Corporation tax for foundations and associations
Foundations and associations may also face a range of tax issues, such as the extent of corporation tax liability, the obligation to submit a corporation tax return as a whole or in part and the special tax incentives and exemptions for these legal entities.
Does your organisation achieve surpluses each year and have you ever considered whether and if so to what extent your organisation is liable for corporation tax? Mazars’ specialists are very experienced in the tax liability of foundations and associations and its reconciliation and will be happy to help you with this. Below are some examples of where knowledge of corporation tax liability is fundamentally important.
Does your organisation pursue commercial activities?
A foundation or association is liable for corporation tax if and in so far as it runs a business. The articles of association will often state that an organisation is not-for-profit, but it is the actual situation that counts and not the articles of association. If structural surpluses are made, there may be a corporation tax liability.
Does your organisation have a PBO status?
If your organisation has a PBO status (Dutch: ANBI-status), you will be subject to specific legislation and regulations at all times. You must comply with different publication rules to retain the qualification, but do you know which rules? By applying the right guidelines you will not have any unwelcome surprises. Also note that it is a misconception to think that a PBO institution is exempt from corporation tax. It may be, but this is not the basic assumption!
The payroll tax regulations state that a payment for volunteers does not lead to an employment relationship and is not therefore subject to income tax and national insurance contributions if the payment does not exceed a certain amount, which varies from year to year. If your organisation is liable for corporation tax, an allowance may be claimed subject to certain conditions for so-called notional wage costs of volunteers. In this case the organisation will have to be a public benefit (PBO) or social benefit organisation.
If your organisation receives grants, various grant conditions must be met. On expiry of the grant received, account must be rendered of its use and the results achieved. The receipt of grants may also have tax implications, such as VAT, but also for corporation tax.
Want to know more?
Would you like to know more about the possible corporation tax liability of your foundation or association? Please contact Marieke van Kooten by email or by telephone +31 (0)88 277 22 64 or Netty van Kreveld by email or by telephone +31 (0)88 277 10 22. They will be happy to help you.