International Tax Bulletin - Beneficial tax regimes for not-for-profit and charitable activities

04 November 2014

We are pleased to provide you with the Fall 2014 issue of our International Tax Bulletin. This issue focusses on special tax regimes for not-for-profit and charitable activities in major European jurisdictions.

Many jurisdictions nowadays provide for a beneficial tax treatment of individuals, businesses and organisations that are involved in funds structuring, assets or activities for international not-for-profit and charitable purposes. Not only traditional charitable organisations make use of this beneficial treatment but increasingly also certain technological research and public benefit entities set up by multinational companies find their way into these regimes.

Not-for-profit and charitable activities are increasingly cross-border which is an interesting development. Although this was traditionally excluded by many domestic tax law frameworks, recent developments including case law of the European Court of Justice on anti-discrimination and the freedom of establishment with the EU have opened the door to more qualifying cross border activities.

This issue of our International Tax Bulletin will guide you through the tax regimes and important considerations in relation to the pursue of not-for-profit and charitable activities in the UK, Germany, Belgium, Switzerland, France, Sweden and The Netherlands. Should you have any questions do not hesitate to contact your local Bird & Bird tax law expert.


Belgium
Tax rules governing non-profit associations

Belgium is of particular interest when establishing non-profit associations (such as trade associations), not only for its central location close to EU institutions, but also for its tax rules...

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France
Tax incentives of non-profit organisations

In France, non-profit organisations are in full expansion. For the year 2012, the weight of a social and solid economy represented 10% of employment.

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Germany
Tax-exemption rules for nonprofit entities

In Germany, upon application, public-purpose entities may be granted a tax-exempt status, exempting them from German corporate income tax and trade tax. Such tax-exempt status may also result in a VAT-exemption or reduced VAT rate for services provided by such entity, depending, however, on the specific type of service rendered.
 
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Sweden
Beneficial tax regimes

In Sweden, foundations and non-profit cooperatives with a purpose of public benefit are generally tax-exempted. However, this is not always the case and several foundations and non-profit cooperatives do carry out business activities that are liable to tax...

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The Netherlands
Dutch Design: unique tax regime for not-for-profit and charitable activities

The Netherlands provides for a favourable regime that matches the demands of Dutch and international individuals, businesses and organisations, seeking to structure their funds, assets or activities for international not-for-profit and charitable purposes. For many international organisations, the Netherlands is the jurisdiction of choice following a unique tax framework designed for not-for-profit and charitable activities...

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UK
Scientific research associations - UK tax regime

In the UK, scientific research associations may qualify for exemption from UK tax if they meet various conditions. A scientific research association ("SRA") is a company for UK tax purposes and is exempt from UK corporation tax in respect of: (i) trade profits; (ii) capital gains made on disposal of its assets; (iii) gifts of money which the SRA receives from companies; (iv) property rental income; and (v) qualifying income and non-trading gains on intellectual property ("IP")...

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Switzerland
Non-profit tax aspects

By Fabrice Kuhn

Fabrice Kuhn
kuhn@bccc.ch

Attorney at law and certified tax expert
BCCC AVOCATS SARL – BCCC ATTORNEYS-AT-LAW LLC*

*Swiss law firm BCCC cooperates with Bird & Bird.

In Switzerland, non-profit legal entities are in principle subject to ordinary corporate taxes levied at the federal, cantonal and municipal levels. Legal entities pursuing non-profit purposes may obtain full exemption from federal, cantonal and municipal taxes if certain requirements are met. Furthermore, non-profit entities benefit from special treatment for VAT purposes...
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