Tax exemption
Question
Our association is tax-exempt. We have now amended the association's purpose in our articles of association and also made further additions. Do we need to send the new articles of association to the tax authority?
Answer
Changes to an association's articles of association that include points that may have an impact on its tax-exempt status must always be notified to the tax administration. Such amendments include, in particular, the association's purpose, the unpaid work of the committee and the allocation of funds in the event of the association's liquidation. It is also important to inform the tax authority about any name changes. Enquire directly with your tax authority if you are unsure.
Question
Are committee members generally entitled to compensation for the performance of their committee function?
Answer
There is no legal entitlement to compensation for committee members. On the contrary: an important condition for the association's tax-exempt status is that committee members perform their role on an unpaid basis. They are, of course, entitled to the payment of any expenses incurred. Compensation can be provided for special professional tasks but this should always be linked to specifically described and limited assignments.
All compensation paid to the committee must be included in the budget and be reported as such in the accounts. Always bear in mind that other forms of recognition are possible, including the option to complete further training, the waiving of membership fees and the provision of extras.
And it is also important to note that recipients of compensation that goes beyond an expenses allowance must also pay tax on the relevant amount, meaning that the association is required to prepare a salary statement. If the compensation totals more than CHF 2300 per person per year, the relevant social insurance contributions must also be settled (see the work aid "Expenses, expense regulations, compensation" in this regard).
Question
Our association has already been tax-exempt for some time. Is it necessary to renew the association's tax-exempt status and, if so, when?
Answer
Tax exemption is issued by the cantonal tax authority on an unlimited basis, although conditions may be stipulated in some cases. Other cantons only grant tax exemption for a limited period, in which case a new application must be submitted after expiry. The tax authorities must be notified of any amendments to the articles of association.
The tax authority can, however, review this tax-exempt status. In such cases, the association in question is asked to submit certain documentation.
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
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.
