Which revenues of an association are subject to taxation?
November 27, 2023 | 50,00 EUR | answered by Dora Krause
Dear tax advisor,
I am Jonas Lauer and the chairman of a sports club. Over the past few years, we have generated various sources of income, including membership fees, donations, sponsorships, and events. Now, I am wondering which of these incomes are taxable and how I should properly declare and pay taxes on them.
Currently, we are recognized as a non-profit organization and benefit from various tax advantages. However, I am concerned that we may be violating tax regulations if we do not correctly report all relevant incomes.
My worry is that incorrect reporting of incomes may jeopardize our status as a non-profit organization or even lead to tax consequences. Therefore, I seek your expertise to determine which incomes of our club are taxable and how we can best handle their taxation to avoid legal issues.
I appreciate your support and thank you in advance for helping us clarify this important matter.
Sincerely,
Jonas Lauer
Dear Mr. Lauer,
Thank you for your inquiry regarding the taxation of your sports club's earnings. As the chairman of a non-profit organization, it is important to adhere to tax regulations in order to avoid potential legal issues and maintain the status as a non-profit organization.
First and foremost, it is important to know that non-profit organizations are generally exempt from corporate tax. This means that earnings that serve the charitable purpose are generally tax-free. This includes membership fees, donations, and proceeds from events that serve the statutory purpose of the organization.
However, there are also earnings that may be subject to taxation if they do not serve the charitable purpose. This includes earnings from commercial operations, such as the sale of merchandise items or the rental of club premises. These earnings must be looked at separately and may need to be taxed.
It is important that you keep a detailed record of your earnings and assess whether they align with the charitable purpose or if they are taxable earnings. If you are unsure, I recommend seeking advice from a tax consultant to ensure that you are correctly implementing all tax regulations.
Additionally, you should regularly review your statutes and ensure that they meet the requirements for recognition as a non-profit organization. If changes are necessary, they should be made promptly to avoid potential consequences.
I hope this information is helpful to you and I am available to assist you further if you have any additional questions. Thank you for your dedication to the organization and for upholding tax regulations.
Sincerely,
Dora Krause, Tax Consultant
