Taxation of the gainful activities of an association

Verified 29 December 2023 - Directorate for Legal and Administrative Information (Prime Minister)

You want to know if an association non-profit, who nevertheless carries on a commercial activity, may be exempt from company tax if he does not carry on that activity under the same conditions as a commercial business?

Special rules exist for labor support establishments (State).

We present you with the information you need to know.

General case

An association which carries out a commercial activity, on a regular or occasional basis, may be exempt from so-called taxes commercial (VAT: titleContent, business tax and territorial economic contribution).

To do this, the following 2 conditions must be met:

The association shall be considered as non-competitive in the market sector if the following four conditions are met:

  • Its activity must be aimed at satisfying a need which is not taken into account by the market or which is not taken into account satisfactorily. For example: catering for people in difficulty, selling food products for people in need.
  • Its activities must be directed primarily at persons who can justify the award of particular advantages in the light of their economic and social situation. For example: jobseekers, people with disabilities.
  • It must charge significantly lower prices than those charged by the market sector for similar services or products. This condition may be met where the practical combination of tariffs differentiated according to the situation of the customers.
  • The information it disseminates to the public on its services must not be akin to commercial advertising. The information must use content different from traditional advertising and be based on a medium that takes into account the intended audience.

In addition, the association must use its surpluses for projects within its non-profit scope or to meet future needs. This means that the association cannot distribute or place its surpluses.

If the gainful activity competes with the market sector

In this case, the association may be exempt from tax if it does not carry on this activity under conditions comparable to those of a commercial company.

It is thus necessary to examine successively the following four elements (so-called method of 4 P) :

  • Product proposed by the association
  • Audience targeted
  • Price practiced
  • Communication Operations (publicity) realized

These elements are not all equally important. The above list ranks them in descending order of importance, i.e. the product and the target audience are of paramount importance in determining whether the association competes with the market sector.

Thus, the criterion of publicity cannot by itself lead to the conclusion that an association competes with the private sector.

If the gainful activity is incidental

The association can be exempted from commercial taxes if it meets the following 3 conditions:

  • The majority of its activities are non-profit making
  • His management is selfless
  • The amount of revenue generated by any of the ancillary activities shall not exceed €76,679 on a calendar year

State

The organization is not subject to commercial taxes if its management is disinterested and if the following conditions are met:

  • The purpose of the body shall be the economic or social integration or reintegration of persons who could not be insured under market conditions
  • The activity cannot be carried out on a long-term basis by a gainful company because of the particular burdens necessitated by the situation of the persons employed (particular adjustments to the jobs, low productivity, etc.)
  • The gainful activity (i.e. the sale of products or services) is inseparable from the non-gainful activity (i.e. the economic or social integration or reintegration of persons in difficulty). It shall contribute financially and in kind to the achievement of the organization's objects.