Under the Georgian Tax Code, charity is not only a social act but also a computational category: every step of the donor — a monetary donation, goods supplied free of charge or services rendered — carries a tax consequence. A correctly documented and planned donation gives the donor a deduction and the recipient exempt income. Donor advisory therefore means planning the tax positions of both sides together.
Deduction of Charitable Donations
Under Article 117 of the Tax Code, the amount given by an enterprise or entrepreneur natural person to a charitable organisation, together with the market price of goods supplied free of charge (other than immovable property) or services rendered and reflected in gross income, is deducted from gross income — but by no more than 10 percent of the amount remaining after the deductions provided by the Code other than this one. This ceiling is the central parameter of deduction planning: the aggregate of donations given during the year must not exceed the stated share of the base remaining after other deductions. The deduction is claimed through the declaration, so every transfer must be supported by a contract, receipt or act.
The Recipient's Exemption
On the recipient's side, Article 82 of the Tax Code creates the framework for exempting income received through charity: income tax does not apply to a benefit received from a non-entrepreneurial legal person founded by the state within charitable activity, to a benefit received from a charitable organisation for financing treatment or medical services, and to property received by gift of up to 1000 GEL per tax year. A separate exemption covers monetary compensation for giving blood or blood components until 1 April 2030. Property received free of charge by persons registered in the unified database of socially vulnerable families is likewise not taxed.
Profit Tax and Free Supply
The corresponding norm of the Tax Code determines that profit tax does not apply to several cases of free supply of goods, rendering of services or transfer of funds: to a donation given to a charitable organisation during a calendar year that does not exceed 10 percent of its net profit of the previous calendar year; to cases taxed at the source of payment; to free supply to the state, a municipality or a legal person of public law; to the free supply of immovable property to a charitable organisation, where the recipient has carried out charity towards persons with disability from childhood for at least the last 3 calendar years; and to food transferred to a food bank under the law on food donation. This norm prevents an incorrect calculation of the tax price of charity.
Documentation and Planning Practice
Structuring a donor's position begins with verifying the recipient's status: the deduction applies only to amounts given to a charitable organisation. An annual plan is then built — what amount and in what form (money, goods, services) will be given, in which period, and how it fits within the ceiling. The distinction between a deduction and a free supply is also decisive: the former reduces the gross income base, while the latter, in the defined cases, does not create an object of profit tax at all.
The planning of the deduction is written into an annual calendar: the deduction of charitable donations applies up to the ceiling established by tax legislation — up to ten percent — and for the donor it is important to remain within that ceiling at the moment of each payment: exceeding it makes the deduction partial and demands an additional calculation. The recipient's status is likewise re-verified in each annual cycle — the list of exempt persons changes, and a donation gives its full tax effect only where the recipient's status is in force at the moment of payment.
Frequently Asked Questions
Donors most often ask about ceilings, the taxation of the recipient's income and the rules of free supply. Short answers are collected below.
How much of a donation is deductible?
The amount given to a charitable organisation and the market price of goods or services supplied free of charge — no more than 10 percent of the amount remaining after other deductions.
Is income received through charity taxed?
In the defined cases, no: a charitable benefit from a state-founded organisation, a benefit for financing treatment and property received by gift of up to 1000 GEL are exempt.
When does a donation not create a profit tax object?
When it does not exceed 10 percent of the previous year's net profit, is taxed at source, is given to the state, a municipality or a public-law person, or falls under the exempt supply of immovable property or food.
How do I verify the recipient's status?
Before payment — against the list of exempt recipients published by the tax authority; the status must be in force at the moment of payment.
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