In the case of non-profit institutions, the focus is naturally on the long-term preservation of the organisation's non-profit status. Not only must the formal requirements be complied with, but it must also be ensured that its actual management complies with the legal requirements of the non-profit status. In addition, non-profit institutions have different reporting requirements or additional tax formalities to comply with (e.g. statement of use of funds).
The various parts of a non-profit entity (non-profit part, asset management, special-purpose operation and non-profit taxable activity) must also be clearly delineated so that the various income and expenses can be correctly allocated to these areas.
In the case of foundations, the question also arises whether they should be structured as non-profit foundations or family foundations. This decision is based on the founder's intentions. The objective may be, for example, to keep a company in the family permanently and to provide the family with income (family foundation) or, for example, to permanently link the name and the person of the founder to a charitable purpose (non-profit foundation).
The structure can have inheritance and gift tax implications already at the time of foundation. At any rate, for non-profit foundations, what is referred to as substitute inheritance tax must be included in the consideration.
The treatment of foreign family foundations represents a special challenge (for instance in the form of a trust).
Benefit from our many years of experience in this area:
- Start-up advice for non-profit organisations
- Support in the realisation of taxbenefits
- Annual accounts and tax return
- Accounting, compliance management and organisational structure
- Advice on financing and association management
Non-profit organisations rank among the tax-advantaged forms of enterprise. Talk to our competence team about your questions in this context.
The starting point is always the correct establishment of the relevant institution. Thus, in the case of foundations, a distinction must first be made between non-profit and for-profit foundations, often in the form of family foundations or double foundations. The design of relevant statutes and foundation by-laws differs considerably in this respect and, if necessary, must be agreed in advance with the tax authorities and the foundation's oversight committee. In order to guarantee an institution's non-profit status, it must be ensured that the tax model statutes are comprehensively represented.
But the ongoing support of the institutions also raises many legal questions. These are partly identical with the questions related to commercial entities, but regular account must also be taken of specific questions, as these institutions are subject to special legal requirements.
The same also applies to the reorganisation of these institutions or, where necessary, their liquidation.
Part of our work as auditors is the statutory or voluntary audit of non-profit institutions and foundations, with express note to be made of the special requirements for these institutions arising from the law, statutes, or foundation statutes.