Only a small flat tax on income from the accompanying exhibition
The Finanzgericht (FG) Münster wants to make it easier for non-profit patient organizations to organize congresses. Income from the stand operators of an exhibition organized on the sidelines of the congress is then subject to favorable flat-rate taxation, as the FG decided in a judgment announced on Monday, May 15, 2017 (Az .: 15 K 2127/14 AO). But it allowed the revision to the Federal Fiscal Court.
Large patient organizations often organize congresses, for example to inform their members and other patients about important medical innovations. In the margins of such congresses there is often an exhibition where pharmaceutical and device manufacturers show their products to visitors. Patients can also get a quick overview here, and the patient associations can use the stand fees to partially finance the congress.
The congress itself remains tax-free because it serves the association's purpose. However, such an exhibition is considered an economic enterprise for which the association has to pay corporate tax. However, the law favors the income of non-profit associations through "advertising for companies that take place in connection with the tax-privileged activity (...)". Then only a flat 15 percent of the income is considered taxable profit. A classic example of this is jersey and gang advertising in sports.
In the event of a dispute, the patient association organizes a medical congress and an exhibition every two years, especially for pharmaceutical companies. At the congress in 2011, the association received just under 40,000 euros in stand fees and accordingly estimated just under 6,000 euros (15 percent) as a profit.
The tax office wanted to tax the income regularly. Because the association had no "advertising for companies", but only provided stand space on which the companies can advertise themselves. The tax office relied on a corresponding ruling by the Hamburg FG on June 16, 2006 (file number: 2 K 10/05).
The FG Münster contradicted this and equated the stand fees with the direct advertising revenue. In both cases the situation is similar. In sports, jersey and gang advertising can only exist because tax-privileged sports events take place. Accordingly, the manufacturer exhibition is only conceivable with the tax-privileged congress, because the stand operators want to address the congress visitors.
Due to the contradiction to the Hamburg ruling, the Münster Regional Court approved the revision of the Federal Finance Court in Munich against this ruling of March 22, 2017. mwo / fle