Successful outcome of AGE lobby on VAT rules for NGOs: EP has decided each Member State should decide itself about VAT for NGOs
On 13 October the European Parliament adopted a Resolution on the Future of VAT. This has key implications for older people’s NGOs:
- VAT exemption for activities carried out by civil society organisations: the EP underlines that non-profit-making organisations play a vital and very beneficial role in furthering democracy, growth and prosperity in Europe. It calls for a mechanism allowing Member States wishing to strengthen civil society to grant a general VAT exemption for all or most of the activities and transactions carried out by civil society organisations, particularly smaller NGOs (see article 19).
- It also calls on the EC to look carefully into the issue of further reducing VAT red tape for non-profit-making organisations. It underlines that there should be a higher degree of flexibility in the VAT system for Member States wishing to take ambitious measures in order to ease the VAT administrative burden for these organisations (see article 31).
AGE contribution to EC consultation
In AGE’s response to the Green Paper, we highlighted our members concerns that reflections on the future of VAT might lead to the removal of existing VAT exemptions on small revenues generated by the activities of non-for-profit organisations at the local level. Our members in countries which share the tax exemption (i.e. Austria, Denmark, Finland, the Netherlands, Sweden) were concerned that the removal of such exemptions would place a heavy administrative burden on small older people’s organisations, which are often run largely or entirely by volunteers, and would risk making their fundraising activities no longer financially viable.
AGE considers that it is essential that the Commission takes a detailed look at what the removal of VAT exemptions would mean in practice for small organisations staffed by volunteers and that it weighs up the administrative obligations and costs in terms of time and resources that this would impose on them. In order for locally-based older people’s organisations - who are carrying out social activities in the public interest - to be able to continue to play a vital role and to bring added-value to the communities in which they function, their fundraising activities should either remain exempt from VAT or a threshold should be set so that these not-for-profit organsisations with limited revenue sources will not be negatively affected by any future harmonisation in VAT rules.
What’s next?
The EP Resolution follows on from the Commission’s Green Paper consultation (December 2010) that launched the debate to evaluate the current VAT system. The consultation focused on how to strengthen and improve the current VAT system for tax payers and administrations and its findings will be available in the coming weeks. Currently the European Commission is carrying out a study on the impact of a reform of the VAT system in the EU. The results of this study, the consultation’s findings and the EP Resolution will contribute to the draft of their proposal which is expected by the end of 2011.
For further details, please contact Rachel Buchanan, Policy Officer for Employment and Non-Discrimination, at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
Adopted EP Resolution on The Future of VAT:
AGE response to consultation on the Commission’s Green paper on the future of VAT:
http://www.age-platform.eu/images/stories/AGE_response_Final.pdf
