Start an NGO/ANBI in the Netherlands
The Netherlands is a very popular haven for non-profit organisations of any kind. Not only do we have a very social and liberal climate, but there are also relatively few red tapes when registering an NGO (Non-governmental organization) in The Netherlands.
INCO can assist you with the incorporation of the company, and the (business) development, as well as providing ongoing corporate secretarial and administrative support. The most common legal entity for an NGO/non-profit is the Dutch Foundation, although a 'BV' (Private Limited Company) can also be used (but is much less common)
INCO can help you determine the best corporate structure for your Dutch NGO or non-profit organisation. We will discuss several topics with you, to determine the best solution, such as: Is there any link with the Netherlands, or reason why you are considering the Netherlands? Are you planning to make any investment in the Netherlands and employ staff here, open a physical office?
In the Netherlands, as in other countries, the privileged tax treatment of nonprofit organizations and their benefactors are related to the nature of their purpose and activities. Organizations that are eligible for the status of public benefit organization are those that pursue religious, ideological, charitable, cultural, scientific or public interest objects. In the remainder of this paper, these organizations are referred to as 'public benefit
The concept of public benefit organization is a fiscal law concept. Although the organization must in principle be a domestic organization to be eligible for public benefit status, there are no restrictions as to where its activities are (mainly) performed.
Nonprofit organizations may be liable for corporation tax (Vennootschapsbelasting), but only if they perform economic activities on a regular basis (see more details below). Most NGO’s would meet the criteria in The Netherlands to obtain a tax-free status, assuming it will meet the following criteria:
They are predominantly serving a social, ideological, charitable, cultural or scientific purpose;
The profit is limited to € 17.500 or does not exceed € 17.500 in that year and the four preceding years together;
The profits are used solely for the above purposes;
the revenues are mainly acquired through the efforts of volunteers;
the activities from which the income is derived do not seriously disrupt fair competition with commercial enterprises;
there is no aim to make a profit or the aim to make a profit is of marginal importance
This means you do not require to apply for any charitable status, such as the ANBI status, to obtain a corporate tax-free status.
Inheritance and gift tax
In the Netherlands, inheritance and gift tax is payable by the recipient of an inheritance, legacy or gift. Legal persons, such as the Foundation, with non-profit or cultural objectives (As SBBI (social Foundation)) can be exempt from gift tax. No separate application or certificate is required to be considered as SBBI. However, another option is to get qualified as a Charity, using the ANBI status.
Benefit institutions can make use of certain tax benefits. Donations to ANBIs are deductible for income tax or corporation tax. ANBIs are also eligible under certain conditions for an exemption from inheritance and donation tax, transfer tax and a reduction of energy tax. The activities of the institution must actually serve 90% or more in the public interest and according to the articles of association. Nor should there be a profit motive for the generally useful activities. In addition, a number of other conditions apply:
1. Do not have a profit motive. However, it is not enough that the regulations show that the institution does not have a profit motive. The actual behaviour must also be in accordance with this. Incidentally, it is not the case that an ANBI that, incidentally, makes use of operating surpluses and uses them for the benefit of the public benefit, immediately has a profit objective with its actual activity.
2. Use exclusively or almost exclusively the public interest.
3. No right of disposal over the assets of the institution for natural or legal persons.
4. Maintain an equity ceiling.
5. A remuneration restriction for the policymakers.
6. An up-to-date policy plan.
7. A reasonable ratio of costs/spending.
8. Provide for correct spending of a positive liquidation balance.
9. Meet requirements regarding the organization of the administration.
10. Make certain information public via the internet.
From 2010 onwards, apart from these conditions, an integrity test also applies.
Marking as an ANBI takes place at the request of the institution. The inspector decides on the request by a decision that can be objected to, possibly under conditions to be set by him.
Corporation income tax
Foundations are only liable for corporation tax if and insofar as they operate a business. It follows that (1) an enterprise must be and (2) only tax must be paid on the benefits arising from the conduct of the business.
(1) A foundation drives an enterprise when a sustainable organization of capital and labour takes part in the economic trajectory (not in a closed circle) with the intention of making a profit. The behaviour of a body must show that systematic achievement of advantages over costs is sought. A chance surplus will not result in tax liability for corporation tax, as long as it does not become a systematic surplus. If the foundation competes with companies, then the foundation is also expected to drive business. Then the effectiveness of the foundation must be at the expense of the revenues of other companies. Subsidies are included in the tax base for corporation tax purposes. As a result, it may be that systematic surpluses arise, as a result of which the foundation becomes liable to pay tax. However, the State Secretary has decided that no profit pursuit is deemed to exist if the surpluses: (a) have to be used in accordance with the subsidy objective or (b) must be paid back to the subsidy provider.
(2) If the Tax Authorities determine that the foundation is operating a company, then only tax must be paid on the benefits arising from the company. Payments from generosity (donations) by persons who have no interest in the company's business operations do not constitute benefits derived from the foundation's business operations. On the other hand, sponsoring that, for example, is advertised, is an advantage that follows from the conduct of business. Sponsoring is therefore included in the tax base.
Some special arrangements are:
- Taxable foundations that do not make profits more than € 15,000 annually are exempt from tax.
- ANBIs that mainly earn their profit with the help of volunteers (no wages or lower wages than usual), may, under certain conditions, deduct the costs that would also be deductible if the reward was to be made on the basis of the minimum wage (in some cases: the usual wage), less the actual costs.
We can draft a specific tax memo for your situation, for which we will involve our tax lawyer, who can prepare a quote based on your questions and requirements. Would you be interested in this?
Moving Forward to Incorporate your Dutch NGO
The next step for us would be to discuss the best corporate structure for your NGO and start the formation process. INCO has incorporated numerous NGO’s throughout the years, and we have experience with non-profit organisations of any size!
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