Corporate income tax on charitable organisations
Corporate income tax may play a role in charities looking for opportunities to improve and strengthen their income position. In principle, charities operate on a non-profit basis. After all, the funds received are intended entirely for charity. Nevertheless, it may be the case that a charitable organisation is confronted with corporate income tax.
Subject to corporate income tax with a public benefit organisation status (ANBI status)?
The presence of an ANBI status is not an exemption from corporate income tax. A charitable organisation is often a foundation. Foundations are subject to corporate income tax if and insofar as they operate a business. A business may exist if a foundation with one or more activities in a sustainably organised context of labour and capital participates in economic transactions and thereby makes or seeks to make a profit and/or enters into competition with other companies. At the moment that a structural surplus is achieved, this may already be considered a profit motive. Even if the surplus is reserved aside to absorb financial setbacks.
The Corporate Income Tax Act 1969 contains a number of specific provisions that may reduce the taxable profit of a charitable organisation. There is also a general exemption when the annual taxable profit is very limited.
It is important to realise that under certain conditions not all revenue streams are included in taxable profit. In order to assess whether there are taxed or perhaps exempted streams, it is necessary, among other things, to properly identify from whom the funds are received and whether there is a quid pro quo in return.
Want to know more?
Would you like to know more about corporate income tax for your charitable organisation? Please contact Marieke van Kooten by e-mail or phone: +31 (0)88 277 22 64 or Netty van Kreveld by e-mail or by telephone: +31 (0)88 277 10 22. They will be happy to help you.
Charitable organisations make an important contribution to society. The areas of attention are numerous, from general health and welfare, culture, refugees and development cooperation, education and science, to people on low incomes, the environment, animals and nature. Society wants to keep helping each of these and many other organisations, but because of the many changes in the sector and ever changing regulations, this involves significant challenges. Our specialists will be happy to advise you on making the best possible use of the opportunities for you and your organisation to maintain the contribution to society.