The ultimate tax-saving model

Yes, yes, the dear tax. It’s really hard to part with your hard-earned money. “If you could at least get something good for it … then …!”

Well, there is in fact a simple and completely legal solution to this: the tax authorities have provided for everyone to become involved in charitable work and to receive tax relief. In this way, everyone can become active in precisely those issues that are really close to their heart.

But simply donating your money to charitable causes is perhaps not what you (and we) had in mind. What might be interesting, however, is a model that allows you to combine your social commitment with a certain amount of retirement provision. And this is also possible: via a foundation.

The model would look like this:

• You set up a charitable foundation (or participate in an existing one). The possibilities here are almost unlimited: There are foundations for cancer aid, children’s hospices, animal welfare, sustainable agriculture, preservation of old craftsmanship, and many more. We are familiar with many foundations without even realizing that they are foundations: Stiftung Warentest, Bertelsmann Stiftung, Deutsches Rotes Kreutz etc.. You can find out all about foundations at www.stiftungen.org
• Next, you pay everything you don’t need to live on into this foundation. This part of your income is then exempt from income and business tax.
• In old age, when you no longer want to/are no longer able to work, you get involved with this foundation in return for a moderate and appropriate salary. This is quite common, see the rescue workers at the DRK.

This model is particularly interesting if you are already committed to a charitable cause or are thinking about doing so. And another advantage should not go unmentioned: Helping makes you happy. Because as the Chinese proverb says: