An increasing number of non-profit organizations, such as municipalities and healthcare and educational institutions, are working together. However, these collaborations often result in additional tax burdens, says PhD candidate Maiko van Bakel in his dissertation. He demonstrates that collaborations between non-profit organizations receive fewer tax benefits than those of commercial organizations. This leads to an unfair tax treatment, discouraging collaboration and hindering effectiveness.
Collaborations between non-profit organizations and public-private partnerships have become crucial in recent years for addressing major societal challenges, such as tackling staff shortages and accelerating the energy transition. A prime example is the many regional partnerships aimed at recruiting, matching, training, professionalizing, mentoring, and retaining (future) staff in education and healthcare.
Consequences of Collaborations
In his dissertation, Maiko van Bakel examines the tax consequences of these collaborations. It turns out that partnerships in the non-profit sector often face a higher tax burden than when the organizations operate individually. This applies particularly to corporate, VAT, and transfer taxes.
"Non-profit organizations are treated differently from a tax perspective when they collaborate," says van Bakel. "The tax provisions that could prevent additional tax burdens during collaborations are often interpreted too strictly in Dutch and European case law. This frequently results in disputes between non-profit organizations and the Tax Authority over the interpretation and application of these provisions."
No Access to Tax Benefits
The study also shows that non-profit organizations do not have the same access as commercial entities to tax provisions that prevent extra tax burdens due to collaboration, such as tax consolidation for corporate and VAT purposes. This leads to an unfair difference in tax treatment. Additionally, access to certain benefits may vary depending on the sector in which the non-profit organization operates. According to van Bakel, there is not always a justification for this distinction.
Level Playing Field
Van Bakel therefore advocates for a level playing field: non-profit organizations should be given an equal position in the tax system and the same tax benefits when collaborating. Lawmakers and judges should also take greater account of the purposes of regulations that promote collaboration. Better alignment between tax legislation and government policy is essential to encourage collaboration in the non-profit sector.
