Liability to pay taxes
Question
Are membership fees subject to VAT?
Answer
Clubs and associations may impose membership fees if this is stated in their Articles of Association. If fees are imposed, the question arises as to whether they are subject to VAT. The Swiss Federal Supreme Court ruled that the crucial factor in assessing this question is whether there is an exchange of services between the club/association and its members.
If the member receives a specific benefit in return for the contribution he or she has made, this is referred to as a "non-genuine" club/association fees. These contributions must be recognised for VAT purposes. If, on the other hand, the fees set out in the Articles of Association are used in accordance with the purpose of the club/association and the associated services ¬benefit all members, these are "genuine" membership fees and are therefore not subject to VAT.
Question
As an association, are we subject to value-added tax? While we do not generate any actual turnover and member fees are not subject to value-added tax, we do receive sponsorship funds.
Answer
It is important that the committee enquires about value-added tax, as a self-declaration requirement applies here. Generally speaking, sponsorship revenues are subject to value-added tax, provided this is genuine sponsorship. Simply naming donors in an annual report, for example, does not belong to this. Sponsors are organisations or individuals that usually support the association with larger amounts and receive something in return: space for logos, advertisements, appearance opportunities, advertising space, etc.
The good news: value-added tax is only payable for non-profit, volunteer-run associations from an amount of CHF 250,000 rather than CHF 100,000 as is the case for all others.
Question
How can our association be exempted from tax?
Answer
As a rule, there is no "automatic" tax exemption for associations. Applications for tax-exemption based on the association's non-profit status must be submitted to the cantonal tax administrations. These will also provide information on the relevant conditions and accept written applications for tax-exemption. The articles of association, foundation protocol, annual financial statements and other documents concerning the association's activities must be enclosed with the application. The articles of association should provide information on the charitable, social, cultural, etc. purpose of the association. The association's purpose must not exclusively benefit its own members (no self-help organisations) and the committee members must, as a rule, perform their role on an unpaid basis.
Upon the dissolution of the association, the liquidation proceeds must go to another tax-exempt association. Tax-exemption does not rule out a possible obligation to pay VAT!
See the work aid "Tax exemption for associations".
Question
Our association was founded in July last year. Is it correct that we only have to prepare our annual accounts at the end of this year and thus also our tax statement?
Answer
The association's annual accounts can be completed as stipulated in the articles of association. For the tax year, however, it is the calendar year that applies. If your association generated a profit during the first six months of its existence and if this profit exceeded the exemption limit, you must complete a tax return. In the cantons of Bern and Lucerne, you are required to register your association with the tax authority.
Question
Does an association that is recognised as tax-exempt also have to complete a tax return?
Answer
This is regulated differently from canton to canton; most cantons do not require a tax return if the organization is tax-exempt. The association must obtain information directly from the cantonal tax administration. However, there are cantons that require the annual accounts of these associations to be submitted to the tax administration. This requirement is formulated in the decision on tax exemption.
Question
Due to our assets, we are now liable to tax. Where do we need to register?
Answer
You can find information on the website of your cantonal tax authority in the section for legal entities. Depending on the canton, you can download and complete the forms for your tax return digitally. In some cases, you may have to register first.
