On 1 January 2008, the foundations of the current system relating to the Public Benefit Organisation (ANBI) introduced. Organisations eligible for the new ANBI status were required to apply for it by the end of 2007 using a form provided by the Tax and Customs Administration for that purpose. ANBI status was granted or refused on the basis of the organisation’s answers to the questions set out on this form. The Tax and Customs Administration did not have sufficient capacity to examine the substance of the applications. This was to be carried out in the following years, and if it were then concluded that ANBI status had been granted incorrectly, that status would be revoked.
The Advocate General (AG) at the Supreme Court recently published an opinion on the question of whether the Tax and Customs Administration was right to in 2011 with retroactive effect from 1 January 2008 has revoked a foundation’s ANBI status. The Advocate General concludes that the (long) retroactive effect is permissible because the foundation provided incorrect information in its application. The foundation had, in fact, stated that it served the public interest to the extent of at least 50%. However, the foundation’s actual activities focus primarily on maintaining a private collection of classic cars, which does not qualify as the public interest. According to the Advocate General, it is irrelevant whether the foundation acted in bad faith when completing the form. As the foundation’s actual activities can only be assessed retrospectively, it is reasonable to be able to revoke ANBI status with retroactive effect. The final say, of course, rests with the Supreme Court.
The system governing ANBIs, established in 2008, has been tightened up in the years since. For example, an organisation seeking ANBI status must now serve the public interest not just under section 50%, but under no fewer than section 90%. In addition, ANBIs must publish a number of (financial) details online. If they fail to do so, their ANBI status may be revoked.
The significance of ANBI status lies in exemptions from inheritance and gift tax, as well as in the fact that donations to the ANBI are tax-deductible against the income of the generous donors.