When is an association or foundation a non-profit organisation?

Whether an association or foundation is a non-profit organisation is always assessed on a case-by-case basis when carrying out taxation. Activities are assessed as a whole, considering the rules and primary activities of the association or foundation. Both of these need to fulfil the requirements for non-profit activities.

What are the requirements for non-profit activities?

An association or foundation can only be a non-profit organisation if all of the following conditions are met:

1. The association or foundation acts exclusively and solely for the public good. 
2. Activities are not only limited to a specific group of people, but they are openly accessible to all or otherwise cover a large group of people.
3. Participants in activities do not receive any financial benefits, such as dividends, profits or unreasonably high wages. For example, the purpose of lowering members’ costs is regarded as a financial benefit. However, membership services and discounts can be provided for members when these benefits are regular and reasonable, and they are closely related to the organisation’s activities.

Associations that promote non-profit activities include youth associations, sports clubs, and recreational or leisure associations based on volunteer work.

When is an association or foundation not a non-profit organisation?

An association or foundation cannot be a non-profit organisation if any of the following conditions are met:

• The association or foundation acts for private interests or promotes private financial purposes.
• The number of members is small or limited, and there is no intention to acquire new members.
• Activities focus only on a specific family, a small company or other closed group. In other words, activities are not directed largely outwards so as to promote the public good.
• The association or foundation uses funds for the good of its founder or their family members.
• Non-profit activities are in a minor role compared with other activities of the association or foundation, such as business activities.
• The association has not been registered.

Another obstacle may be that, when the association or foundation is dissolved, its funds are distributed to members or other participants in its activities, or the funds are used for purposes other than non-profit activities.