Question:
Our start-up, which focuses on developing innovative solutions for early Alzheimer’s detection, is considering adding a donation feature to our website to support our initiatives.
I have a few important questions and would be grateful for your insights on these matters:
- Donation Eligibility: Is our BV company eligible to receive donations, or is a change in company type necessary for this purpose?
- Adjusting Company Structure: If altering our company type is required to facilitate donations, could you please provide guidance on the necessary steps and procedures?
- Tax Implications: We are eager to understand the tax ramifications associated with accepting donations. Specifically, how are taxes applied to donations from individuals? Are these taxes deducted at the time of payment, or are they managed in our quarterly financial reports by our accountant? Furthermore, how are these taxes considered in post-audit assessments?
Answer:
The company (BV) can receive donations, but they will most likely be qualified as income/revenue. It’s not necessary to change your company type solely for receiving donations, but the way these donations are treated will differ from a non-profit setup. If it makes sense to avoid that, you could set up a foundation instead. The tax implications for a BV receiving donations are quite different from those for non-profit organizations. As a BV, donations would likely be considered part of your taxable income. Taxes on these donations would be handled in the same way as other income – not specifically taxed at the time of each payment, but included in your overall financial accounts and taxed accordingly.
