"61_Public Benefit Status _van Veen_"
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)