Non-Profit status

The tax concession of the tax code is tied to the realisation of charitable, benevolent and ecclesiastical purposes. These purposes are regulated in §§ 51 ff. of the German Fiscal Code (AO) and must be anchored in the statutes of the corporation.

In addition to the realisation of at least one non-profit purpose, the corporation must fulfil further requirements in order to be recognised as tax-privileged.
These purposes must be pursued exclusively, directly and selflessly for the promotion of the general public, which must be reflected in your statutes as well as in the actual management.

According to the wording of the German Fiscal Code (Abgabenordnung), the purposes of the statutes and the way in which they are to be achieved must be defined so precisely that the statutes can be used to check whether the statutory requirements for tax concessions are met. This must be done by incorporating the provisions of § 60 AO Annex 1 into the statutes.

Non-profit corporations are fundamentally obliged to realise their purposes directly and thus independently. Fundraising for domestic and foreign corporations therefore requires a special structure. We will be happy to advise you on the requirements for a non-profit association and on fundraising.

This refers to the actions of the responsible persons. And yes, it is rarely formal (statutory) errors, but much more often unintended consequences in the actual management that lead to a threat to the non-profit status. Seek advice as soon as you think that such a case exists. Often it is still possible to save the tax relief.