Do club assets have to be taxed?
September 14, 2022 | 45,00 EUR | answered by Dora Krause
Dear tax advisor,
My name is Wilhelm Schneider and I am the chairman of a non-profit organization that is dedicated to promoting the welfare of children and teenagers in our city. Over the past few years, we have accumulated a significant amount of assets through donations and membership fees, which we use to finance our projects.
Now I am wondering whether the organization's assets are subject to taxation. I am concerned that we may have to pay taxes that could heavily burden our budget for supporting children and teenagers.
As the chairman of the organization, it is very important to me that we continue to pursue our charitable goals and avoid any unexpected financial burdens. Therefore, it would be very helpful to me if you could explain whether and to what extent the organization's assets are taxable. Are there any possible exceptions or tax regulations that we could take advantage of to protect our assets?
Thank you in advance for your support and advice on this matter.
Sincerely,
Wilhelm Schneider
Dear Mr. Schneider,
thank you for your inquiry regarding the taxation of the assets of your non-profit association. As a tax advisor with years of experience in the field of association taxation and non-profit status, I can understand your concerns and would like to help you further.
In principle, the assets of a non-profit association are not subject to corporate tax as long as they are used exclusively for charitable, benevolent, or church purposes. This means that donations and membership fees used to finance projects for children and youth are usually not subject to taxation.
However, there are certain exceptions and regulations to consider even for non-profit associations. For example, income from economic business operations, such as the sale of goods or services, may be subject to value added tax. It is important to be aware of the limits for taxable economic business operations and, if necessary, to keep separate accounting records.
Furthermore, in the case of larger surpluses of the association's assets, a so-called "asset management tax" may be levied. This tax is imposed on the surplus generated by the association's assets and currently amounts to 30%. Therefore, it is advisable to regularly create an asset overview and take measures to avoid an impending surplus of assets.
To protect your association's assets optimally and minimize tax risks, I recommend seeking individual advice from an experienced tax advisor specializing in association taxation. They can help you identify tax optimization opportunities and adjust your accounting accordingly.
I hope that this information was helpful to you and I am available for any further questions.
Best regards,
Dora Krause
Tax Advisor
