesses, regardless of their legal structure, the industry they operate in, or the accounting system they use
  

How does this tax credit work?

According to Article 4 of the decree, the tax credit amount differs based on the type of taxpayer, equivalent to:

• 65% for charitable donations made by individuals within the limit of 15% of taxable income
  
• 50% for charitable donations made by companies within the limits of five per thousand of annual income
  
• 50% for donations made by non-commercial entities within the limits of 15% of taxable income
  

The tax authority splits the Social Bonus credit into three equal annual instalments, and individuals and non-commercial entities can begin to use it, starting with the tax return for the year in which they made an eligible donation. Any unused annual instalment rolls over to subsequent tax returns of future periods until you use the full amount of your tax credit.

Persons with business income can use the credit for offsetting purposes starting from the tax period after their donation by submitting form F24 exclusively through the online services provided by the Italian revenue agency (Agenzia delle Entrate).

Taxpayers qualify for the Social Bonus only if they make contributions using traceable payment methods. Additionally, the payment description must contain a reference to the bonus, the recipient TSO, and the purpose of the donation.

The tax credit does not count towards the calculation of earnings for income tax purposes, nor does it affect the value of production for the Italian regional tax on productive activities (IRAP).

Taxpayers can only direct charitable donations under the Social Bonus to TSOs that have submitted a project to the Ministry of Labour and Social Policies to recover unused public real estate and movable property confiscated from organised crime. This ministry must first approve these projects, and qualifying entities must allocate assets to the specified TSO, which must use them exclusively for non-commercial activities of general interest.

Staying current with constantly changing tax regulations can be challenging for your business. Tools such as Stripe Tax can simplify compliance by generating detailed reports useful for filing returns and correctly applying tax credits, such as those for the Social Bonus.

What are the eligibility requirements for Third Sector Organisations?

The requirements for TSOs to participate in the process of identifying recovery projects eligible for the Social Bonus are as follows:

• Status as one as outlined in Article 4, paragraph 1, of the Third Sector Code
  
• The entity’s legal representative must have the appropriate authority to submit the project
  
• There must be no grounds for prohibition, suspension, or disqualification related to personal preventive measures, as specified in Article 67 of Legislative Decree No. 159 of 6 September 2011, concerning the legal representative and members of the entity’s governing bodies
  
• The entity must comply with its contribution obligations
  
• The entity must be in good standing with its obligations related to paying taxes and fees
  
• The entity must fulfil the insurance obligations for volunteers as specified in Article 18 of Legislative Decree 117/17
  
• The successful transfer of the property to the entity
  

All involved partner entities must meet these requirements.

Qualification as a Third Sector Organisation

Since individuals or businesses interested in the Social Bonus tax credit must ensure that the beneficiaries of their donations qualify as TSOs, you might wonder: from what point must the proposing entity hold this status? The Ministry of Labour and Social Policies document, published on 23 April 2024, clarifies this question.

The above policy explains the recipient’s standing as a TSO is important for the lawful use of the credit by taxpayers who make contributions to such entities. Thus, the beneficiary must hold this position both at the time of the application and on the adoption date of the measure approving the list of recovery projects eligible for the Social Bonus. Involved parties must maintain this qualification throughout the entire period of the recovery project’s implementation.

What are the compliance requirements for Third Sector Organisations?

To allow individuals or legal entities that make donations to benefit from the Social Bonus, TSOs proposing recovery and restoration projects must apply to the Ministry of Labour and Social Policies (General Directorate of the Third Sector and Corporate Social Responsibility) by one of three annual deadlines: 15 January, 15 May, or 15 September.

To apply, complete the required document on the ministerial portal. You can access the portal using SPID, CIE, or eIDAS credentials, with the necessary form attached as expected. In particular, attach the following to the submission:

• Substitute declarations made under Articles 46 and 47 of Presidential Decree No. 445 of 28 December 2000, confirming the possession of the requirements for accessing the government bonus mentioned in the previous paragraph
  
• Bylaws of the proposing entity and any partner entity
  
• Latest approved budget of the proposing and the partner entity, if any
  
• Partnership statement, if applicable
  
• At least two photographs of the property in question
  
• Transfer licence of the asset
  
• Statement of estimated costs
  
• Timeline of project activities
  

After the Social Bonus project is approved, the proposing entity must report to the Ministry of Labour and Social Policies every three months, providing details of the individual donations received during that quarter. In addition to reporting the amount of donations, they must publicly disclose information about how these funds are allocated and used through its institutional website.

The Ministry of Labour and Social Policies provides a manual for TSOs containing all the necessary information to apply as beneficiaries for recovery projects under the Social Bonus.