The study compares the taxation of non-profit organizations in 25 EU countries, Japan and the United States. In particular, taxes on earnings, sales, inheritance and gifts are documented and compared.
General agreement can be seen in the forms, types and qualification principles of non-profit organisations and non-profit associations. For nearly all associations the non-profit character stands in the foreground. The state supports the activity of the associations in all examined countries by making their revenue from non-profit activity generally tax exempt.
This is basically the case in states that also have a broad tax definition of non-profit organisations (Germany, Denmark, Estonia, Finland, Greece). Some countries, such as France, Belgium, Portugal, Cyprus, only give preferential treatment to associations that are particularly approved and contained in a list. Also the regulations with regard to sales taxes show a strong agreement. Non-profit associations are exempt from sales taxes in the areas of their stated purposes but are subject to sales taxes if the revenue stems from business activity.
On the other hand, strong differences were detected with respect to the tax-exempt status of donations to non-profit associations, whereby donations to associations with headquarters abroad are not recognised as tax exempt, as a rule. Also the taxing of gifts and inheritances is handled quite differently. As a rule, associations with headquarters abroad do not receive direct preferential treatment if they are not registered domestically and have not been recognised by domestic authorities.
The first part of the study is devoted to an explanation of the relevant rules for non-profit organisations in the individual countries that were examined. These included not only the present EU countries but also the USA and Japan. In addition to the taxation of revenue (investment income, rental income, capital gains, etc.), business profits are also included. In addition, turnover tax regulations, the taxing of donations and membership fees as well as regulations on inheritance and donation taxes are examined.
National legal texts and statistics are used as well as other relevant data on taxes, turnover and employment for the non-profit sector in the 25 EU countries as well as Japan and the USA
The main result of the examination of regulations for non-profit organisations/associations is that the German regulations are largely in agreement with the rules in the majority of the examined countries. In some areas they are quite generous not only in terms of the definition of a non-profit organisation but also with respect to the donation regulations for services performed for non-profit associations and for the indirect promotion of non-profit activity by means of the “tutor lump-sum”. Also the taxation of inheritances and donations that are given to associations is relatively liberal vis-à-vis non-profit associations. This means that not only domestic non-profit associations but also foreign associations are exempt from inheritance and donation if they meet the conditions of Art. 13 Sec 1 No. 17c ErbStG, i.e. if the inheritance or donations given abroad are for non-profit purposes and if this can be viewed as certain.
ifo Schnelldienst 14/2005
Friedrich, Peter (with Anita Kaltschütz, Chang Woon Nam, Rüdiger Parsche and Dietmar Wellisch), "Die Besteuerung gemeinnütziger Organisationen im internationalen Vergleich", ifo Forschungsbericht Nr. 24, 2005, (Abstract)
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