61_Public Benefit Status _van Veen_

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					Public benefit law in the
      Netherlands

    Zagreb 6 december 2005

    Dr. W.J.M. van Veen

     Vrije Universiteit Amsterdam/
     Baker&McKenzie Amsterdam
 Association and Foundation law
       and Public Benefit
• Public benefit status is not related to
  association and foundation law:
  – Not related to eligibility for establishment
    (Civil Code)
  – Related to tax provisions, which provide
    favorable treatment to associations and
    foundations engaged in public benefit activity
    (Tax Law)
        Public Benefit Status
• Has Fiscal Implications:
  – Donor Incentives for companies and individuals
  – Donations by a public benefit organization in
    the pursuit of its purpose are exempt
  – Donations (liquidation distribution) to other
    public benefit organisations are exempt
  – 0% gift and death duties (as of 1 January 2006)
  – For certain institutions; exemption energy
    consumption tax
        Acquisition of Public
           Benefit Status
• Public benefit status follows from the law
• Listing or acknowlegdement by public
  authority is not required (except for foreign
  NGOs).
• However, listing may be applied for by the
  Inspector for Registration and Succession
  (tax authority for gift and death duties)
  – A refusal is subject to review by fiscal court
   Acquisition of public benefit
         status (contd.)
• The relevant Inspector may challenge that a
  specific NGO meets the criteria for public
  benefit status.
• He can do so by refusing preferential tax
  treatment as claimed by the NGO
• NGO may challenge this position of the
  Inspector in court of law.
   Acquisition of public benefit
         status (contd.)
• Application for registration by letter
  addressed to Inspector for Reg. & Succ.
• Confirmation or refusal may be issued
  within one week.
       Requirements for Listing
• Purpose as well as de facto activities must be of
  public interest (religion, charity, culture, science,
  or public benefit interest)
• Established in the Netherlands
• No commercial purpose (income from commercial
  activities is allowed if applied to public benefit
  purpose)
• At least three directors (restrictions on close
  relations between directors)
• All directors have one vote
Requirements for listing (contd.)
• Directors may not be remunerated (in practice this
  is restriction is however, not applied)
• Liquidation proceeds applied for purpose or
  transferred to other PBO
• Amendment of articles and change of composition
  board of directors requires prior consultation with
  Inspector
• Annual account and report must be submitted to
  Inspector
Requirements for listing (contd.)
• Application must be done in writing
  accompanied with:
  – Copy of authentic deed containing articles of
    incorporation that are in force
  – List of names and addresses of directors
  – Last annual account
              Supervision
• General supervision by Public prosecutor:
  applicable to all legal persons including
  companies on shares and non profit
  organisations. Not specific for Public
  benefit organisation.
               Supervision
• By the Inspector:
  – For listed PBOs based on annual reports and/or
    at random
  – For non-listed PBOs based on tax declarations,
    press releases, complaints and/or at random

    (estimated number of PBOs 20.000-30.000)
   Loss of Public Benefit Status
• Fiscal implications only: loss of preferential
  tax treatment of donations, etc. received by
  or done by the organisation.
• For the future only (unless fraud is
  involved)
               Policy Proposals
• Listing required for public benefit status
• Requirements based on self-regulation; safeguards
  to be implemented in the articles of assocciation
   – composition board of directors
   – reporting requirements
   – decisionmaking process
   – conflict of interests provisions
   – Etc.
   (inspired on Central Bureau of Fundraising criteria for the
      Seal of Approval for fundraising organisations)