Law on societies/non-profit character right - non-profit character and economic business concern

Martin J. Warm, attorney // specialist lawyer for tax law // specialist lawyer for industrial law/lawyer for the middle class in Paderborn - after a decision of the revenue court Hamburg from June d.J. those places accomplished letting of exhibition surfaces parallel to a congress of physician at industrial exhibitors represents a taxpayer to economic business concern and no administration of an estate. By the letting at industrial exhibitors the association does not lead advertisement in the sense 64 exp. 6 No. 1 AO out (fG Hamburg, 2-K-10/05, judgement of 15.06.2006). In the case it concerned the question whether repay, which are taken by those parallel to the trade conferences accomplished industrial shows, the yield taxation to be subjected are or as fortune-administering activity are taxfree and/or in accordance with 64 exp. 6 No. 1 AO are overall paid duty. The plaintiff is an association, whose statutory purpose is directed toward the selbstlose promotion of science and research as well as the technical advanced training of its members by holding from scientific meetings. The association was created with statute of 05.12.1990 and registered to 25.01.1991 into the register of associations. It is after the 51ff AO non-profit body. After the indisputable statements of the audit of operating results the actual management of the plaintiff is directly directed excluding and toward the fulfilment of the tax-privileged purposes. The association takes in donations to small extent. Membership dues are not raised. The association obtains interest incomes to small extent. The association accomplished medical trade conference in rented areas annually in the controversy years one. Renting the respective congress hall took place uniformly as total package as well as the exhibition surfaces. The exhibition surfaces as such are not separately repaid. In the context of the conferences medical seminars and course were accomplished. From this conference and course fees were taken in, which the association did not subject to the taxation. During the conferences also social meetings and trip programs were offered. The incomes resulting from this were not subjected to the taxation. At the same time to the respective conference organized the association in each case an industrial show. On the industrial exhibition apply select representatives of the industry of products, which are for the medicine from interest. Surfaces were offered to the enterprises for the mounting of advertisement and/or exhibition by own products in the context of the industrial exhibition. The industrial show makes possible to inform the congress participants on the basis the products issued there about new scientific working on of well-known disease pictures. At the exhibitions in principle no sales take place. The payment, which the respective industrial on plates pay, depends on the size of the surface, which is rented. Because of the details to the submitted calculations one refers (FGA sheets 49, 50). The plaintiff used the surplus from the entgeltlichen letting around the participation fees to lower. From the exhibition the association obtained incomes, which it seized uniformly as proceeds industry 16%. In 1999 obtained the plaintiff exhibitor-repay at a value of 65.657, 50 DM and in 2000 at a value of 90.242, 15 DM. In to 01.11.2002 delivered trade and body expensive clarifying the 1999 and 2000 the plaintiff explained a trade yield and/or a profit for 1999 at a value of -2.547 DM and for 2000 at a value of 6.469. By the answers for 1999 and 2000 about the trade tax measuring amount and the trade tax of 06.12.2002 was determined in each case a trade tax measuring amount by 0,00 DM and a trade tax by 0,00 DM. By the body expensive answers 1999 and 2000 of 06.12.2002 were determined in each case one body-expensively by 0,00 DM. In the time of 05.02.2003 up to 07.01.2004 with the plaintiff an audit of operating results was accomplished. In opinion of the Betriebsprferin the exhibitor-repaid of the industry and other not contentious positions are incomes from a taxpayer economic business concern here. The developed costs the Betriebsprferin assigned directly to the individual range, if this was possible. In all other respects it divided the costs mixed arranged in the relationship of the incomes of the different ranges to each other. Afterwards a surplus resulted after BP at a value of 18.646, 84 DM for 1999 and at a value of 40.921, 05 DM for 2000.

In the opinion the fG Hamburg are subject repay, which pay the industrial exhibitors, to the yield taxation. The conditions for the overall taxation of the profit in accordance with 64 exp. 6 No. 1 AO in the version of 20.12.2000 are not present. Those repays, which is paid by the industrial exhibitors to the plaintiff, is taxable, since they are referred from an economic business concern. The conditions for a purpose enterprise are not given. The letting of the exhibition surfaces to the industrial exhibitors represents an economic business concern in the sense to 14 AO. The release from that body-expensively ( 5 exp. 1 No. 9 KStG 1977) is void to that extent, when an economic business concern will maintain. To the trade tax applies for 3 No. for 6 GewStG. In accordance with 14 AO an economic business concern is an independent lasting activity, by which incomes or other economic advantages are obtained and which goes beyond the framework of an administration of an estate. The intention of obtaining profit is not necessary. An administration of an estate is usually present, if fortune is used, for example capital abilities are interest-bearing put on or immovable fortune is rented or leased. The letting of the exhibition surfaces to the industrial exhibitors represents an independent lasting activity, by which incomes are obtained. The short term letting of the exhibition surfaces to the industrial exhibitors is not administration of an estate separates represents a commercial activity. The range of the administration of an estate is exceeded, if over the hiring by surfaces outside substantial special services are furnished. An only short term letting leads in principle not to incomes from letting and farm lease separates to commercial incomes. In the controversy the plaintiff does not only leave the surfaces to the industrial exhibitors, because the surfaces are the exhibitors only in connection with the execution of the congress of use. For the industrial exhibitors it is crucial that it their addressees, who members of the plaintiff, to whom congress days and communicate with these can find directly. Without the execution of the congresses the hiring of the surfaces for the industrial exhibitors would be senseless (to the range of the gang advertisement see BFH of 13.03.1991, I R 8/88, BFHE 164, 57, BStBl II 1992, 101). Regarding the letting of exhibition booths the senate assumes it concerns here a commercial letting, because she takes place at short notice to changing tenants. It is crucial that after the overall view of conditions with consideration of opinion of traffic it is recognizable that the plaintiff uses the fortune under perception from the usual measure-exceeding thing consolidated market chances to the achievement of incomes. The plaintiff obtains the relatively high rent-repaid for the spaces occupied only, because the industrial exhibitors have a substantial interest in renting because of the taking place congress, because they know that at the meeting place their partners will locally be (to the hiring of advertising surfaces in sports stadiums see fG Munich of to 30.07.1996, 15 K the 353/95, EFG 1996, 1180).

In addition the conditions for a tax-privileged purpose enterprise are are not given in opinion of the judges. In accordance with 65 AO a purpose enterprise is given the body, if 1 serves. the economic business concern in its total adjustment for it, to carry out the tax-privileged statutory purposes 2. the purposes only by such a business concern be achieved can and 3 did not favour. the economic business concern too enterprises the same or similar kind to larger extent into competition does not step, than it is unavoidable with fulfilment of the tax-privileged purposes. The conditions 1 to 3 must be present cumulatively (Tipke/Kruse Tipke 65 AO Rn. 1 m.w.N.). The condition for facts 65 No. 1 of the AO is already not fulfilled, because the statute purpose covers expressly only the promotion of science and research as well as the technical advanced training of its members by holding from scientific meetings and not also co-operation with the industry for the purpose of the development of medical products (see 2 exp. 1 of the statute).

Also the conditions in accordance with 65 No. 2 AO are not given in opinion of the court, because the tax-privileged purposes of the plaintiff cannot only be achieved by the maintenance and operation of the economic business concern. The plaintiff could accomplish its trade conference also if he would not organize parallel the industrial exhibition. He would have to then increase only if necessary its admission fees for the congresses or to be e.g. striven by alternative financings as membership dues or donations. Since the first two conditions are not fulfilled already, it can remain here open whether it is missing to 65 No. also at the condition of the 3 AO, although the plaintiff speaks that there are no commercial offerers within the field of the medicine, which as a competitor be disadvantaged could. Because it cannot be excluded that it is made impossible for a commercial offerer because of the execution of the industrial exhibition by the plaintiff to accomplish trade fairs in the field of the medicine. It is not crucial that it does not concern with the industrial exhibition accomplished by the plaintiff a sales fair, because there are also commercial industrial exhibitions with those the direct sales in the foreground does not stand. (Source: Lexinform)

Communicated of: Attorney TEAM.de warm & Kanzlsperger in Paderborn, attorney Martin J. Warm, Fachanwalt for industrial law, specialist lawyer for tax law, lawyer for middle class and economics www.rechtsanwalt-in-paderborn.de; www.rechtsanwalts-TEAM.de

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Warmly & Kanzlsperger
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Martin J. Warm

Specialist lawyer for tax law
Specialist lawyer for industrial law

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Attorney TEAM.de warm & Kanzlsperger in Paderborn - lawyers for the middle class in private law and commercial law - a modern law office with emphasis industrial law for employee, industrial law for employer, bank right, labor management relations right, vomit, non-profit character right, managing director, corporate law, GmbH right, commercial law, collection right, EDP right, insolvency law, IT-right, capital investor protection, limited partnership, protection against dismissal law, right for operational age precaution (bAV), reorganization right, tax law, steering wheel meeting right, law on societies/donation right, treaty right, enterprise right, commercial law.

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