A foundation and association may be (partially) liable to corporate income tax. This is the case if and to the extent that the foundation or association runs an enterprise or competes with taxpayers.
Corporate tax
Corporate income tax (Vpb) is payable on the profits earned by the foundation or association. It concerns only the profit earned from the corporate activity.
The tax rate in 2020 is: 25% of the taxable amount (from 2021, this rate is: 21.7%). But only 16.5% is payable on the first €200,000 of the taxable amount (from 2021, this rate will be: 15%).
The rates for 2021 are, of course, subject to change. Higher rates apply for the years prior to 2020. In general, the tax authorities can levy Vpb for up to the 5 years before the year in which the assessments are imposed.
Exemption
Filing 15% (or more) of the profits made to the tax authorities is obviously sour. Fortunately, many foundations and associations can make use of an exemption. This applies when the annual profit does not exceed €15,000 or the profit of 5 consecutive years does not exceed €75,000 (the profit ceiling). NOTE: for this €75,000, the profit in loss years is set to €0.
How does this exemption work for a foundation or association that has been in existence for less than five years? That is the issue in a case in which the Arnhem-Leeuwarden Court of Appeal recently ruling has done. The ruling concerns a professional association for stylists. The taxable profits of this association amount to:
| 2010 | € 9.884 |
| 2011 | € 28.433 |
| 2012 | € 31.414 |
In both 2011 and 2012, the annual profit exceeds €15,000. But the total in the 3 years does not exceed €75,000. The Court decides that the profit ceiling must be applied by time: 3/5 * €75,000 = €45,000. The total profit for 2010 + 2011 + 2012 is €69,731, as a result of which the association does not meet the conditions of the exemption and has to pay Vpb on its profit.
Extra attention from tax authorities
The Inland Revenue has a programme launched that focuses on intensifying information to (boards of) foundations and associations (referred to in this context as Stivers). This programme focuses first on VvEs (owners' associations) and e sports industry. Later it will be the turn of other industries.
The action consists of sending a letter which requires boards to first assess themselves, using a web module, the extent to which their foundation or association might be liable to tax. If they do not come out of this, they can ask the Tax Administration for a more comprehensive assessment.
The action towards Stivers obviously concerns not only corporate tax, but also payroll and sales tax (VAT). If you want to know more about the tax liability of foundations and associations, check out our comprehensive note.