Purpose-built operation

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A special-purpose operation is an economically oriented sub-area of ​​a corporation that is otherwise non-profit or under public law .

The distinction between a (beneficiary) special-purpose operation and a (non-beneficiary) commercial operation is particularly important from a tax law perspective. The commercial businesses of the non-profit corporations are subject to income tax and are taxed beyond the exemption limits. Losses of non-favored economic businesses can endanger the non-profit status as a misuse of funds.

In contrast, the income of a special-purpose operation is not subject to income taxes, regardless of the amount of profit generated. Likewise, the sales of a special purpose establishment are usually exempt from sales tax ( § 4 UStG ) or they are subject to the reduced tax rate ( § 12 Paragraph 2 No. 8 a) UStG). A special purpose enterprise can thus be an important (if not the only) source of income and a central area for the implementation of statutory tasks. Losses of a special purpose enterprise may be financed from donations or other free funds.

Special purpose operations of the non-profit organizations

A commercial business operation is an independent, sustainable activity that generates income or other economic benefits and is not asset management ( Section 14 AO ). Such a business practice is generally taxable and a tax exemption is only justified if this activity represents a necessary and inseparable part of the charitable work.

In contrast to a purely economic business operation, a special purpose operation is given if

  1. the business operations in its overall direction serve to realize the tax-privileged statutory purposes of the corporation,
  2. the purposes can only be achieved through such a business operation and
  3. commercial business operations do not compete with non-beneficiary businesses of the same or a similar type to a greater extent than is unavoidable when fulfilling the tax-privileged purposes ( Section 65 AO).

In § 68 AO some special purpose establishments are listed as examples:

  • Retirement homes, retirement homes and nursing homes, rest homes, meal services, if they particularly serve the people named in Section 53 AO ( Section 66 Paragraph 3 AO),
  • Kindergartens, children's, youth and student homes, school country homes and youth hostels,
  • Workshops for disabled people who are eligible for funding under the provisions of Book Three of the Social Code and offer jobs to people who cannot work on the general labor market due to their disabilities,
  • Institutions of welfare education and voluntary educational assistance,
  • cultural institutions such as museums, theaters, and cultural events such as concerts, art exhibitions; this does not include the sale of food and drinks,
  • Adult education centers and other institutions, insofar as they hold lectures, courses and other events of a scientific or educational nature themselves; this also applies insofar as the facilities themselves grant the participants of these events accommodation and meals,
  • Scientific and research institutions whose sponsors are mainly financed by grants from the public sector or third parties or from asset management.

Due to organizational and structural necessities, non-profit corporations are increasingly tending to outsource the economically successful special-purpose businesses (e.g. old people's home, hospital, nursing service) to a newly founded subsidiary . The new company is usually run in the form of a GmbH .

Special-purpose operations of public corporations

Municipalities, for example, may set up special-purpose enterprises if the public purpose justifies the company and this purpose can be economically fulfilled by the company and the type and scope of the company is in an appropriate relationship to the performance of the municipality and the expected needs.

The municipality has a wide discretion when choosing the legal form of the special-purpose establishment. In the area of public forms of organization are publicly owned enterprise (unincorporated), the house operation and the administration union in question. Under private law, the special-purpose operation can be operated as a subsidiary or as an investment company. Possible legal forms here are partnerships OHG , KG , GbR (without legal personality) or corporations ( AG , GmbH , KGaA ) and mixed forms. A special form are the registered cooperatives (eG), the mutual insurance associations (VVaG) and the partner shipping companies (sea merchant shipping ).