Are clubs allowed to make profits?
There are a large number of registered associations in Germany. Often these are non-economic associations. A large number of them are recognized as charitable. The tax authorities deny others this status and thus tax privileges. Finally, there are some state-appointed business associations. Are all associations, including non-profit organizations, allowed to make a profit?
Associations can be economically active. Both a non-economic and an economic association are allowed to do so. They are allowed to make profits, albeit with different consequences. Because these are tax-free within certain limits.
Non-economic and economic associations - differences
In contrast to an economic association, a non-economic association has the option of benefiting from tax benefits. The prerequisite for this is that he exclusively, directly and unselfishly supports charitable purposes.
- It does not depend on an entry in the register of associations. However, he can only acquire legal capacity through an entry. The legislature allows non-economic associations to be economically active on a larger scale. Through the economic activity financial means should be able to be procured within the framework of the statutes.
- A commercial business operation must not be the sole purpose of the articles of association. Certain forms of commercial law such as GmbH or GbR are available for associations with economic objectives. This also includes the economic association.
- This is planned and permanently active on the market or acts against payment as Provider, also towards its members, or pursues the purpose of a cooperative Cooperation. He obtains his legal capacity through a state award.
With the recognition of non-profit status, a legal person (association, ...
If associations make high profits, they have to pay taxes
The legislature allows clubs to make profits. If you participate in economic life like ordinary entrepreneurs, you will also be treated as such for tax purposes. The normal retailer pays income tax, an association pays corporate income tax.
- Corporate income taxes are levied whenever certain tax limits are exceeded. In the case of a non-profit association, the limit is 35,000 euros (including sales tax), alternatively limited by an exemption for corporation tax of 5,000 euros (as of May 2014).
- Assuming that advertising services generate income of 20,000 euros, participation in a festival community brings another 2,500 euros. This association income makes a total of 22,500 euros. The taxation limit (35,000 euros) is not exceeded by this relevant income. Thus, the profits and profit shares may remain tax-free.
- Non-profit making clubs include the football clubs of the first two leagues. According to the DFL (German Football League), every second club in the Bundesliga achieved a high profit in 2011. The 18 top division teams have won a total of more than 52 million euros.
The tax office will waive the determination of taxes if the amount to be determined is disproportionate to the costs of collection. This can happen with a small club because an allowance cannot be claimed. The low incomes are below 500 euros.
