No tax deduction for non-market-conform rental by private foundation

If a private foundation leases and rents an apartment market-compliant are acting, usually die Rental income The Value Added Tax to subjugate, for which in return a Input VAT deduction from the Construction costs as well as the ongoing operating costs is warranted. For rent die Private foundation the apartment an den Founder or the Beneficiary, That is how it is from the Overall picture dependent, Whether there actually is one Entrepreneurial activity is available or It is an exclusion from the tax deduction Benefit provided by the private foundation acts.

The Universal Flash Storage had (GZ RV/1556-W/11 of 29.12.2012) dealt with the case of a private foundation that had large apartment with garden and parking space in a good residential area rented to the founder and from the purchase cost as well as from subsequent maintenance costs the Input VAT deduction had claimed. The residential rental between the private foundation and the founder was governed by several abnormalities marked – e.g., in contrast to common practice, a Unsecured rent agreed upon and a deposit of €5,000 was also deposited, although this was never collected by the private foundation. Furthermore, Rent payments partially very long stretched and so does the Operating costs for several years bent forward. This approach was also justified by the fact that the apartment had been left uninhabitable for a long time due to water damage. not fully usable was and it was taken into account that the relationship with the tenant (founder) should not be burdened.

Decisive for the possible Input VAT deduction at the foundation, whether a Entrepreneurial activity whether the lease is based on a contractual relationship based on company law, intended benefit-granting represents the founder. It is important to bear in mind that – as in the present case – the founder has significant influence over the foundation, which is also reflected in the fact that the Flat open acquired by the donor's express wish In such a situation, the application for the tax deduction must be made to the Advertising policy (clearly visible agreements to the outside) fulfilled His as well as the Rental in itself a Market comparison can withstand.

Based on the Overall picture the circumstances denied The Universal Flash Storage den Input VAT deduction In the specific case, since it is already at the conclusion of the lease agreement It was not acceptable to undertake market-conform rental of the apartment. This assessment was further strengthened when considering the actual processing of the lease agreement (suspension of rent and operating costs, etc.). Would the „non-economic leasing“ to the founder be in the Purpose of the Foundation – e.g. satisfaction of the founder’s and his family’s housing needs - corresponding, If it were not at all to one Input VAT deduction has arrived. A Input VAT deduction that is when Not possible, when an activity Achievement of the Foundation’s purpose is. The „Revenue from the rental“ in the present case, at the Foundation due to a lack of entrepreneurial action not subject to value-added tax. For the practice, it is important to note that for the tax recognition of the design of the business relationships between the foundation and the donor/beneficiary, market-conform conditions are mandatory.

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