Do non-profit organizations also have to keep cash books and present them to the tax office?
March 8, 2022 | 55,00 EUR | answered by Björn Ley
Dear tax advisor,
I am the chairman of a non-profit organization and have some questions regarding the taxation and charitable status of our organization. Our bylaws state that we exclusively pursue charitable purposes and are therefore exempt from corporate tax. Now I am wondering if, as a charitable organization, we are also required to keep cash books and submit them to the tax office.
So far, we have only prepared a simple income-expenditure account and submitted it to the tax office. Our organization's cash is managed jointly by several board members, but there is no detailed accounting or cash management.
I am concerned that we may be violating legal regulations by not maintaining proper bookkeeping. Are there specific regulations or exceptions for charitable organizations regarding cash management and documentation? How should we best proceed to meet the requirements of the tax office and avoid potential consequences?
Thank you in advance for your support and advice.
Sincerely,
Emil Hirschberg
Dear Mr. Hirschberg,
Thank you for your inquiry regarding club taxation and charitable status. As the chairman of a charitable organization, it is important to be familiar with the tax regulations and obligations to avoid potential consequences.
First and foremost, I want to emphasize that charitable organizations are generally exempt from corporate tax as long as they exclusively pursue charitable purposes and meet the necessary requirements. However, this does not mean that charitable organizations are exempt from all tax obligations.
Regarding the management and documentation of funds, charitable organizations are required to maintain proper bookkeeping in accordance with general tax regulations. This means that as chairman, you are obligated to keep cash books and provide them to the tax office upon request. A simple income-expenditure account is usually not sufficient to meet the tax requirements.
It is crucial that the fund management and documentation are orderly and comprehensible. This means that all income and expenses must be meticulously documented. It is advisable to maintain detailed bookkeeping to avoid any misunderstandings or discrepancies.
There are, however, special regulations and exceptions for charitable organizations regarding fund management. Small charitable organizations that do not exceed certain revenue and profit limits may be exempt from the obligation to keep double-entry bookkeeping. In this case, you can prepare an income-expenditure account, which must also be proper.
To meet the tax office's requirements and avoid potential consequences, I recommend reviewing and potentially improving your fund management. Maintain comprehensive documentation of all income and expenses and ensure that it is easily traceable.
If you are unsure whether your fund management meets the tax requirements, I suggest contacting a tax advisor specializing in club taxation and charitable status. They can provide comprehensive advice and help you fulfill your tax obligations.
I hope that this information has been helpful to you. If you have any further questions, please feel free to contact me.
Best regards,
Björn Ley
