Can our association also act internationally and how does this affect our taxation?
November 26, 2023 | 60,00 EUR | answered by Günther Schmidt
Dear tax consultant for association taxation,
As a board member of the association "Kulturverein Sonnenschein e.V.", I am concerned with the question of whether our association can also operate internationally and how this would affect our taxation.
For many years, our association has been dedicated to promoting art and culture, and regularly organizes events such as exhibitions, concerts, and workshops. So far, our activities have been limited to national projects, but now we have the opportunity to also be active abroad. We have been invited to participate in an art festival in Spain, which we would like to attend.
However, we are worried about how international activities could affect our taxation. What tax aspects do we need to consider when operating abroad? Do we need to pay additional taxes or are there ways to take advantage of tax benefits? How can we ensure that our charitable status is not jeopardized?
We would like to know what steps we need to take to properly manage our international activities from a tax perspective and how we can minimize potential tax burdens. We would greatly appreciate your expert advice and support on this matter.
Sincerely,
Hilde Ullmann, board member of Kulturverein Sonnenschein e.V.
Dear Mrs. Ullmann,
Thank you for your inquiry regarding the international activities of your association "Kulturverein Sonnenschein e.V." and the tax implications that may arise as a result. I am pleased that you are interested in expanding your activities and I am happy to offer my expertise to assist you.
When a nonprofit organization like yours engages in activities abroad, there are several tax aspects to consider. First and foremost, it is important to know that nonprofit organizations can generally operate internationally. However, certain conditions must be met to avoid jeopardizing the tax-exempt status.
Firstly, you should verify if the planned activity abroad is in line with the purpose stated in your association's bylaws. In your case, since the focus is on promoting arts and culture, participating in an art festival in Spain would certainly be a suitable project. It is crucial that the international activities of the association are directly related to the nonprofit purpose.
Furthermore, it is important to ensure that the revenue generated from international projects serves the association's purpose and does not benefit individual members financially. All financial transactions should be transparent and traceable.
Regarding taxation abroad, there may be additional taxes to consider depending on the tax regulations of the country in question. It is advisable to research the tax laws and obligations in the target country in advance. There may also be tax agreements between Germany and the specific country that could provide you with some tax advantages.
To minimize potential tax burdens, I recommend carefully documenting the income and expenses from international projects and seeking professional tax advice if necessary. It may also be beneficial to collaborate with other nonprofit organizations to share experiences and resources.
In conclusion, I emphasize the importance of careful planning and implementation of your international activities to safeguard the tax-exempt status of the association. I am here to assist you with the tax planning of your international projects.
Best regards,
Günther Schmidt, Tax Advisor for Nonprofit Taxation / Charitable Status
