A nonprofit foundation can operate in four areas. First of all, there is the ideal area:
In the ideal area of the foundation, donations (increase in assets) are public grants or donations. These pure inflows of money are of course not subject to taxation. This also applies to turnover tax, since no exchange of services takes place and the foundation is treated as a non-contractor.
Asset management in the ideal area
The assets are, however, only the income for the purpose of the foundation can be used. In order to achieve the highest possible income from the asset portfolio, professional asset management is necessary. Typical returns for the area of asset management are: interest, rents and leases. However, price gains can also be included.
It would make sense to tax these income in addition to tax. No, they should be one hundred per cent of the endowment. For this reason, there is also an exemption from trade and corporation tax. Turnover tax is somewhat different.
Taxation in the area of ideas
If taxable income (eg from a taxable rental) is applied, a reduced tax rate of 7% is to be applied (nevertheless, instead of the normal tax rate of 19%). If these sales are below 35.000 € per year, an average rate of 7% can be applied for the pretax. On balance, this does not result in a tax burden
- A non-profit foundation generates rental income of net 30.000 €
- these are to be taxed with 7% 2.100 €
- The average rate of 7% is deducted from revenue
- is formed and is therefore also. 2.100 €
- In sum, there is a tax burden of 0 €
Purpose enterprises of a donation are economically organized business enterprises, which, however, have the following three characteristics: The enterprise must serve directly statutory purposes. The operation must be directly necessary for the realization of the statutory purposes.
The holding must not be placed unfairly on unfavored farms in economic competition.
A foundation “Against Forgetting” has set itself the task of dealing with the terror of National Socialism and bringing it closer to the young. For this, she has rented a training room and is generating income from lectures and publications on this topic.
The area is a purpose-built operation with the tax-advantaged consequences. It should be noted, however, that the income of 35.000 € already mentioned should not be exceeded for the tax benefit.
Economic business is defined as sustainable and self-employment for the purpose of generating revenue or other economic benefits beyond the scope of pure asset management.
These (contrary to the purpose of operation) do not directly contribute to the achievement of the statutory purposes and are in immense competition with other non-taxed traders.
However, the tax liability in the case of corporate income tax and trade tax also applies here only if the income exceeds 35.000 € per year. However, VAT is subject to the general tax rate of 19%, as long as there is no tax exemption.
Attention tax liability for non-profit making
The foundation itself does not have to operate these establishments directly. It is sufficient already if the foundation is involved. The tax consequences presented are also to be drawn.
A non-profit foundation is generally taxable. Special exemption or exemption rules do not exist.
What kind of income is there?
It should be noted that the foundation does not, like other entities, constitute a commercial enterprise by virtue of its legal form, but income from various types of income. These types of income include:
- Commercial income
- Income from agriculture and forestry
- Income from capital
- Income from leasing and lease
- Other Income
Income from self-employment and self-employment is not possible, because always the person is in the foreground and this is not possible with a foundation.
Corporation tax and solidarity surcharge
The income is taxed with the corporation tax of 15% (and solidarity surcharge 5,5%) and as far as commercial income is available, trade tax is payable, also around 15%.
First of all, this is a very attractive tax rate if, for example, the foundation's assets consist of real estate and thus income from letting and leasing exists.
Value added tax
There are no special requirements for VAT. Foundations can be normal entrepreneurs in the sense of the sales tax and thus achieve common taxable sales with the rule tax rate of currently 19%.
Again, the usual exemptions of VAT law apply, such as the tax-free rental of housing.
Sales tax and land tax
In addition to the already mentioned transfer tax, which is levied every thirty years, a tax on current business is provided, as far as real estate is concerned, land tax.
Here, too, the normal principles that the unit value forms the basis of assessment of the property tax, and since this is a council tax, this can be different levels, depending on the rate of levy.
More knowledge - PDF download, eCourse on demand or personal advice
Offline download: Download this text as PDF - Read usage rights, Because we do not automatically submit the title of this text for privacy reasons: When buying in "interests" the title register if support is needed. After buying text exclusively Download at this URL (please save). Or for a little more directly an entire book or eCourse with this text buy, read on.
Your eCourse on Demand: Choose your personal eCourse on this or another desired topic, As a PDF download. Up to 30 lessons with each 4 learning task + final lesson. Please enter the title under "interests". Alternatively, we are happy to put together your course for you or offer you a personal regular eMailCourse including supervision and certificate - all further information!
Consultant packages: You want to increase your reach or address applicants as an employer? For these and other topics we offer special Consultant packages (overview) - For example, a personal phone call (price is per hour).