Do clubs have to pay taxes?
August 23, 2023 | 50,00 EUR | answered by Thomas Tressel
Dear lawyer specializing in association law,
My name is Selma Stolzheim and I am a board member of a non-profit organization that advocates for animal welfare. Lately, we have been dealing more with the issue of taxes and are uncertain if our association is subject to taxation. We all work on a voluntary basis and mainly finance ourselves through donations and membership fees.
So far, we have not made any profits and all income has been used for our charitable purposes. However, we have heard that under certain circumstances associations may have to pay taxes. We are concerned that we may have to pay back taxes and would like to know what tax obligations could apply to us.
Can you please explain to us whether non-profit associations like ours have to pay taxes? Are there specific requirements that must be met to become subject to taxation? And if so, what taxes would we have to pay as an association? We want to ensure that we comply with all legal requirements and do not face any unexpected tax demands.
Thank you in advance for your help and support.
Sincerely,
Selma Stolzheim
Dear Mrs. Stolzheim,
Thank you for your inquiry regarding the tax obligations of nonprofit organizations in the field of association law. As a lawyer specializing in association law, I am pleased to be able to assist you with this question.
In general, nonprofit organizations that are dedicated to a charitable purpose are exempt from corporate tax. This means that these organizations usually do not have to pay taxes on their income, as long as it is used for charitable purposes. This also applies to your organization, which is dedicated to animal welfare and is mainly funded by donations and membership fees.
However, in order for your association to be recognized as charitable and exempt from corporate tax, certain requirements must be met. These include, among others, the statutory definition of the charitable purpose, the actual pursuit of this purpose, and compliance with the tax requirements for nonprofit organizations.
The tax obligations that nonprofit organizations may face include primarily compliance with the tax requirements for nonprofit organizations. This includes proper bookkeeping, preparation of financial statements, and timely submission of the required tax returns. It is important that your association complies with all tax regulations in order to maintain its charitable status and tax exemption.
As a board member, you can be confident that your nonprofit organization is unlikely to have to pay taxes as long as it pursues its charitable purposes and meets the tax requirements. If you have any further questions or concerns, I am available for personal consultation.
I hope I have answered your questions thoroughly and am available for further information if needed.
Best regards,
Thomas Tressel
Attorney at Law specializing in Association Law
