Taxation

Physical persons working for NGOs do not enjoy tax privileges. Moral persons, however, that pursue public interest goals, may be exempted from:

Direct federal tax, which is governed by the la Federal law relating to direct federal tax (LIFD), of the 14th of December 1990

Exemption relates only to revenue, and is not limited in time, but is subject to review at any moment.

Cantonal and municipal tax, which is governed by the Law relating to the taxation of moral persons (LIPM), of the 23rd September 1994

The exemption is on both revenue and wealth, for a 10 year period, renewable.

Procedure for requesting exemption

An NGO may make a combined request for exemption from both federal and cantonal/municipal taxes. Exemption at the cantonal level does not give an automatic right to exemption at the federal level.

The request must be in writing and addressed to the Finance Department. You have to transmit the statutes in french at the same time as the demand. The exemption form will be send to you afterward with the list of required documents. After reception of all documents, the procedure lasts three months for a demande of exonération and one month for a renewal. The general direction of the tax administration takes the final decision. If exemption is refused, an appeal may be lodged.

The statutes must imperatively mention the non-restitution clause in case of dissolution of the association:

"In the case of the association being dissolved, the assets should be allotted to a non-profit organisation pursuing goals of public interest similar to those of the organisation benefiting from tax exemption. The goods cannot be returned to the founders or members, nor be used to their own profit.”

And two other clauses:

"The Committee members act voluntarily and can only be compensated for their effective and travel costs. Eventual fees cannot exceed that paid for official commissions. For activities exceeding the usual function, each committee member can receive appropriate compensation."

"The paid employees of the association have only a consultative vote in the committee."

(See: "Model statutes")

For more information, you can consult the practical instructions produced by the Swiss Conference of tax relating to exemptions and the circular no 12.

Any organisation enjoying a tax exemption is nevertheless obliged to submit a tax declaration. (See: "2009 Tax Declaration Guide")

Declaration of a donation

One of the main advantages of the tax exemption is that physical persons who make a donation to a tax-exempt NGO, which has is Headquarter in Switzerland, may deduct the amount of the donation from their own tax declaration, up to a limit of 20% of their total taxable net income, and moral persons up to a limit of 20% of taxable net benefit.

For this purpose, the NGO must provide to their donators, a receipt for donations received when the amount is in excess of CHF 200.--. (See: "Donation receipt")

Taxpayers who claim a deduction for donations made must provide documentary evidence with their annual Geneva tax declaration. They must make sure beforehand that the beneficiary organisation(s) are entitled in this regard.

For more information, you may consult:

State tax or Inheritance tax

Certain institutions are exonerated from state taxes according to the article 6 of the Law on Inheritance Rights of November 26, 1960:

"Are exempt from all taxes, for any succession, the institutions of heirs, legacies and other generous gifts because of the death of corporate bodies having their seat in Switzerland, which are exonerated from the income taxes and on the capital, by reason of their goal of public service, of public utility, worship, or to the Confederation, the cantons, the communes and their institutions."

Act registration fee

The Law on the registration fees (LDE) of October 9, 1969 lists the acts free of the obligatory register for the moral persons having their seat in Switzerland, who are exonerated from the income taxes and on the capital. It is about the exemption of the tax on the registration fee concerning the following acts:

donations (Article 6)

purchase of property made for the purpose of public utility or worship. The proof of the assignment of the property for a public purpose or worship should be given to the administration (Art. 42).

loans contracted exclusively with an aim of public utility (Article 89).