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That's pretty cool (and also pretty ridiculous that it took 8 months). I'm kinda confused by the last part: > Since both Patreon and our custom sponsorship pla

That's pretty cool (and also pretty ridiculous that it took 8 months). I'm kinda confused by the last part: > Since both Patreon and our custom sponsorship platform are based around rewards to patrons/sponsors, they cannot be classified as donations, so there are no changes to how those are taxed. So when German non-profits want to hand out merch in exchange for a specific donation amount, non-profit has to pay for-profit taxes on that?

deleted 5y ago
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codesections 5y ago
> So when German non-profits want to hand out merch in exchange for a specific donation amount, non-profit has to pay for-profit taxes on that? No, I think what he's saying is that it's not a tax-deductible donation for the patrons. (Which is actually more-or-less law in the US too, unless the reward is worth vastly less than the donation[0]) [0] https://www.nolo.com/legal-update/irs-changes-thank-you-gift-rules-35445.html https://www.nolo.com/legal-update/irs-changes-thank-you-gift...
southerntofu 5y ago
> So when German non-profits want to hand out merch in exchange for a specific donation amount, non-profit has to pay for-profit taxes on that? I don't know about german regulations specifically, but based on my experience in other legal systems and my understanding of the announcement, i believe it means that because "patreon and our custom sponsorship platform" aim to reward individuals, they cannot be considered donations for the non-profit. A non-profit may employ/contract people for specific tasks aligned with its goals, but rewarding people outside of such specific contract is closer to a "shareholder" model and incompatible with non-profit regulations. Of course, contributors to a non-profit may setup donation systems to pay their own bills, but that must not be advertised as donations "to the non-profit" (because that would be a lie), and they have to declare/pay taxes on that.
TeMPOraL 5y ago
That would be my default assumption. Back when I was running a non-profit in Poland, this was the assumption we've made when evaluating options like Patreon - that we'll account for it as income (I don't know the actual interpretation because I've stepped down before the foundation started using such services). On a related note - also in terms of Polish tax laws (which are bound to be more similar to German than e.g. US would be) - I recently talked about this with a tax advisor, in context of individuals funding OSS work via Patreon and other donation schemes; their answer was that it's a bit case-by-case, depending on your reward structure. If the donors are getting direct value back for their donations, it'll be seen as you selling those rewards (and/or performing a service), which will obligate you to start an actual business. The safe way to do it is to not give anything in return, except maybe for a trinket that's not commensurate to the value of donation.
Archelaos 5y ago
To qualify as a donation under German tax law, a donation needs to be voluntary (freiwillig) and altruistic (uneigennützig).[1] Where exactly the boundary between altruism and personal benefit lies would have to be judged by the courts in each individual case. For example, engraving the name of a donor on an altar, naming her in intercessions and inviting her to a dedication ceremony was interpreted as an "outflow of charitable funds" (Ausfluss der gemeinnützigen Mittelvergabe) and entitled to a tax deduction.[2] [1] For more details see the following ruling of Germany's Federal Fiscal Court: https://www.bundesfinanzhof.de/de/entscheidung/entscheidungen-online/detail/STRE201910047/ https://www.bundesfinanzhof.de/de/entscheidung/entscheidunge... (in German). [2] Cf. this ruling of Germany's Federal Fiscal Court: https://www.bundesfinanzhof.de/de/entscheidung/entscheidungen-online/detail/STRE201810106/ https://www.bundesfinanzhof.de/de/entscheidung/entscheidunge... (in German).

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codesections 5y ago

> So when German non-profits want to hand out merch in exchange for a specific donation amount, non-profit has to pay for-profit taxes on that? No, I think what he's saying is that it's not a tax-deductible donation for the patrons. (Which is actually more-or-less law in the US too, unless the reward is worth vastly less than the donation[0]) [0] https://www.nolo.com/legal-update/irs-changes-thank-you-gift-rules-35445.html https://www.nolo.com/legal-update/irs-changes-thank-you-gift...

southerntofu 5y ago

> So when German non-profits want to hand out merch in exchange for a specific donation amount, non-profit has to pay for-profit taxes on that? I don't know about german regulations specifically, but based on my experience in other legal systems and my understanding of the announcement, i believe it means that because "patreon and our custom sponsorship platform" aim to reward individuals, they cannot be considered donations for the non-profit. A non-profit may employ/contract people for specific tasks aligned with its goals, but rewarding people outside of such specific contract is closer to a "shareholder" model and incompatible with non-profit regulations. Of course, contributors to a non-profit may setup donation systems to pay their own bills, but that must not be advertised as donations "to the non-profit" (because that would be a lie), and they have to declare/pay taxes on that.

TeMPOraL 5y ago

That would be my default assumption. Back when I was running a non-profit in Poland, this was the assumption we've made when evaluating options like Patreon - that we'll account for it as income (I don't know the actual interpretation because I've stepped down before the foundation started using such services). On a related note - also in terms of Polish tax laws (which are bound to be more similar to German than e.g. US would be) - I recently talked about this with a tax advisor, in context of individuals funding OSS work via Patreon and other donation schemes; their answer was that it's a bit case-by-case, depending on your reward structure. If the donors are getting direct value back for their donations, it'll be seen as you selling those rewards (and/or performing a service), which will obligate you to start an actual business. The safe way to do it is to not give anything in return, except maybe for a trinket that's not commensurate to the value of donation.

Archelaos 5y ago

To qualify as a donation under German tax law, a donation needs to be voluntary (freiwillig) and altruistic (uneigennützig).[1] Where exactly the boundary between altruism and personal benefit lies would have to be judged by the courts in each individual case. For example, engraving the name of a donor on an altar, naming her in intercessions and inviting her to a dedication ceremony was interpreted as an "outflow of charitable funds" (Ausfluss der gemeinnützigen Mittelvergabe) and entitled to a tax deduction.[2] [1] For more details see the following ruling of Germany's Federal Fiscal Court: https://www.bundesfinanzhof.de/de/entscheidung/entscheidungen-online/detail/STRE201910047/ https://www.bundesfinanzhof.de/de/entscheidung/entscheidunge... (in German). [2] Cf. this ruling of Germany's Federal Fiscal Court: https://www.bundesfinanzhof.de/de/entscheidung/entscheidungen-online/detail/STRE201810106/ https://www.bundesfinanzhof.de/de/entscheidung/entscheidunge... (in German).