TAXATION of NGO

Institutions that pursue public interest goals may be exempted from:

  • Direct federal tax, which is governed by the Federal law relating to direct federal tax (LIFD) of 14 December 1990. Exemption applies to profits only. It is granted for an undetermined time period and may be reviewed at any time.
  • Cantonal and municipal tax, which is governed by the Law relating to the taxation of moral persons (LIPM) of 23 September 1994. Exemption is both on profits and capital. It is granted for an undetermined period and may be reviewed at any time (change from a 10-year exemption period to an undetermined period as of 1 November 2015).
Tax exemption for public utility or public-service goalNGO may request both federal and cantonal taxes exemption at the same time. However, an exemption at the cantonal level does not give an automatic lead to an exemption at the federal level.

Procédure

The request must be addressed to the Direction des affaires fiscales de l'Administration fiscale cantonale (Case postale 3937, 1211 Genève 3). It must include the Tax exemption form, statutes of the association in French as well as all documents required. The procedure takes approximately three months after sending the request and all documents. The Direction des affaires fiscales takes the final decision. If exemption is refused, an appeal may be lodged.

Conditions

In order to be tax-exempted, the statutes of the entity must mention the following non-restitution clause in case of dissolution (See:"Model statutes"):

  • "Should the association/foundation be dissolved, the available assets should be transferred to a non-profit organization pursuing public interest goals similar to those of the institution and likewise benefiting from tax exemption. Under no circumstances should the assets be returned to the founders or members. Nor should they use a part or a total of assets for their own benefit."

The statutes must also mention the following two remuneration clauses:

  • "The Committee/Council members work on a volunteer basis and as such can only be reimbursed for their actual expenses and travel costs. Potential attendance fees cannot exceed those paid for official commissions. For activities beyond the usual function, each Committee/Council member is eligible for appropriate compensation."
  • "The paid employees of the Association/Foundation have only a consultative vote on the Committee/Council."

The procedure stipulates that at least one members of the Association Committee or Foundation Council with power of attorney is a Swiss national or resident in Switzerland.

Any organization benefiting from a tax exemption must nevertheless submit its annual tax declaration (See: "2016 Tax Declaration Guide").

Deduction of a donation

Physical person and legal entity that make a donation to an institution that is headquartered in Switzerland and is tax exempted for public utility goal or public-service, may deduct the amount of the donation from their own tax declaration. Physical persons may deduct up to 20% of their total taxable net income. Legal entity may deduct up to 20% of their taxable net profit.

Donations in cash or assets (shares, equipment or real estate assets, debts, Intellectual property rights) can be deducted. However, membership fees, mandatory payment and labor are excluded cannot be deducted.

NGOs must give their donors a donation receipt when the donation amount exceeds CHF 300.-per year (See: Donation receipt).

Inheritance tax

Some institutions are exempted from paying inheritance tax. According to the article 6 of the Law on Inheritance Rights of 26 November 1960:

"Sont exempts de tous droits, pour toute succession, les institutions d'héritiers, legs et autres libéralités à cause de mort à des personnes morales ayant leur siège en Suisse, qui sont exonérées des impôts sur le bénéfice et sur le capital, en raison de leur but de service public, d'utilité publique, cultuel, ou à la Confédération, aux cantons, aux communes et à leurs établissements".

REGISTRATION FEE

Some institutions are exempted from paying registration fees for some acts and operations (cf. Law on registration fees (LDE) of October 9, 1969).

For instance, in case of a donation: " sont exemptes de tous droits, les donations à des personnes morales ayant leur siège en Suisse, qui sont exonérées des impôts sur le bénéfice et sur le capital, en raison de leur but de service public, d'utilité publique, cultuel, ou à la Confédération, aux cantons, aux communes et à leurs établissements." (cf. art. 28 LDE).

In case of a promise to purchase (art. 51 LDE), purchase (art. 42 LDE), real estate exchange (art. 74 LDE) or mortgage loan (art. 89 LDE), exemption of registration fee is granted when the operation is made for a public utility, public service or worship goal by a legal entity headquartered in Switzerland that is exempted from taxes on profit and capital. In case of real estate purchase or exchange, the exemption is maintained if the change of affectation of the property has not taken longer than 2 years and if its new affectation has lasted at least 3 years.


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