Nonprofit Organizations and tax policy

In which cases are Nonprofit Organizations subject to tax and in which cases are they excluded?

One of the most important tax issues that an NPO is concerned about is the tax regime. Even if a legal entity has been characterized by its founders as nonprofit, it is judged in any case by the competent head of the Tax Office, on the basis of factual circumstances. Any financial surplus must be used to serve the entity’s purpose and no profit distribution is permitted.

The head of the Tax Office has to investigate whether the nonprofit entity is engaged to business activity or has been disposed of its purpose. In such case it is deemed to be a trader and has all the obligations that derive from the Law.

The profit or Nonprofit Organizations have all the obligations of the traders, so they keep books and in any case they issue the tax information provided by the Code of Tax Representation of Transactions, former Code of Books and Elements.

In general, nonprofit entities are exempt from tax unless there are activities that are subject to tax or have a commercial activity from which taxable income is occurred.

More specifically, we are interested in the case that nonprofit legal entities keep books and their subjection or not to tax.

What basic acts of nonprofit legal entities are exempt from tax?
1) The provision of services of a cultural or educational kind of a nonprofit nature that are lawful and have cultural or educational purposes is exempt from Tax. Such services include, but are not limited to, the organization of artistic events.
2) Revenues from occasional events organized by various entities, given that these events do not exceed 2 per year.
3) The provision of training services as an object of activity
4) Participation in programs funded by European funds for which a relevant notice of payment / invoice is required.
A basic element that determines the subjection or no subjections to tax is the number of Activity Codes that have been activated for the entity. After a relevant audit, it is ascertained whether the entity will now be subject to tax for the specific activities and therefore will comply with all the relevant procedures, including the regular (quarterly) submission of the periodic tax return (electronically via taxisnet.

In conclusion, for any real action made by a legal entity, the entire tax framework around it should be considered. If it is subject to tax or not, in which cases it is exempt or not, in order for the proper interpretation to be given.

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