Are political associations automatically charitable?
March 12, 2023 | 50,00 EUR | answered by Björn Ley
Dear tax advisor,
I am Robert Rothwiller and I am the head of a political association that advocates for environmental protection and sustainability. In the past, our association has regularly received donations from companies and individuals, which we have successfully used for our projects. Now, I am wondering whether our political association is automatically classified as charitable and therefore enjoys tax benefits.
Currently, we are active as a political association and conduct our work in a transparent and accountable manner. We regularly organize events and activities to raise awareness about environmental issues and inform the public. However, I am unsure whether we are truly classified as charitable and can therefore benefit from tax advantages.
My concern is that we may be mistakenly classified as a political association and not recognized as charitable, meaning that donations and funding may not be tax deductible. This could ultimately result in having less financial resources available and not being able to implement our projects to the extent we desire.
Therefore, my question to you is: Are political associations automatically considered charitable or are there specific criteria that must be met to be classified as charitable? What steps must we take as a political association to obtain charitable status and what benefits does this bring us?
Thank you in advance for your support and advice.
Sincerely,
Robert Rothwiller
Dear Mr. Rothwiller,
Thank you for your inquiry regarding the charitable status of your political organization, which advocates for environmental protection and sustainability. It is very commendable that your organization is dedicated to important societal issues and has received donations for your projects. I understand your concern regarding the tax recognition as a charitable organization and I will be happy to assist you.
In general, political organizations are not automatically classified as charitable. There are certain criteria that must be met to be recognized as charitable. According to German tax law, organizations must pursue specific charitable purposes, such as promoting environmental protection or sustainability. Additionally, the activities of the organization must be geared towards serving the public and should not primarily pursue self-interested motives.
To obtain charitable status, your political organization must draft the statute accordingly. It is important that the statute clearly defines the charitable purposes to be pursued and how they should be implemented. Furthermore, you should ensure that your organization's activities are transparent and traceable in order to substantiate the charitable status.
It may also be helpful to publish regular reports on your organization's work and transparently present your financing to strengthen the trust of the public and tax authorities.
If your political organization is recognized as charitable, there are various tax benefits. Donations to charitable organizations are typically tax-deductible for both companies and individuals. Additionally, charitable organizations may be exempt from corporate tax and enjoy other tax advantages.
I recommend that you consult with an experienced tax advisor or a lawyer specializing in association law to review and potentially amend your statute in order to obtain charitable status. With careful preparation and transparent organization management, there is a good chance that your political organization will be recognized as charitable and can benefit from the tax advantages.
I hope that this information has been helpful to you and I am available for any further questions.
Sincerely,
Björn Ley
