Last updated on 28. Juli 2023
With the current Rule of Law report, issued on July 13th, 2022, the European Commission recommends Germany to adress the challenges, civil society organisations under the tax-exempt public benefit status (“Gemeinnützigkeit“) currently face.
As stated in the Country Report (page 2), the German government should:
“Take forward the plan to adapt the tax-exempt status for non-profit organisations with a view to address the challenges which the currently applicable rules present for their operation in practice, taking into account European standards on funding for civil society organisations.”
On pages 24 and 25 of the report it states:
“Civil society continues to face practical challenges due to the uncertainty of their tax-
exempt status, while a reform of the rules has been announced.While civic space in
Germany continues to be considered as ‘open’, as noted in the 2020 and 2021 Rule of Law
Reports, the legal uncertainty related to the political activity of civil society organisations
(CSOs) with tax-exempt status continues to be a challenge in practice. While an administrative decree adopted in January 2022 provides clarifications on the current situation in line with the case law of the Federal Finance Court, stakeholders continue to raise concerns over the limitations for CSOs to engage in ‘political activity’ while maintaining their tax–exempt status. In particular, certain associations may be unable to carry out their charitable purpose without use of political means. In this context, civil society continues to report about cases of pressure on CSOs by political actors through legal action and threats related to their tax–exempt status, which can lead them to refrain from taking any political positions or engaging in advocacy work, and have started to systematically document such cases. The coalition agreement includes the commitment to present a legislative amendment that would clarify that charitable organisations can, within their charitable purpose, conduct political activity and can also occasionally take political positions on other issues outside its main field of activity.”
The Rule of Law Report is yet another indication for the German government to quickly adress the amendment of the tax legislation as stated in the coalition agreement of 2021.