What tax obligations does an association have to fulfill?
July 17, 2024 | 50,00 EUR | answered by Thomas Tressel
Dear lawyer,
My name is Max Köhler and I am the chairman of a non-profit organization dedicated to environmental protection. Lately, I have been focusing on the tax obligations of our organization and I am unsure if we are complying with all regulations correctly.
Our organization is recognized as non-profit and we regularly receive donations which we use for our projects. We also organize events to raise awareness about environmental issues and raise funds. So far, we have not made any profits as all income goes directly into our projects.
Nevertheless, I wonder if we have certain tax obligations to fulfill and if there might be legal consequences if we do not comply. I am concerned that we may have made unintentional mistakes and want to ensure that we handle everything correctly.
Can you please explain to me what tax obligations a non-profit organization like ours must fulfill? Are there specific regulations that we need to consider since we collect donations and hold events? What are the consequences if we violate these obligations?
I thank you in advance for your support and look forward to your expertise on this matter.
Sincerely,
Max Köhler
Dear Mr. Köhler,
Thank you for your inquiry regarding the tax obligations of a non-profit organization in the field of environmental protection. It is very commendable that you are actively engaging with this issue and want to ensure that your organization complies with all regulations. I would be happy to explain in detail the tax obligations that you, as the chairman, should consider.
First and foremost, it is important to know that non-profit organizations in Germany are subject to special tax regulations. They are exempt from corporate tax if they exclusively and directly pursue charitable, benevolent, or church purposes. This seems to be the case in your situation, as your organization is dedicated to environmental protection and all income goes towards projects.
However, there are certain requirements that must be met for an organization to be recognized and maintain its status as charitable. These include the organization's statutes, which must contain specific wording to ensure charitable status. In addition, the organization's income and expenses must be properly documented and transparently disclosed.
If your organization collects donations, there are also special regulations to consider. Donations are tax deductible, but donors must receive a donation receipt above a certain amount in order to deduct their donation from taxes. Detailed documentation is also necessary in this case.
When organizing events, you must ensure that they align with your charitable purposes and are not commercially oriented. Income from events can only be used to support the charitable purposes of the organization.
Failure to comply with these tax obligations can potentially result in tax consequences. This could lead to tax payments or even the loss of charitable status and associated tax benefits.
Therefore, it is advisable to seek advice from a tax advisor or a lawyer specializing in association law to ensure that all tax obligations are met correctly. I am also available to personally assist you in clarifying any further questions and in complying with tax regulations.
I hope that I have been able to assist you with this information and I am available for any further questions.
Best regards,
Thomas Tressel, Attorney
