Tax relief for clubs

Associations benefit from various tax reliefs in Switzerland. At both the national and cantonal levels, associations enjoy benefits. These range from lower tax rates to tax exemptions.

Tax exemption for associations

The answer to the question "Do associations have to pay taxes?" is Yes! In principle, associations are also obliged to pay taxes. However, they benefit from various tax reliefs for associations. These are granted at both national and cantonal levels, with the cantonal regulations often being aligned with the nationwide regulations. Under certain conditions, associations are exempt from the obligation to pay taxes. This is the case if the following cumulative conditions are met (Art. 23 para. 1 lit. f StHG). The tax-exempt capital must be used in the interest of the general public for public or charitable purposes. Charitableness is assumed if a fundamentally open group of persons can benefit from the funds and the support exclusively benefits third parties, i.e., the association itself or its members gain no advantage from it. Furthermore, the funds must irrevocably benefit the favored organization or, alternatively, a third party. However, they must not revert to the association or its members. The statutory charitable purpose must also be pursued in fact.

Taxation principles for associations

Even if the criteria for tax exemption are not met, there is the possibility of tax reliefs for associations. Although associations are subject to the direct federal tax according to Art. 50 DBG, they are subject to a special tax rate: the so-called association tax rate. Associations are taxed at 4.25%, while the profits of corporations and cooperatives are subject to a rate twice as high (Art. 68 in conjunction with Art. 71 para. 1 DBG). Association profits under 5000 CHF are not taxed. In line with the national regulation, many cantons also provide such association tax rates.

In addition to direct payments to the federal government, associations are also obliged to pay value-added tax. This is required according to Art. 10 para. 1 MWSTG if a commercial activity is carried out, regardless of any profit motive. According to para. 2 Bst. c of this article, non-profit, volunteer-led sports or cultural associations, which generate a turnover of less than 150,000 CHF per year, are excluded from the obligation to perform.

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