What needs to be considered for projects abroad?
We do not allow organizations to donate funds received from betterplace.org to external, foreign recipients. This applies even if the recipient is an organization recognized as a non-profit in the respective country.
However, the following 3 cases are permissible for us:
First of all: The following information does not constitute legal or tax advice. They only serve to raise awareness and are intended to encourage you to seek appropriate advice from an expert. Ask your tax advisor/lawyer for advice before starting the project.
1. It is permissible for an organization to use donations abroad through its own activities. This is the case if you yourself or official authorized representatives of the organization, e.g. the board of directors or official employees, use the donations directly on site.Please note that you have to provide more proof if you use the funds abroad. See this help article.
2. on the other hand, it is possible to hand over donations to a domestic or foreign so-called auxiliary person in the sense of § 57 para. 1 sentence 2 of the German Fiscal Code (AO), so that this person uses the funds on behalf of your organization for the project of your organization abroad. This is permissible under the following conditions. This is not a (onward) donation to a foreign recipient, but an own realization of tax-privileged purposes by your organization abroad by means of an auxiliary person.
What do you have to consider when using such an auxiliary?
Your organization must have concluded a written contract with the auxiliary, which specifies the content and scope of the activities as well as the accountability of the auxiliary. It must be clear from the contract that the auxiliary is acting on behalf of your organization (e.g. as a service provider, employee or volunteer) and the contract must comply with non-profit and other legal requirements. For this it is necessary that according to the circumstances of the case, in particular according to the legal and factual relationships that exist between the organization and the auxiliary, the work of the auxiliary is to be regarded as the organization’s own work, i.e. the auxiliary carries out a specific assignment according to the instructions of the organization. The auxiliary may be a natural person, an association of persons or a legal entity. The entity must be able to determine the content and scope of the auxiliary’s activities internally and supervise them. The activities of the auxiliary must comply with the provisions of the corporation’s articles of association. It is best to seek advice on this from a tax advisor.
In certain cases, we may request appropriate proof from you, such as the above-mentioned written auxiliary person contract. Please note that you are subject to increased verification requirements if you use funds abroad.
3. Finally, as a result of the reform of the non-profit law, it has been possible since the end of 2020 for your organization to cooperate with another non-profit organization under certain conditions and to realize a tax-privileged purpose together with this organization in Germany or abroad, see the new § 57 para 3 AO introduced by the legislator. One of the requirements is, for example, that this cooperation must be expressly regulated in the articles of association, see the wording of § 57 Abs 3 AO. In addition, a written cooperation agreement must be concluded between the two organizations for reasons of proof and documentation. The object of the cooperation can be any kind of service (e.g. IT services, personnel leasing, etc.).
It is possible that we will request appropriate proof from you, e.g. the articles of association with the regulations on cooperation based on division of labor and the above-mentioned written cooperation agreement. Please note that you are subject to increased obligations to provide evidence if you use funds abroad.
Note also that in the opinion of the tax authorities:
- only another tax-privileged corporation can be considered as a cooperation partner, but not, for example, a legal entity under public law, and
- the cooperation partner and the manner of cooperation must be designated in the articles of association of the parties involved. See further details in the amendment to the Application Decree to the Fiscal Code (AO) of 06.08.2021 (therein on p. 3 ff.) and in the amendment to the Application Decree to the Fiscal Code (AO) of 12.01.2022 (therein on p. 8).