Court of Appeal of ‘s-Hertogenbosch ruled that a KBO association was rightly denied ANBI status by the Inland Revenue.
CBE
The case concerns an association founded on 1 January 1954 that is part of the Katholieke Bond van Ouderen in Noord-Brabant (the KBO Brabant). The KBO Brabant is an (umbrella) association, which has been classified by the Tax Office as a Public Benefit Institution (ANBI).
KBO Brabant requested the Tax Authority to add the local KBO association to its ANBI group decision, which the Tax Authority refused.
Public benefit
The Court first noted that the law requires an ANBI to be an institution whose sole or almost exclusive purpose is the public benefit. The burden of proof for this lies with the institution seeking ANBI status. (Virtually) exclusively is quantified in taxation as: for 90% or more.
In addition to this quantitative test, the Court also carries out a qualitative test. The Court held that the bulk of the KBO association's activities are aimed at relaxation and entertainment of its members (and sometimes non-members). Although it also organises activities aimed at providing support to the elderly (such as collective and individual advocacy), the association has not made it plausible that its activities are (almost) exclusively for the public benefit.
The Court does not doubt that the activities can contribute to the social cohesion and self-reliance of the elderly, but this concerns a beneficial side effect of the association's activities. Most activities serve relaxation and social intercourse among the elderly, namely (light) sports, games and social gatherings, such as various celebrations, excursions, meals and coffee mornings.
The court also considered: “It is also significant that the interested party is an association, which by its nature implies in principle that the activities organised by the interested party are aimed at promoting the interests of its own members.”. Associations can only qualify for ANBI status if the objective and actual activities are not primarily aimed at the private interests of its members, but have external effects.
SBBI
The importance of qualifying as an ANBI is that the association then gets a space exemption in inheritance and gift tax. In addition, donations made to an association qualifying as an ANBI are deductible for income tax purposes.
The KBO association does qualify as a Social Interest-Bearing Institution (SBBI). An SBBI also enjoys an exemption from inheritance and gift tax for inheritances and gifts received. But donations to an SBBI are not deductible for income tax, except if they are periodic donations that meet specific conditions.