Legal entities, partnerships or individuals donate shares of listed companies
Different donation entities have different tax treatment methods.
In December 2025, Tianyoude Group and Peking University Education Foundation signed the "Supplementary Agreement on the Third Donation of the Donation Agreement". Tianyoude Group donated 560,000 shares of the company's shares it holds to the Peking University Education Foundation, accounting for 0.12% of the company's total equity, to support the development of education. In recent years, there have been an increasing number of cases of private entrepreneurs donating shares of listed companies. In the specific donation process, different donors have different tax treatments.
Charity Donation Cases
A invested in the establishment of the E Education Foundation, which mainly supports the development of education. At the same time, A indirectly holds the partnership share of A’s equity investment fund partnership through D asset management partnership (limited partnership), and A is the only natural person partner. In March 2024, E Education Foundation donated its shares of listed company C to Foundation B for free. In October 2024, A donated the shares of listed company C he held to foundation B through equity investment fund partnership A. In December 2024, person A donated his shares of listed company C to foundation B.
The donor is a corporate enterprise
In March 2024, E Education Foundation donated equity of listed companies free of charge. According to Article 1 of the Enterprise Income Tax Law, within the territory of the People's Republic of China, enterprises and other organizations that obtain income are taxpayers of enterprise income tax. Other organizations that generate income include non-profit organizations, such as foundations, social groups, etc. Therefore, E Education Foundation is a corporate income tax payer and a legal entity.
According to Article 1 of the "Notice of the Ministry of Finance and the State Administration of Taxation on Corporate Income Tax Policies for Public Welfare Equity Donations" (Caishui [2016] No. 45), equity donations made by enterprises to public welfare social groups shall be regarded as transfers of equity in accordance with regulations, and the amount of equity transfer income shall be determined based on the historical cost when the donated equity was acquired by the enterprise. In other words, if a company donates equity to a charity, it should be treated as a sale for corporate income tax purposes.
At the same time, according to the information disclosed by the tax department, the E Education Foundation is a non-profit organization that enjoys tax exemption status. It is also necessary to determine whether the E Education Foundation's income from the deemed transfer of equity qualifies for tax exemption. The "Notice of the Ministry of Finance and the State Administration of Taxation on the Issue of Corporate Income Tax Exemption from Non-Profit Organizations" (Caishui [2009] No. 122) clarifies that qualified non-profit organizations receiving income donated by other units or individuals are exempt from corporate income tax.
In this case, the E Education Foundation donated the equity of a listed company free of charge instead of accepting donations from other units or individuals, which does not fall into the category of tax-free income. In other words, the equity donation made by the E Education Foundation to public welfare social groups should be regarded as a transfer of equity according to regulations. The income from the equity transfer is determined based on the historical cost when the donated equity was acquired by the enterprise. Therefore, the equity transfer income of the E Education Foundation is 0.
It is worth noting that Foundation B is on the list of pre-tax deduction qualifications for public welfare social organization donations from 2023 to 2025 disclosed by the government department. That is, Foundation B is a social organization that has obtained the pre-tax deduction qualification for public welfare donations. According to Article 9 of the Enterprise Income Tax Law, the part of the public welfare donation expenditure incurred by the enterprise within 12% of the total annual profit is allowed to be deducted when calculating the taxable income; the part exceeding 12% of the total annual profit is allowed to be carried forward and deducted within the next three years when calculating the taxable income. In other words, if the E Education Foundation makes donations to social organizations that have obtained pre-tax deduction qualifications for public welfare donations, the public welfare donation expenditures incurred can be deducted when calculating taxable income in accordance with regulations.
The donor is a limited partnership
In the case, A donated equity through Equity Investment Fund Partnership A in October 2024. The donor was a limited partnership and should be handled in accordance with the "Announcement of the Ministry of Finance and the State Administration of Taxation on Individual Income Tax Policies for Donations to Charitable Causes" (Announcement No. 99 of the Ministry of Finance and the State Administration of Taxation in 2019, hereinafter referred to as Announcement No. 99).
According to Announcement No. 99, for public welfare donation expenditures incurred by a partnership, its individual investors shall calculate the public welfare donation expenditures attributable to each individual investor based on the distribution ratio of the partnership in the year of donation. In the case, A indirectly holds the partnership share of A’s equity investment fund partnership through D asset management partnership (limited partnership), and the public welfare donation expenditure attributable to him or her can be calculated step by step according to the distribution ratio of the partnership in the year of donation.
It is worth noting that X can combine the public welfare donation expenditures of his sole proprietorship and partnership with other public welfare donation expenditures that he needs to deduct from his operating income, and deduct them from his operating income. Among them, the amount of equity donation expenditure should be determined based on the original value of the equity held by the A equity investment fund partnership.
The donor is an individual
In the case, person A donated equity in December 2024, that is, the individual directly donated stocks as a donor.
According to Announcement No. 99, when individuals donate to education, poverty alleviation, poverty relief and other public welfare charities through state agencies such as public welfare social organizations in China, people's governments at or above the county level and their departments, the public welfare donation expenses incurred can be deducted when calculating taxable income, but the deduction limit shall not be exceeded. The so-called domestic public welfare social organizations include charitable organizations, other social organizations and mass organizations that are established or registered in accordance with the law and have obtained pre-tax deduction qualifications for public welfare donations in accordance with prescribed conditions and procedures.
In the case, Foundation B is a social organization that has obtained pre-tax deduction qualifications for public welfare donations. Therefore, if Person A directly donates stocks to Foundation B, his donation expenditure can be deducted from the taxable income of personal income tax within the deduction limit. According to Announcement No. 99, the charitable donation expenses incurred by A can be deducted from the comprehensive income, and the deduction limit is 30% of the taxable income of the current year. At the same time, the amount of public welfare donation expenditure for A’s donated equity must be determined based on the original value of the property held by the individual.
Things to note
Currently, China Securities Depository and Clearing Co., Ltd. only recognizes foundations registered with the civil affairs department and recognized as charitable organizations as objects of stock donation. Therefore, in existing cases, most companies or individuals will choose to directly donate listed company stocks to various foundations. When making pre-tax deductions, donors should pay attention to whether the foundation is qualified for pre-tax deductions for charitable donations. Relevant donors are advised to pay attention to the list jointly announced annually by the Ministry of Finance, the State Administration of Taxation and the Ministry of Civil Affairs, as well as the finance, taxation and civil affairs departments of provinces, autonomous regions, municipalities and cities under separate state planning.
If the public welfare donation expenditure is made to a foundation that is qualified for pre-tax deduction of public welfare donations, the enterprise or individual should pay attention to retaining the public welfare donation receipt that is supervised (printed) by the Ministry of Finance or the financial department of the province, autonomous region, or municipality directly under the Central Government and stamped with the seal of the donation receiving unit to ensure tax treatment compliance.
