For years the situation remained unchanged with regard to the annual tax to compensate for inheritance tax, better known as wealth tax. This form of wealth tax applies to international and domestic non-profit organisations (INPOs/NPOs) and private foundations. However, on 28 December 2023, a new law containing various tax provisions brought in changes, with various adjustments being made to the wealth tax. These modifications relate to aspects such as the taxable base, the rate, allowances and an exception for specific sectors. The changes have significant consequences for international and domestic non-profit associations and private foundations. To make the situation clearer, we briefly discuss the most important changes below.
The taxable base for the wealth tax is described by the legislation as the “body of assets”, meaning the possessions of the NPO or private foundation. Until recently, this did not include foreign real estate. Under the old rules, if the value of the assets (minus debts) was equal to or exceeded €25,000, the wealth tax was charged at a fixed rate of 0.17%.
Under the new rules, the €25,000 allowance has been removed and replaced by a tax-free threshold of €50,000. In addition, from now on the value (minus debts) of foreign real estate is also included in the taxable base, although provision has been made to offset any tax paid abroad that is similar to the wealth tax. Finally, a progressive rate – instead of the old fixed rate – has also come into effect, which works as follows:
| €0 - €50.000 | 0% |
| €50.000,01 – €250.000 | 0,15% |
| €250.000,01 – €500.000 | 0,30% |
| Vanaf €500.000,01 - … | 0,45% |
In other words, if your NPO or private foundation has assets of more than €500,000, this will quickly result in the rate that applied up to 31 December 2023 being more than doubled.
The new rules include an exception for certain sectors such as healthcare, education, sport or animal shelters.
For these, the taxable base is reduced to 37.7%. In practice, this means that they will never be liable for wealth tax of more than 0.17%.
The law also provides clarity regarding the application of the general anti-abuse provision within the wealth tax. This is intended to prevent NPOs or private foundations from organising themselves in an attempt to avoid wealth tax – for example, by splitting up NPOs or private foundations, or by establishing multiple NPOs or private foundations with identical goals. It is therefore important to take this into account when establishing or considering restructuring NPOs and private foundations.
All changes regarding wealth tax came into effect on 1 January 2024. In concrete terms, this means that the adjustments will apply to declarations with submission dates from 31 March 2024.