Two further rulings have recently been published concerning foundations that have lost their ANBI status.
ANBI
The abbreviation ANBI stands for ‘Algemeen Nut Beogende Instelling’ (Public Benefit Organisation). Organisations with this status are fully exempt from inheritance and gift tax. The gift tax exemption also applies to gifts made by the ANBI.
Donations to an organisation with ANBI status are tax-deductible for the donor for income tax purposes. Please note: a threshold and a maximum limit do apply (except in the case of a regular donation).
Management Foundation
Court of Appeal of The Hague confirms a court ruling that a management foundation does not serve the public interest. The Tax and Customs Administration was right to revoke this foundation’s ANBI status.
The foundation carried out activities in the health and elderly care sectors. As part of a restructuring, the operational activities were transferred to three private limited companies, in which the foundation held all the shares.
The foundation thus became a managing foundation. The Court ruled that the foundation itself must, in fact, carry out the ANBI activities. As these activities are carried out by the private limited companies, the foundation no longer qualifies as an ANBI.
Public interest
Gelderland District Court has ruled on a foundation whose aim is to establish a community of adherents to a particular philosophy of life.
However, the foundation’s expenditure is directed towards the residents of the residential community itself. Consequently, the foundation does not serve the public interest, but rather the individual interests of its own residents.
Furthermore, the foundation acted in breach of the conditions of the ANBI scheme by reimbursing or donating a sum of €220,000 to the founder.
The court considers the Tax and Customs Administration’s withdrawal of ANBI status at the end of 2018, with retroactive effect from 1 January 2012, to be correct.
Corporate tax
Following the audit of the accounts, the Tax and Customs Administration has also concluded that the foundation is liable for corporation tax. Through its activities, the foundation participates in economic activity. Furthermore, a surplus (profit) has been made in several years.
The court therefore upholds the additional corporation tax assessments imposed on the foundation by the Tax and Customs Administration.
Volunteers
The fact that the foundation’s activities are carried out, amongst other things, by volunteers does not affect its liability for corporation tax. The ruling does not specify to what extent the possibility of deducting notional labour costs for the volunteers was taken into account when calculating the profits. It is possible that the foundation is unable to substantiate this deduction.
If volunteers have been paid allowances under the volunteer scheme, the withdrawal of ANBI status may also mean that the scheme can no longer be applied. The former ANBI may therefore still face additional payroll tax assessments.