Comparative legal analysis of associations laws and regimes in the EU. Country Report: Germany

Executive summary

An association (Verein) in Germany is considered a membership organization whose members pursue a common purpose. Two types of associations are legally recognized: non-profit and economic/commercial associations. The associations are regulated at federal level by sections 21 to 70 of the Civil Code (Bürgerliches Gesetzbuch, BGB). The non-profit association is defined as a coalition of natural or legal subjects organised to act over a certain period of time with the aim to achieve a common purpose. The law regulating the public benefit associations (öffentliche Vereine) provides for a similar definition but highlighting the public benefit aim.1

The primary source introducing associations is the National Constitution of Germany (Grundgesetz) which establishes the freedom to associate as a fundamental right.2 From then on, individuals enjoy the right to cooperate in associations in order to pursue common goals. Every legal act should follow this freedom and comply with the requirements for its application. In Germany, one of the main pieces of legislation regulating the functioning and formation of associations is the Civil Code (Bürgerliches Gesetzbuch, BGB). In particular, it regulates registered non-profit and for-profit associations registered as juridical persons (Vereine) in sections 21–79.

In Germany the status of “non-profit” is defined through the Tax Code and is granted to every entity carrying similar purposes no matter the structure. There are two main tax benefits for non-profit organizations working for public benefit: 1) they are exempted from inheritance tax, gift tax, and in majority of the cases from corporate income tax. 2) there is a tax deduction option for donations and endowments from the taxable income of donors.

Non-profit associations obtain their legal personality after registration in the register of associations, which is kept at the local court (Amtsgericht) of the district in which the association has its seat (Eintragung). This register may also be stored electronically as a computerized data file.3

On the other hand, economic/commercial associations (association with economic purposes) obtain their legal personality (Konzessionierung) after obtaining a permission by the relevant authority .4

The recognition of a non-profit status for an association does not exclude some commercial activities. In this case, the association may be obliged to pay sales tax. The rule of small business5 (Kleinunternehmerregelung) applies also in the case of non-profit association. Therefore, in order to be required to pay VAT6, an association should have an annual turnover of more than EUR 22 000 during the previous tax year.7

In 2017, the estimated number of registered associations in Germany is 603 886. The share of citizens involved in the third sector and the associations in particular is relatively high. Every second German is member of at least one association (2019)8 and their number is estimated to over 50 million people (2013)9. According to a study conducted in 2007 by the Bertelsmann Foundation (the Donors' Association for German Science and the Fritz Thyssen Foundation) in 2007, non-profit organizations contributed with 4,1 % to the overall gross value added generation in Germany. It is difficult for scholars to estimate the share between voluntary and paid work within the associations. A study conducted in 2012 indicates that only 53% of the registered associations employed paid personnel .10 On the other hand, volunteering is quite common in Germany.

Contents

REGULATORY FRAMEWORK

1. Definition, types of associations and characteristics

2. Sources of law founding associations

3. Formation requirements and constitutive acts and elements

4. Registration requirements

5. Administration costs

6. Liability

7. Legal personality

9. Membership regimes

11. Governance, operating rules and bodies

12. State supervision

13. Reporting and transparency

14. Resources and assets management

15. Liquidation

16. Fundamental decisions

17. Taxation regimes

LANDSCAPE OF ASSOCIATIONS

1.Number of Associations

2.Number of members

3.Activities covered

4.Revenues

5.Economic weight

6.Share between voluntary and paid work

7. Cross-border activities

REGULATORY FRAMEWORK

1. Definition, types of associations and characteristics

Association

An association (Verein) in Germany is considered a membership organization whose members have come together to permanently pursue a common purpose. The private associations are regulated at federal level by sections 21 to 70 of the Civil Code (Bürgerliches Gesetzbuch, BGB). It is defined as a coalition of natural or legal subjects organised to act over a certain period of time with the aim to achieve a common purpose. Accordingly, the law governing the public associations (öffentliche Vereine) provides for a similar definition.11

Two types of associations are legally recognized: non-economic and economic/commercial associations. The associations in Germany are established by notary deed when the relevant prerequisites set by the law are met. It contains the articles of association which according to Civil Code §57 (1) must contain the objects, the name and the seat of the association and indicate that the association is to be registered.

Non-economic associations (nichtwirtschaftliche Vereine / Idealvereine) are obliged to have a primary goal and activity other than conducting business activities. The law stipulates that the association may have any lawful purpose. The only non-authorized purpose is trading business.12 According to Civil Code §21 in combination with §55, the non-economic associations receive legal personality after registration at the local court (Eintragung). After registration, it assumes the designation “e.V.” (eingetragener Verein) (Civil Code §65 and §57 (2). Section 56 of the Civil Code stipulates that the minimum number of members required in order to register an association is seven. The reason for that is to prevent non-economic associations of minor value from obtaining legal personality.13 After registration, the number of members can decrease, but the minimum required for establishement is three.

On the other hand, according to Civil Code §22, in some cases, the responsible administrative authority of a German federal state (Bundesland) may grant legal personality (Konzessionierung) to a different type of association whose object is primarily commercial business operations (Wirtschaftlicher Verein).14 Associations may also appear in the market unincorporated and unregistered, without legal personality (nichtrechtsfähiger Verein) (section 54, Civil Code).15 This type of association is used predominantly by some political parties.

Non-profit status

In Germany, associations are regulated by the Civil Code. However, the non-profit status (Gemeinnützigkeit) is explained in section 52(1) of the Fiscal code (Abgabenordnung). It may be granted to any association if it constitutes an entity trying to achieve goals in public benefit (gemeinnützige Zwecke), volunteering aims (mildtätige Zwecke), or having religious aims (kirchliche Zwecke). These purposes must be clearly indicated in the statutes of association, and pursued through the life of the association.

The purposes considered as public benefit are listed in the Fiscal Code16. They are namely: the development of science, religion, art and culture, education, protection of the environment, public welfare, support for persons persecuted for political, racial, or religious reasons, internationalism, protection of animals, foreign aid, consumer advice, sport.

According to the Fiscal Code, the status of an entity qualifying for tax reduction does not depend exclusively by its charitable aim. Non-profit associations must work towards achieving such targets selflessly (selbstlos), exclusively (ausschließlich), as well as directly (unmittelbar). What is more, charitable organisations should not make profit (Gebot der zeitnahen Mittelverwendung).

Pursuant to section 55(1) of the Fiscal Code, the legal provisions with regards to altruistic activity (Gebot der Selbstlosigkeit) are as follows:

Non-profit associations obtain legal recognition as tax-exempt organizations on the basis of the charitable nature of their objectives. Their aims are evaluated on the ground of their statutes.

The German tax law considers non-profit associations corporate bodies (Körperschaften) regardless of their definition under civil law or their membership and legal capacity.

There are three main organisational forms that may be granted tax-exemption as non-profits:

2. Sources of law founding associations

The primary source regulating associations is the National Constitution of Germany (Grundgesetz). It establishes the freedom to associate as a basic right.17 From then on, individuals enjoy the right to cooperate in associations in order to pursue common goals. Every legal act should follow this freedom and comply with the requirements for its application.

A definition of the association is also offered through the law on the regulation of public association law (Gesetz zur Regelung des öffentlichen Vereinsrechts). With this legal vehicle, the German legislator achieves to define the scope of the freedom to associate and balance the interests between the latter and other major freedoms, therefore safeguard the constitutional order.

In Germany one of the main pieces of legislation regulating the functioning and formation of associations is the Civil Code (Bürgerliches Gesetzbuch, BGB). In particular, it regulates registered non-profit, and for-profit associations registered as legal persons (Vereine) in sections 21–79.

Non-profit associations are also regulated by the Fiscal Code and special tax rules as for the tax privileges granted to them. The Fiscal Code defines non-profit organizations (Gemeinnützigkeit) in sections 51 to 68 in the heading of tax-privileged purposes (steuerbegünstigte Zwecke).

The recognition that an organisation is pursuing charitable purposes is elaborated in special tax legislative acts such as:

3. Formation requirements and constitutive acts and elements

A non-profit registered association becomes a separate legal person after validation of its registration by the federal register of associations (Vereinsregister).19 After registration eV (eingetragener Verein) is added as a suffix to the name of the organization.20

In order to ensure a corporate structure, the association must be established by at least two founders in its constitutive act. In this case, the association may function under the principles of unauthorized associations.

However, the registration can only be successful with a minimum of seven members.

4. Registration requirements

Registration of a non-profit association involves a notary and the registration to the local register of associations.21 The entry in the register of associations is conditional upon application at the local court (Amtsgericht) for the district in which the association has its seat.22 One should distinct that the registration of commercial associations is conditional upon state grant.23

There is no requirement for the provision of nominal or minimal capital. Despite this, the articles of association usually specify the yearly membership fees. This is important because the Registered Association is not allowed to engage in commercial activities, thus it has no profits.

When a request for registration is made the following documents must be submitted:

a) a copy of the articles of association (with the signature of at least seven members and containing the date of incorporation). Pursuant to §57 of the Civil Code, the articles of association must have a concrete minimum content including; the name of the association, the seat, its purpose (which should not be commercial) and the intention to be registered as a non-profit association, including the suffix e.V in the name. In §58 of the Civil Code there are further minimum requirements explained, such as provisions concerning membership, membership contributions, composition of the Board and ways of convening the General meeting. Furthermore, articles of association should be signed by at least seven members and bring the date of their execution.24

b) a copy of the appointment of the board members (normally the minutes of the General Assembly appointing the members).25

Registration requires the filling of an application and belongs to the duty of the Board.26 Around 2-3 months should be anticipated for the formation of a Registered Association, e.g. the publication of the judicial decision or the administrative permission.

5. Administration costs

In Germany administration costs are regulated in the Law on the costs for Courts and Notaries (Gerichts- und Notarkostengesetz, GNotKG).

For a registration of a non-profit association, the total costs consist of the fees for the registration and the notary costs. In some federal states, however, there are state regulations according to which clubs or associations recognized as tax-privileged can apply for exemption from court costs due to the promotion of charitable purposes.27

The first registration with the court costs EUR 75 plus publication costs. For later entries, for example in case of amendment of the statutes, the court will incur costs of EUR 50 plus minor publication costs, which vary at a federal state level.

The notary costs for the registration of the foundation of an association amount to EUR 20 and for the drafting of the application form for the register EUR 30 (total EUR 50). 28

6. Liability

After the registration, the association has its own legal personality, therefore the liability is limited to the assets of the Registered Association and differentiated from the assets of its members. However, as legal persons are persons on the premises of a legal fiction, management is always exercised by natural persons, in the case of associations the responsible body for managerial decision is in principle the Board. According to § 31 of the Civil Code, the association is also liable for damage caused by the Board to a third party through actions or omissions in violation of their duties. This is the so-called organ liability (Organhaftung).

Exceptions to the non-liability of the Board and members are introduced through §31a-31b of the Civil Code in cases of misconduct. In sections 31a and 31b of the Civil Code it is mainly described that if members of executive bodies or special representatives act without financial compensation, or if they receive remuneration for their activity which does not exceed EUR 720 per year, they are liable towards the association for damage caused in performing their duties only in case of intent or gross negligence.

Exception constitutes the unincorporated association which pursuant to §54 brings joint liability of all the involved persons together.

Non-profit associations obtain their legal personality after registration to the register of associations kept at the local court (Amtsgericht) for the district in which the association has its seat (Eintragung). This register is kept in the competent local court where the association has its seat29. It may also be stored electronically as a computerized data file.30 The latter lays on the decision of each federal state.

On the other hand, economic/commercial associations (association with economic purposes) obtain their legal personality (Konzessionierung) by permission of the relevant authority, which is basically and administrative distinctive process.31

Depending on the form, after the completion of one or the other alternatives (registration or permission), the Registered Association obtains legal personality. It can be subject of rights and liabilities just as the natural persons. This particularly means that it is able to act in its own name represented by its organs, conclude transactions, sue and be sued in its own name; it also has the right to possess property, including real estate.

8. Definitions of public interest

In Germany the “public benefit” concept is described in the Fiscal Code (Abgabenordnung, or AO). However, there are other legal acts, which define special tax benefits: the Corporate Income Tax, Commercial Tax, VAT, the Inheritance and Gift Tax, the Income Tax. The Fiscal Code includes a definition of a tax-privileged purpose. What is more, the Fiscal Code stipulates those special requirements that exist for organizations working for tax-privileged purposes.

According to the Fiscal Code, there are three types of tax-exemptions:

If the general public interest is philanthropically promoted in a material, intellectual or moral area, this purpose can be declared non-profit. The supreme financial authorities of the federal states (administrative process) must designate a financial authority.

Church-related (Kirchliche Zwecke §54) “Church-related purposes” (kirchliche Zwecke) covers the support of public law religious communities, construction of houses of worship, spiritual development. Various forms of religious education are considered too.

9. Membership regimes

Membership in the association is established on a contractual basis. The articles of association define the conditions regarding entry and withdrawal modalities of the members as well as their duties and rights.32 The practical rule is that the associations themselves have the right to choose who enters the association or not. However, once obtained, membership is not transferable and not inheritable. The exercise of membership rights cannot be entrusted to another person.33 All members shall have the right to participate in the decision-making process of the association, to be informed about its activity, to use its property and the results from its activity by the rules provided by the statutes.

Members always retain the right to withdraw from the association once entered, therefore membership remains voluntarily.34 Membership can also be terminated on the grounds of:

1. Death or curatorship. In case that member is a legal entity, then death corresponds to cessation (but not dissolution or start of liquidation).35

2. Termination of the non-profit entity.

3. Exclusion by other members if similar possibility is granted through the articles of association. However, it should only be treated as a last and final resort.36

Members are obliged to pay their contributions/ membership fees and remain loyal to the purposes of the association. To this end, members should promote the interests of the association and abstain from malicious behaviours for the fate and the life of the association, e.g. participating in unlawful activities or hindering the achieving of the goal of the association.37

10. Economic activities permitted

According to Section 21 of the German Civil Code, non-profit associations may never pursue an economic activity as their main purpose; this is referred to as a so-called secondary purpose privilege. From this, the Berlin Court of Appeal (ruling of January 18, 2011, 25 W 14/10) rated the operation of kindergartens as an entrepreneurial activity - there are also different decisions by other district courts. In Berlin, a kindergarten can be non-profit, but not in the legal form of an association, but, for example, as a non-profit GmbH. In tax law, an economic activity is permitted without restrictions if it is carried out as a special-purpose operation and restricted if it is implemented as a taxable business operation.38

A definition of economic business operations can be found in the Tax Code and is defined as an independent, sustainable activity that generates income or other economic benefits and that goes beyond mere asset management. An intention to make a profit is irrelevant, an intention to generate income is sufficient (section 14 of the Tax Code). This means that even if the association does not generate any surplus with its economic activities, there can still be an economic business operation that can at least be subject to sales tax.

In principle, a non-profit association cannot engage in commercial activity in the sense that the association is not allowed to participate in the market and perform entrepreneurial acts. Nonetheless, some auxiliary commercial activities in support of the non-profit purpose which only play a subordinate role may be performed and do not harm.39 Since an association should be entitled to generate the necessary funds for the realization of the association's purpose, it cannot be prevented from directly realizing its ideal purpose with its economic activities.

11. Governance, operating rules and bodies

The supreme body of the registered association is the General Assembly of its members, which has the authority to appoint the members of the Board.40 This appointment is revocable at any time. The managing body of the association is the Managing Board.

General Assembly

The General Assembly consists of all members of the association, unless provided otherwise by the statutes. Members retain the right to leave the association.

Powers of the General Assembly

The main body of the Registered Associations in Germany is the General Assembly which is responsible for:

  1. amending the articles of the association (§33(1) Civil Code),

  2. appointment of the board members (§27(1) Civil Code),

  3. decision-making and resolutions for all matters that do not fall within the competence of other bodies of the association (business management matters) (§32(1) Civil Code).

Convening the General Assembly (§§36-37, Civil Code)

The Management Board is in principle the responsible body for convening the General Assembly by own initiative, unless differently provided by the articles of association. As for the reasons for convening, the general meeting is to be convened in cases laid down in the articles of associations or when the interests of the association require it, namely for decisions of particular importance.41

Convening the General Meeting can also be initiated by request of a small minority of its members. The required number is to be determined by the articles of association, otherwise one tenth of the members is considered as adequate.42 If the request is not granted, the local court may authorize the members who made the request to convene the meeting.43

Decision-making in the General meeting and Voting

Every member of the General Assembly is entitled to vote with one vote. Exception to a member's voting rights may occur in the event when the resolution relates to the execution of a legal transaction with him or the initiation or settlement of a legal dispute between him and the association.44

The General meeting decides on the basis of the majority voting of the present members in meetings.

Managing Board

The wording of §26(2) of the Civil Code provides that normally the Managing Board consists of one person, unless the statutes provide otherwise. In this case, the Management Board may consist of many persons.

The members of the management board of an association can only be remunerated if the statutes stipulate this.

Powers of the Board

As follows, the duties and powers of the Board include:

1) the management of the company and supervision of the association’s non-profit oriented activities. These activities that affect the structure and subsistence of the association and all matters that cannot be assigned to the category of everyday management fall within the exclusive competence of the General Assembly. Therefore, they are to be distinguished from everyday management.45

2) the legal representation of the association, unless provided otherwise to the statutes.46 Its power of representation with regard to a third persons cannot be restricted.

3) the registration of the association in the register of associations.47

Decision-making in the Board

Section 28 of the Civil Code applies in case of a board consisting of more than one person; it refers to the provisions of sections 32 and 34, which govern the resolutions of the members of the association, namely the decision-making in the General Assembly. Therefore, as for the convening and decision-making processes of the Board, the provisions that apply to the General Meeting are also applicable in the same manner.

12. State supervision

In order for an association to be recognized as non-profit by the financial authorities, the association's statutes and activities must meet special requirements laid down in §§ 51 et seq. of the tax code (AO) regulated. There is always close cooperation with the responsible tax authority (Finanzamt) in order to ensure that the articles of association meets the requirements of the non-profit status.48

Record keeping obligation of taxes payed by the company is also required. For the non-profit association, this is mainly the obligation to record according to the non-profit law. Because the recording of the income and expenditure of the association is a prerequisite for the association to be able to benefit from tax exemptions and tax concessions. The association must provide evidence that the management of the company is oriented towards the non-profit and tax exempted purposes and complies with the relevant provisions of the articles of association. Violation of the recording obligations can have far-reaching consequences - up to and including loss of non-profit status.49

On top of that, unlike the non-profit ones, economic associations are conditional upon a system of state permission. For this permission to be granted, a closer in-depth screening of the association, its purposes and objectives, is necessary.

Apart from taxation, there is no another supervisory body. This is why there is an ex ante control before granting legal personality.


13. Reporting and transparency

The organizations benefiting from tax-exempted status, are obliged to file a report on their accounts, the use of funds as well as the accumulation of reserves with the tax authorities. The reports must be submitted once a year and refer to the activities relating to the tax-exempted purposes. Thus, there is no reporting other than related to the tax benefit status.

The associations can submit a cash-flow accounting report with an inventory, or a commercial annual financial statement with a balance sheet and profit and loss account. There is no an obligation for the reports to be published.

14. Resources and assets management

In principle, the Managing board is in charge of managing the assets of the association during the period of existence of the association. However, it must respect the interests of the entity and the provisions of the articles of association.

Section 45 of the Civil Code introduces a special provision regarding asset management of the association in cases of dissolution or deprivation of the legal personality of the association. In these circumstances, the entitled persons to whom the assets devolve are specified by the General meeting.

If the purposes pursued by the association are not commercial business operations, the general meeting may, even without such a provision, allocate the assets to a public foundation or institution.

15. Liquidation

The Liquidation phase always comes before the dissolution of the association. The liquidation of assets is operated by the Board, unless the General Meeting appoints other third people according to the requierments of the appointment of the Board.50 Liquidators have to convert the available assets into money for the satisfaction of the creditors of the association. For this reason, liquidation is to be announced in public notice so that all creditors become aware of this fact and manage their claims.51

According to sections 55(1)(4) and 61(1) of the Fiscal Code, the legal provisions with regards to altruistic activity (Gebot der Selbstlosigkeit) are as follows: if an organization is dissolved or liquidated, or when its former charitable purpose is not applicable anymore, the assets of the organization that exceed the members' capital shares and the fair market value of their contributions in kind can only be used for tax-privileged purposes.

16. Fundamental decisions

Fundamental and strategic decisions related to the associations’ life are made by the General Assembly. These decisions affect the constitution of the association and other matters that cannot be assigned to the category of day-to-day management.

Prominent examples are the amendment of the articles of association (§33 Civil Code), the appointment of the members of the Board or the liquidators, the decision regarding dissolution, termination or merger of the association, decision regarding the height of the membership fees, budgetary decision or changing of the purpose of the association.52

17. Taxation regimes

In order to qualify for tax benefit, the associations must meet several criteria. The non-profit purpose written in the articles is not enough. A decisive factor is also the management of the entity, namely the way that the functioning of the association is organized53.

In Germany, there are two main tax benefits for non-profit associations working for public benefit:

They are exempt from inheritance tax, gift tax, and in majority of the cases, from corporate income tax.

There is a tax deduction option for donations and endowments from the taxable income of donors.

Tax on income

The corporations, associations, and endowments working for public benefit, benevolent or religious purposes are generally exempt from corporate income and trade tax. This applies in particular to their non-material activities, their special-purpose businesses and their asset management, such as donations, income from capital investments, membership fees54 (sphere of Vermögensverwaltung).

Income from related business activities (Zweckbetriebe) is tax-exempt too, and includes the following:

This tax exemption, however, does not extend to ancillary and secondary activities of the associations. These activities are a taxable commercial business. The income from unrelated business activities (wirtschaftlicher Geschäftsbetrieb) is subject to taxing (currently at 15%) (section 64 (6), Fiscal Code).

According to section 64(3) of the Fiscal Code there is a threshold for a turnover up to EUR 45 00056 which is not considered as taxable income. If the income of the association remains below this limit, it is exempt from corporate income tax and trade tax, otherwise it is taxable in full. If the remaining amount (taxable income) exceeds the tax-free limit of EUR 45 000, 15% corporate tax and a 5.5% solidarity surcharge apply.

In addition, trade tax (Gewerbesteuer) applies under conditions adopted by local authorities. In the majority of the cases non-profit entities do not pay trade tax but this tax exemption does not apply to business activities considered as unrelated or for income surpassing the aforementioned amount.

Value added tax (VAT)

The recognition of a non-profit status for an association does not exclude some commercial activities. In this framework, the association may be obliged to pay sales tax. The rule of small business (Kleinunternehmerregelung) applies also in the case of non-profit association. Therefore, in order to owe VAT, an association should have an annual turnover of more than EUR 22 000 the previous tax year.57

Even for associations exceeding this threshold, the VAT provides for some exceptions.

For example, several charitable activities are exempt from VAT. Some of them are educational, health-related, cultural and scientific activities. Grants are also not subject to VAT.

Charities may be allowed to apply a reduced VAT rate of 7% if an activity is subject to VAT. Despite this, the general VAT rate of 19% applies to non-related economic activities. The income from asset management activities as far as they are subject to VAT are also subject to the standard VAT rate of 19 %.

According to section 13(1) (16b), Inheritance and Gift Tax Act”58, charities are exempt from inheritance and gift tax. This condition applies if their tax-exempt status lasts for at least ten years after the inheritance or the transfer between living persons.

Also, there is a sales tax exemption for activities in the non-material area of ​​the association, a reduced tax rate of 7% for activities in the area of ​​special purpose operations, a reduced tax rate of 7% for activities in the field of asset management, if not VAT-free from the outset (e.g., rental) and the standard tax rate (7% or 19%) for activities in the area of ​​economic business operations.59

Tax on property

There is also prediction for tax exemption from real estate/property tax (Grundsteuer) for non-profit associations. However, this exemption is conditional upon permission of the responsible tax office following an application on behalf of the association.

LANDSCAPE OF ASSOCIATIONS

1.Number of Associations

According to the report of Ziviz the estimated number of registered associations in 2017 is 603 886. The next similar survey on the matter about Germany is scheduled for 2022.60

2.Number of members

The share of citizens involved in the third sector and the associations in particular is relatively high. Every second German is member of at least one association (2019)61 and their number is estimated to over 50 million people (2013)62.

 

3.Activities covered

According to the report Social Enterprises and their Ecosystem in Europe, Germany (2018), the majority of registered associations in Germany operate in the following areas: care services, education, culture, housing, integration.

4.Revenues

The sources of income of the registered associations in Germany is as follows: public grants and subsidies (29%), regulated service fees (38%), donations, sponsoring (13%), own revenues (sales, membership fees, return on capital market) – (19%)63.

5.Economic weight

According to a study conducted in 2007 by the Bertelsmann Foundation: In 2007, non-profit organizations contributed 4.1 percent to the overall gross value added of around EUR 2,200 billion. The third sector is roughly the size of the German construction industry and half the size of the public sector. Organizations from the areas of health and social affairs have the largest share of added value in the third sector with EUR 51 billion (58 percent).64

6.Share between voluntary and paid work

It is difficult for scholars to determine the personnel structures of non-profit association. A study conducted in 2012 indicated that only 53% of the registered associations and only 36% of the foundations (Stiftungen) employed paid personnel and these employment rates are mostly supported by part-time employment or mini-jobs.65 On the other hand, volunteering is quite common in Germany.

7. Cross-border activities

Receipt of funding of foreign non-profit organizations is allowed by German tax law. In addition, it authorizes a donation deduction even if the recipient of the grant is located in another European country. Despite this, a requirement is that the foreign recipient of the grant meets the requirements of §§ 51 et seq. AO (in the Fiscal Code (Abgabenordnung, or AO) for tax privileges for non-profit organizations (Federal Fiscal Court ruling of May 27, 2009 - XR 46/05, BeckRS 2009, 25015373).§§ 51 et seq. AO therefore also has a significant cross-border influence. Although they are not directly applicable to foreign non-profit corporations, they will often ensure compliance with these requirements in their own interest in order to benefit from indirect support through the donation deduction.66

References:

https://www.steuertipps.de/lexikon/g/gemeinnuetzigkeit

https://ra-balg.de/rechtsanwalt-fuer-vereinsrecht-koeln/vereinsformen-idealverein-und-wirtschaftsverein/

Neudert/Waldner, Erster Teil. Darstellung des Vereinsrechts, in: Sauter/Schweyer/Waldner, Der eingetragene Verein 21. Auflage 2021.

Prütting/Wegen/Weinreich, Bürgerliches Gesetzbuch Kommentar, 2020, 15 Auflage, Luchterhand Verlag.

https://www.gemeinsam-aktiv.de/mm/merkblatt.htm

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https://www.juraforum.de/lexikon/verein-mitgliedschaft

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file:///C:/Users/elene/Downloads/2015_09_01_Vereinsrecht_Broschuere.pdf

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https://www.justiz.bayern.de/media/pdf/broschueren/vorschaubilder/vereinsrecht_-_rund_um_den_eingetragenen_verein.pdf

European Commission (2018): Social Enterprises and their Ecosystems in Europe-Country report: Germany. Authors: Nicole Goeler von Ravensburg, Gorgi Krlev, Georg Mildenberger, Luxembourg: Publications Office of the European Union, available at http://ec.europa.eu/social/main.jsp?advSearchKey=socenterfiches&mode=advancedSubmit&catId=22.

Charitable organisations in Germany: overview

by Dr Andreas Richter and Dr Anna Katharina Gollan, P+P Pöllath + Partners, https://uk.practicallaw.thomsonreuters.com/3-632-5987?transitionType=Default&contextData=(sc.Default)

  1. §2 (1) of the Law for governance of public associations (Gesetz zur Regelung des öffentlichen Vereinsrechts, Vereinsgesetz). In German translation: „Verein … ist jede Vereinigung, zu der sich eine Mehrheit natürlicher oder juristischer Personen für längere Zeit zu einem gemeinsamen Zweck freiwillig zusammengeschlossen und einer organisierten Willensbildung unterworfen hat.“↩︎

  2. Art. 9 (1) of the German National Constitution reads in English translation: “All Germans shall have the right to form societies and other associations. (2) Associations whose aims or activities contravene the criminal laws or that are directed against the constitutional order or the concept of international understanding shall be prohibited. (3) The right to form associations to safeguard and improve working and economic conditions shall be guaranteed to every individual and to every occupation or profession. Agreements that restrict or seek to impair this right shall be null and void; measures directed to this end shall be unlawful. Measures taken pursuant to Article 12a, to paragraphs (2) and (3) of Article 35, to paragraph (4) of Article 87a or to Article 91 may not be directed against industrial disputes engaged in by associations within the meaning of the first sentence of this paragraph in order to safeguard and improve working and economic conditions.” Available online at: https://rb.gy/gz7che.↩︎

  3. §55a Civil Code.↩︎

  4. Combination of §§21-22 and §55, Civil Code.↩︎

  5. Threshold based on the turnover of the associations↩︎

  6. Threshold based on the turnover of the associations↩︎

  7. https://deutsches-ehrenamt.de/steuern/↩︎

  8. "Zivilgesellschaft in Zahlen" der Robert Bosch Stiftung 2019, https://www.dw.com/de/die-deutschen-und-ihre-vereine/a-48403682.↩︎

  9. https://bundesverband.bvve.de/vereine-in-deutschland/↩︎

  10. European Commission (2018): Social Enterprises and their Ecosystems in Europe-Country report: Germany. Authors: Nicole Goeler von Ravensburg, Gorgi Krlev, Georg Mildenberger, Luxembourg: Publications Office of the European Union, available at http://ec.europa.eu/social/main.jsp?advSearchKey=socenterfiches&mode=advancedSubmit&catId=22, p. 66.↩︎

  11. §2 (1) of the Law for governance of public associations (Gesetz zur Regelung des öffentlichen Vereinsrechts, Vereinsgesetz). In German translation: „Verein … ist jede Vereinigung, zu der sich eine Mehrheit natürlicher oder juristischer Personen für längere Zeit zu einem gemeinsamen Zweck freiwillig zusammengeschlossen und einer organisierten Willensbildung unterworfen hat.“↩︎

  12. The recognition of an association as non-profit pursuant to sec 51. of the Fiscal Code can function as an indication that the corresponding purpose pursued by the association is non-economic; see BGH NJW 17, 1943 Rz. 23 ff.↩︎

  13. Schöpflin, §56 in: Prütting/Wegen/Weinreich, Bürgerliches Gesetzbuch Kommentar, 2020, 15 Auflage, Luchterhand Verlag, p. 63.↩︎

  14. §22, Civil Code.↩︎

  15. Citing further the provisions about partnership, namely §705 ff BGB.↩︎

  16. Section 52(1) and (2), Fiscal Code.↩︎

  17. Art. 9 (1) of the German National Constitution reads in English translation: “All Germans shall have the right to form societies and other associations. (2) Associations whose aims or activities contravene the criminal laws or that are directed against the constitutional order or the concept of international understanding shall be prohibited. (3) The right to form associations to safeguard and improve working and economic conditions shall be guaranteed to every individual and to every occupation or profession. Agreements that restrict or seek to impair this right shall be null and void; measures directed to this end shall be unlawful. Measures taken pursuant to Article 12a, to paragraphs (2) and (3) of Article 35, to paragraph (4) of Article 87a or to Article 91 may not be directed against industrial disputes engaged in by associations within the meaning of the first sentence of this paragraph in order to safeguard and improve working and economic conditions.” Available online at: https://rb.gy/gz7che.↩︎

  18. https://uk.practicallaw.thomsonreuters.com/3-632-5987?transitionType=Default&contextData=(sc.Default)↩︎

  19. §21 and §64, Civil Code.↩︎

  20. §65 Civil Code.↩︎

  21. According to §55a, this registry is also maintained electronically as a computerized data file.↩︎

  22. §55, Civil Code.↩︎

  23. §22, Civil Code.↩︎

  24. §59 (3), Civil Code.↩︎

  25. https://www.sns-anwaelte.de/Die-Anmeldung-zum-Vereinsregister_725.aspx; https://uk.practicallaw.thomsonreuters.com/3-632-5987?transitionType=Default&contextData=(sc.Default)↩︎

  26. §59 (1), Civil Code.↩︎

  27. https://www.rkpn.de/vereinsrecht/veroeffentlichungen/eintragungen-in-das-vereinsregister-wurden-teurer.html↩︎

  28. https://www.vereinswiki.info/node/156.↩︎

  29. §§21 and 55, Civil Code.↩︎

  30. §55a Civil Code.↩︎

  31. Combination of §§21-22 and §55, Civil Code.↩︎

  32. §58, Civil Code.↩︎

  33. §38, Civil Code; https://www.juraforum.de/lexikon/verein-mitgliedschaft.↩︎

  34. §39, Civil Code.↩︎

  35. file:///C:/Users/elene/Downloads/2015_09_01_Vereinsrecht_Broschuere.pdf, page 31.↩︎

  36. file:///C:/Users/elene/Downloads/2015_09_01_Vereinsrecht_Broschuere.pdf, page 31.↩︎

  37. https://www.bmj.de/SharedDocs/Publikationen/DE/Leitfaden_Vereinsrecht.pdf?__blob=publicationFile&v=14↩︎

  38. https://www.vereinswiki.info/node/104.↩︎

  39. file:///C:/Users/elene/Downloads/2015_09_01_Vereinsrecht_Broschuere.pdf, page 17; As example one refers to festivals or events with entrance fees. In this case, this secondary commercial activity is tolerated.↩︎

  40. §27 Civil Code. However, exception is established in §29; in case that the Board lacks the necessary number of members for some reason, in urgent cases, after application of a person concerned, the local court that keeps the register of associations for the district in which the association has its seat appoints the members of the board.↩︎

  41. §36 Civil Code.↩︎

  42. §37(1) Civil Code.↩︎

  43. §37(2) Civil Code.↩︎

  44. §34(1) ff. Civil Code.↩︎

  45. Leuschner, BGB § 27 Bestellung und Geschäftsführung des Vorstands, in: Münchener Kommentar zum BGB 9. Auflage 2021, para. 35.↩︎

  46. §26 (1)(2) Civil Code.↩︎

  47. §59 (1) Civil Code.↩︎

  48. https://www.bmj.de/SharedDocs/Publikationen/DE/Leitfaden_Vereinsrecht.pdf?__blob=publicationFile&v=14, page 60.↩︎

  49. https://winheller.com/blog/buchfuehrungspflicht-gemeinnuetzige-vereine/↩︎

  50. §48(1) Civil Code.↩︎

  51. §50 (1), Civil Code.↩︎

  52. https://deutsches-ehrenamt.de/vereinsrecht/mitgliederversammlung/.↩︎

  53. https://deutsches-ehrenamt.de/steuern/↩︎

  54. Membership fees are normally tax-free, however there might be an exception in cases they exceed EUR 300 per year.↩︎

  55. §§65 to 68, Fiscal Code↩︎

  56. This sum used to be EUR 35.000; however, it has changed for tax year 2020 and on with retrospective power.↩︎

  57. https://deutsches-ehrenamt.de/steuern/↩︎

  58. https://uk.practicallaw.thomsonreuters.com/3-632-5987?transitionType=Default&contextData=(sc.Default)↩︎

  59. Nicole Goeler von Ravensburg, Gorgi Krlev, Georg Mildenberger (2018), Social Enterprises and their Ecosystems in Europe-Country report: Germany, p. 55.↩︎

  60. https://www.ziviz.de/ziviz-survey; https://www.bertelsmann-stiftung.de/de/unsere-projekte/zivilgesellschaft-in-zahlen/projektnachrichten/ziviz-survey-2017↩︎

  61. "Zivilgesellschaft in Zahlen" der Robert Bosch Stiftung 2019, https://www.dw.com/de/die-deutschen-und-ihre-vereine/a-48403682.↩︎

  62. https://bundesverband.bvve.de/vereine-in-deutschland/↩︎

  63. European Commission (2018): Social Enterprises and their Ecosystems in Europe-Country report: Germany. Authors: Nicole Goeler von Ravensburg, Gorgi Krlev, Georg Mildenberger, Luxembourg: Publications Office of the European Union, available at http://ec.europa.eu/social/main.jsp?advSearchKey=socenterfiches&mode=advancedSubmit&catId=22↩︎

  64. https://idw-online.de/de/news430533↩︎

  65. European Commission (2018): Social Enterprises and their Ecosystems in Europe-Country report: Germany. Authors: Nicole Goeler von Ravensburg, Gorgi Krlev, Georg Mildenberger, Luxembourg: Publications Office of the European Union, available at http://ec.europa.eu/social/main.jsp?advSearchKey=socenterfiches&mode=advancedSubmit&catId=22, p. 66.↩︎

  66. https://www.tax-legal-excellence.com/tle-29-2017-besteuerung-gemeinnuetziger-organisationen/↩︎