When can I claim the VAT exemption for nonprofit organizations?
March 27, 2022 | 40,00 EUR | answered by Quentin Reuter
Dear tax consultant,
I am Gertrud Melzer and I am the director of a non-profit organization dedicated to environmental protection. In recent years, we have seen an increase in income from donations and events. Now we are faced with the question of when we can take advantage of the VAT exemption for non-profit organizations.
Currently, we are required to submit regular VAT returns and pay VAT. However, as a non-profit organization, we would like to know if and under what conditions we can be exempt from VAT.
My concern is mainly that we may be paying taxes unnecessarily, which could hinder our non-profit work. I am also unsure if we meet the requirements for VAT exemption and if there are any risks associated with choosing to do so.
Therefore, my question to you is: When exactly can we, as a non-profit organization, claim VAT exemption? What conditions must we meet and what steps do we need to take for this? Are there any potential pitfalls we should be aware of to avoid tax liabilities or penalties?
Thank you in advance for your help and support.
Sincerely,
Gertrud Melzer
Dear Mrs. Melzer,
Thank you for your inquiry regarding the VAT exemption for non-profit organizations. It is understandable that you are concerned about this, as a non-profit organization you naturally want to use your financial resources as effectively as possible to continue your valuable work in environmental protection.
The VAT exemption for non-profit organizations is regulated in § 4 No. 22 of the Value Added Tax Act (UStG). In order to be exempt from VAT as a non-profit organization, the following requirements must be met:
1. Non-profit status: Your organization must be recognized as non-profit. This means that your activities must serve a non-profit purpose, such as environmental protection. The recognition as non-profit is granted by the competent tax office.
2. Exclusive and direct non-profit activities: Your activities must be exclusively and directly non-profit. This means that all income and expenses of your organization must serve the non-profit purpose.
3. No distortion of competition: You must not provide services that directly compete with commercial providers, as this could lead to a distortion of competition.
Once you meet these requirements, you can submit an application for VAT exemption to the tax office. This application must be submitted in writing and contain all relevant information about your organization.
It is important that you carefully review all requirements and ensure that your organization complies with them to avoid any risks. If you are unsure whether your organization meets the requirements, I recommend contacting a tax advisor to clarify all questions in detail and minimize potential risks.
I hope this information is helpful to you and I am happy to answer any further questions you may have.
Sincerely,
Quentin Reuter.
