Foundations are typically taxed according to the same rules as for other companies.
But when a foundation makes a grant to a project it supports, it can deduct the amount from its taxable income, which means that tax incentives play a role in the funding for social projects.
A so-called tax deduction for consolidation of the foundation capital calculated as a percentage of the means allocated for non-profit grants makes it possible to transfer this amount tax-free to the foundation's tied-up assets. In this way, a foundation is able to hedge the assets, which constitute the financial basis for the grants, against inflation and in the future keep its long-term objective, i.e. to award grants and thereby achieve a high level of non-profit activities.
Amendment in 2016
Until 2016, the tax deduction for consolidation of the foundation capital was 25%, and the reduction to 4% has the consequence that in future the foundations will regrettably not be able to award as many grants as previously.