How can I save corporation tax as a non-profit organization?
February 4, 2023 | 40,00 EUR | answered by Siegfried Strauss
Dear tax advisor,
I am Helma Kaiser and I am the director of a non-profit organization that is dedicated to social projects in our region. In recent years, our organization has grown significantly and we now have a larger budget available. However, we are now concerned about corporation tax, as we have little experience with this issue.
Our current situation is that we have been exempt from corporation tax so far, as we are recognized as a non-profit organization. However, we have heard that certain income or activities may trigger the need for us to pay corporation tax. This worries us, as we would like to use as much money as possible for our social projects.
Therefore, my question is: How can we, as a non-profit organization, save on corporation tax? Are there specific measures we can take to reduce our tax burden? Are there specific guidelines or regulations we need to follow in order to remain exempt from corporation tax?
I would be very grateful if you could advise us on this matter, as we would like to ensure that we comply with tax laws correctly and efficiently use our financial resources.
Thank you in advance for your help.
Best regards,
Helma Kaiser
Dear Mrs. Kaiser,
Thank you for your inquiry regarding corporate tax for your non-profit association. As a tax advisor specializing in this topic, I can give you some tips on how to save corporate tax and continue to benefit from the exemption.
First of all, it is important to understand that non-profit associations are generally exempt from corporate tax as long as they meet the requirements of charitable status. These include the pursuit of charitable, benevolent, or religious purposes, selflessness, immediacy, and exclusivity of purpose pursuit. As long as your association meets these criteria, you should generally be exempt from corporate tax.
However, there are certain income or activities that can lead to a non-profit association having to pay corporate tax. These include, for example, economic business operations that are not directly related to the charitable purpose. So if your association generates income from such economic business operations, this could result in a corporate tax liability.
To save corporate tax and continue to benefit from the exemption, you should therefore ensure that your income and activities are in line with charitable purposes. Avoid economic business operations that are not directly related to your association's purpose and adhere to the regulations of charitable status.
It may also be helpful to regularly review your articles of association and association activities to ensure that you continue to meet the requirements of charitable status. If you are unsure whether certain income or activities could trigger corporate tax liability, I recommend seeking advice from a tax advisor specializing in non-profit associations.
I hope this information helps you and I am available for further questions.
Sincerely,
Siegfried Strauss
