A foundation, which organised cooking days for the elderly, does not qualify as an ANBI due to the marketing advantages gained by an affiliated limited company.
ANBI
ANBI stands for Algemeen Nut Beogende Instelling. ANBI status is granted, upon application, by the tax authorities and recorded in the ANBI register. An ANBI has an unlimited exemption in inheritance and gift tax. People who make gifts or donations to an ANBI can use the gift deduction in income tax.
An institution wishing to qualify as an ANBI must make a plausible case that its activities serve primarily and directly 90% or more public benefit. It is not sufficient if the activities have the effect of (indirectly) serving the public interest. Importantly, the burden of proof is on the institution, not on the tax authorities.
Soup
The case on which the North Holland District Court has ruled, concerns a foundation that organises cooking days, where elderly people prepare soups together with volunteers. These soups are then consumed at lunch. What is left over is delivered to elderly people's homes free of charge.
The foundation is affiliated to a BV, which manufactures and sells soups. At least 50% of this BV's profits are used to fund the foundation.
Welfare
The court confirmed that organising cooking days for the elderly qualifies as the direct promotion of the public interest. These activities are directly aimed at promoting the welfare of the elderly. The cooking days are not aimed at entertainment or relaxation because entertainment and relaxation qualify as ancillary effects of the foundation's primary objective.
Commercial activities BV
The court also considered that, in principle, the BV's commercial activities do not prevent the foundation from being classified as an ANBI. However, the BV derives marketing benefits from the foundation's activities. This is evidenced, inter alia, by the fact that the BV mentions the foundation's activities on the labels of the soups it sells.
The foundation fails to make it plausible to the court that the BV (and its shareholders) are not significantly benefited by the foundation's activities. To do so, the foundation would have to substantiate that, with the 50% to be received by it from the BV's profits, it is adequately compensated for the benefits the BV enjoys from the foundation's activities.
The court concluded that the foundation serves more than incidental (more than 10%) interests other than the public interest, namely the interests of the BV and its shareholders. The Inland Revenue was therefore right not to grant the foundation ANBI status.