The call for more transparency in the non-profit sector has become louder and louder in recent years – especially with regard to the non-profit status of non-profit organizations (NPOs). The legislator has already responded to such call in the 2020 Annual Tax Act and created a publicly accessible register of grant beneficiaries, which will finally be launched on January 1, 2024. What does this mean for non-profit organizations?
The legal basis for the register of grant beneficiaries can be found in Art. 60b AO (German General Tax Code). In the accordingly newly established register of grant beneficiaries, potential donors can obtain information on whether the organization to which they intend to make a donation is actually entitled to receive donations. Therefore, the register also aims to enable donors to view of an organization’s charitable tax status at any time.
Furthermore, the donation receipt procedure is to be simplified and the digital issuing of donation receipts facilitated.
Who can be included in the register?
- Corporations, associations of persons or assets that are tax-exempt in accordance with Art. 5 (1) no. 9 KStG (German Corporate Income Tax Act). This includes domestic corporations with unlimited tax liability and EU/EEA corporations with limited tax liability
- EU/EEA corporations under private law that are not subject to limited tax liability but fulfill the requirements pursuant to Art. 51 to 68 AO. Please note: they must apply separately for inclusion in the register.
- Domestic legal entities under public law and those that have their registered office in the EU or EEA
- Political parties and independent voters’ associations
What specific data will be visible in the register?
- Corporation’s business identification number
- Corporation’s name and address
- Tax-privileged purpose
- The tax office responsible for assessing corporate income tax
- Date of issue of the last notice of exemption or assessment notice pursuant to Art. 60a AO
- Bank details
It is noticeable that the legal text does not mention the annex to the corporate income tax assessment notice – i.e., for all those non-profit corporations that maintain a taxable business operation and therefore do not receive a notice of exemption, but a corporate income tax assessment notice with annex. In practice, however, it is assumed that this data will also be stored.
The register, which is uniformly located at the German Federal Central Tax Office (“BZSt”), is filled with the data already available from the competent local tax offices. Thus, there is generally no need for non-profit corporations to take any action. If the competent tax offices become aware of any changes, they must inform the BZSt immediately.
However, organizations can also request changes to the register themselves; for example, new bank account details can be transmitted electronically using an officially prescribed data set. As the bank details can thus be viewed by donors, we recommend checking that they are up to date and complete.
The new register of grant beneficiaries is a prerequisite for enabling data transfer pursuant to Art. 50 (2) EStDV (German Income Tax Ordinance), as this option has so far been provided for in the law – but is meaningless in practice. The actual implementation, whereby the donor can authorize the recipient to send the donation receipt to the tax authorities by electronic transfer, is currently being planned. Some interfaces have already been agreed; however, the services for transmitting the notification are not yet available.