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Tax incentives for assistance and non-profit associations
8. Mai 2020
The Federal Ministry of Finance published the administrative regulations for non-profit organisations on 9 April. These support measures apply from March 2020 and end on December 31 2020. The measures include tax incentives for assistance and non-profit associations. We have compiled all the information for you.
A simplified proof of donation applies for donations
For all special accounts, which are managed by
domestic legal entities under public law,
domestic public services, or
by an officially recognised domestic association of non-statutory welfare agencies, including its member organisations
which were set up for the purpose of Corona crisis management, the simplified proof of allocation applies without any limitation as to the amount. The cash deposit slip or the booking confirmation from a credit institution, e.g. account statement, direct debit collection slip or the printout of the slip from the online banking is sufficient proof. The simplified grant statement also applies to an account of the above-mentioned recipients to which grants were paid until a special account was opened.
If the grant is paid into one of the above-mentioned special accounts via an account managed as a trust account of a third party, the cash deposit receipt or the booking confirmation of the donor’s credit institution together with a copy of the cash deposit receipt or the booking confirmation of the third party’s credit institution will suffice as proof.
In the case of donations for assistance in the Corona crisis, which are made via a third party account to
a domestic legal person under public law,
a domestic public service, or
a non-profit corporation
association of persons or assets
If the third party’s account was managed as a trust account, the grants were forwarded from there to the recipient and the recipient was provided with a list of the individual donors and their respective share of the grant amount, a grant receipt issued to the respective donor will suffice as proof.
The donors must provide all the documents required for proof of this upon request by the tax authorities. Incidentally, they must be retained for up to one year after the tax assessment is announced.
Fundraising campaigns by non-profit organisations for people affected by the Corona crisis
As a matter of principle, a non-profit organisation is not allowed to use funds for tax-privileged purposes which it does not promote under its statutes.
If it nevertheless calls for donations for Corona sufferers, the following applies.
It is not detrimental to the tax benefits of a corporation if it uses funds that it has received as part of a special campaign to help Corona sufferers for the stated purpose itself, without amending its articles of association.
When promoting charitable purposes, the corporation must itself check and document the neediness of the person or institution supported. In the case of shopping assistance for persons in domestic quarantine or for persons who, due to their age or previous illnesses, belong to the particularly vulnerable group of persons, the need for physical assistance is assumed. The same applies to economic need for help with food donations or shopping vouchers for people in need or help for the homeless.
In the case of financial assistance, the economic need for help must be demonstrated to the supported person.
Support services outside the realisation of charitable or non-profit purposes, e.g. to companies particularly affected by the Corona crisis, self-employed persons or corresponding local authority support funds are not favoured.
It is, however, sufficient if the donations are either passed on to a tax-privileged corporation that pursues charitable purposes, for example, or to a domestic legal entity under public law or a domestic public office to help Corona-affected persons. The charitable institution that has collected donations must certify appropriate receipts for donations it receives and uses to help people affected by Corona.
The donation receipt must also refer to the special offer.
Non-profit corporations that, for example, pursue the support of public health, welfare or charitable purposes, such as sports clubs, music clubs, allotment garden clubs or customs clubs, may grant support without further difficulties.
Measures taken by tax-privileged corporations to provide aid for people affected by Corona
In addition to the use of the requested donation funds, it is exceptionally also neutral for the tax privilege of the corporation if it uses other existing funds, which are not subject to any other binding effect, to support people affected by Corona without amending the statutes. This also applies to the transfer of personnel and premises.
Purchasing services or comparable services for people affected by Corona are neutral for the tax privilege of the corporation. Additionally, the refund of costs for purchasing or courier services to members of the corporation is neutral.
Passing on existing funds to other tax-privileged corporations that pursue a charitable purposes, which are, for example, directly related to the support of people affected by Corona, to a domestic legal entity under public law or a domestic public office for this purpose, is neutral to the tax privileges of the corporation according to § 58 number 2 of the German Tax Code (AO).
If employees waive the payment of parts of their wages or parts of an accumulated credit balance in favour of a payment by the employer to a donation account of an institution entitled to receive donations within the meaning of Section 10b (1) sentence 2 of the Income Tax Act (EStG), these wage parts shall not be taken into account when determining the taxable wage if the employer fulfils the conditions for usage and documents this accordingly.
The wage that is not taken into account must be documented in the payroll account. The documentation can be waived if the employee has declared his or her waiver in writing and this declaration has been taken to the payroll account. The wage that is not included does not have to be stated in the wage tax statement. The parts of the employee’s wage that remain tax-free may not be taken into account as a donation in the income tax assessment.
Remuneration of the supervisory board
If a member of the supervisory board waives parts of his or her supervisory board remuneration before it is due or paid, the before mentioned principles for a salary donation apply accordingly.
Assistance to overcome the Corona crisis
If non-profit corporations provide personnel, premises, material resources or other services which are necessary for coping with the effects of Corona crisis, for example to hospitals, old people’s homes and nursing homes, then no objections will be raised if these activities are assigned to the special-purpose operation within the meaning of § 65 of the German Tax Code (AO) for both income tax and sales tax purposes. This applies regardless of the tax-privileged purpose of the respective corporation.
Subject to the further conditions of Art. 4 No. 14, 16, 18, 23 and 25 of the German VAT Act (UStG), the turnover taxable transfers of material resources and premises as well as of employees may be VAT-free as closely related transactions between the tax-privileged institutions, if the transferred services serve the care and provision of people affected by the Corona crisis, particularly in the areas of social welfare or social security. The VAT exemption does not apply to services provided by or to other entrepreneurs.
In the case of the provision of medical supplies or personnel for medical purposes free of charge by companies to institutions which provide an indispensable service for coping with the Corona crisis, such as hospitals, clinics, doctors‘ practices, emergency services, nursing and social services, old people’s and nursing homes and other public institutions such as the police and fire brigade, taxation of a free transfer of value on an equitable basis is waived.
Simplified use of funds
1.losses from taxable business operations within the meaning of Section 64 of the German Fiscal Code (AO) and in asset management
The compensation of losses that tax-privileged organisations can prove to have incurred in taxable economic business operations or asset management up to December 31 2020 as a result of the Corona crisis, which are
means of the non-material realm,
Profits from special purpose operations,
income from asset management or
Profits from commercial operations
is neutral for the tax privilage.
2.increase of short-time work allowance and continuation of payment of training supervisor and volunteer lump sum
If non-profit organisations increase the short-time working allowance for their own employees up to a total of 80 percent of their previous remuneration, neither the use of funds for statutory purposes nor the marketability and appropriateness of the increase will be examined if the increase is made uniformly for all employees. The requirements of § 55, Subsection 1, Nos. 1 and 3 of the German Fiscal Code (AO) are deemed to be fulfilled.
In addition, there is no objection under the law on non-profit organisations if the lump sums for voluntary work or training supervisors are continuingly paid, even though it is at least temporarily no longer possible to carry out the activity due to the Corona crisis.