What happens if our association no longer meets the requirements for tax-exempt status?
April 11, 2023 | 60,00 EUR | answered by Günther Schmidt
Dear tax advisor,
I am writing to you because our association is currently in a difficult situation and we are very concerned about our charitable status. We are a non-profit organization that has been involved in social projects and fundraising to help those in need for many years. However, we have recently been struggling to meet the requirements for charitable status.
The current situation is as follows: Our membership numbers have decreased in recent years, leading to financial difficulties. Additionally, we feel that our activities are no longer sufficient to be recognized as charitable. We are afraid that we may no longer meet the requirements for charitable status, which could result in tax disadvantages and financial losses.
My concern is that our association may be in trouble and our charitable work is at risk. What are the consequences if we no longer meet the requirements for charitable status? Are there ways we can get our association back on track and maintain our charitable status?
Thank you in advance for your help and expertise.
Sincerely,
Phillip Becker
Dear Mr. Becker,
Thank you for your inquiry regarding the charitable status of your association. It is understandable that you are concerned, especially when membership numbers are declining and financial difficulties arise. Charitable status is an important requirement for associations to enjoy tax benefits and receive donations from companies and individuals.
If an association no longer meets the requirements for charitable status, this can have serious consequences. Firstly, the association loses its tax-exempt status and must pay trade tax. In addition, donations may no longer be tax deductible, which can deter donors and further deteriorate the association's financial situation. Furthermore, donations already received may also be reclaimed.
Therefore, it is important to take measures to get your association back on track and maintain charitable status. There are various ways to do this. Firstly, you should check whether your association meets the statutory and actual requirements for charitable status. If this is not the case, you can amend your statutes and revise your activities to once again engage in charitable activities.
Furthermore, you should try to recruit new members and organize fundraising events to improve the financial situation. You can also enter into partnerships with companies or apply for grants to receive additional financial resources.
It may also be helpful to seek advice from a tax advisor specializing in association taxation and charitable status. An expert can help you find the best solutions for your association and support you in their implementation.
I hope this information helps you and wish you success in getting your association back on track and maintaining charitable status.
Best regards,
Günther Schmidt
