selflessness

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The selflessness is the central tax requirement for the determination of charitable status for the purposes of the Tax Code (AO). A selfless activity within the meaning of § 55 AO is the promotion or support, "if this is not primarily for self-economic purposes - for example commercial purposes or other profitable purposes - are pursued" . The unselfishness is only given in full if the statutes stipulate a promotion of the general public and the actual management also uses all means accordingly. The principle of selflessness allows the corporation to generate profits , but the overall scope of the activity must not be primarily aimed at increasing its own wealth. The use of all profits - whether from special-purpose operations , economic business operations or asset management - is also subject to strict rules and disregard of the exclusionary criteria leads to the loss of tax breaks .

Principle of the statutory use of funds

All funds of the corporation may only be used for the realization of the statutory purposes. The pursuit of other purposes not specified by the articles of association is tax detrimental. It does not matter that the purposes that are not in the statutes are also recognized as non-profit. At most, it would be permissible to stipulate several charitable purposes that are to be pursued by the corporation (e.g. in addition to care for the elderly also child and youth welfare ).

Furthermore, the corporation may not favor any person through expenses that are not in line with the purpose of the corporation or through disproportionately high remuneration . Among other things, it is therefore not permissible to make financial contributions to members of the corporation that go beyond the generally customary and reasonable amenities. Unusually high remuneration for board members or managing directors is a harmful use of funds. In addition, funds are not used selflessly if the costs for administration , including fundraising , exceed an appropriate framework. After the start-up and development phase, during which more than 50% of the administrative costs can still be harmless, it is - depending on the circumstances of the individual case - a misuse if more than half of the total funds received are used for administration and fundraising .

Principle of asset retention

An essential prerequisite for selflessness is the commitment of assets beyond the end of the corporation. This is to prevent assets that have accumulated tax-free through the provisions of the AO from being used for non-favored purposes after the end or cessation of the previous purpose. Therefore, upon resignation or liquidation of the corporation , members of the corporation may not get back more than their paid-up capital shares . Any additional assets may only be used for tax-privileged purposes. In order for this requirement to be met, the articles of association must stipulate that in the event of dissolution, the assets should be transferred to another tax-privileged corporation or a corporation under public law for tax-privileged purposes.

Principle of the timely use of funds

In principle, the corporation must use its funds “promptly” ( Section 55 of the Tax Code) for its tax-privileged statutory purposes. Funds are considered to be used in a timely manner if they are used at the latest in the two calendar years following the inflow for the realization of the tax-privileged and statutory purposes. Use in this sense is also the acquisition or manufacture of assets that serve statutory purposes. An exception to this principle is the legally permitted formation of earmarked or free reserves .

The granting of loans can comply with the requirement of timely use if the company immediately realizes its purposes by granting the loan (e.g. granting a grant on a repayment basis) or the loan is made available to another non-profit corporation for the timely realization of its purposes.

literature

  • Johannes Buchna: Charitable status in tax law ; Butcher publisher; 8th edition June 2007; ISBN 3816840485

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