Civil society in Germany is strong. Hundreds of thousands of associations, foundations and charitable limited liability companies work every day to make the world a little better. The available legal forms are diverse and offer initiators every opportunity to put their charitable projects into practice. The political framework is secure, the legal framework guarantees both the necessary protection of good deeds and the necessary flexibility in daily management. In addition, German tax law comprehensively promotes charitable work.
It is therefore not surprising that many international organizations first look at the German market when planning to extend their activities to Europe. Germany is very often the entry market, as German law enables German charities to work both within Germany and worldwide. The funds invested in Germany can therefore also be used for charitable purposes outside Germany.
While German law generally does not set any hurdle as far as the transfer of funds from abroad to Germany is concerned, charitable organizations abroad are often subject to restrictions regarding their use of funds abroad. As a rule, the foreign giving charity must be able to prove, according to the locally applicable law, that its funds are being used in Germany properly, i.e. according to the foreign law and the foreign charity's own bylaws. This may require the conclusion of a contract between the international charity and the German recipient organization. Frequently, an explicit confirmation of the recipient organization is also required which certifies that the funds have actually been used for the agreed purposes. In most cases, the international charity must submit this proof to its local tax authorities.
We are happy to support international charities in fulfilling their obligation to provide evidence and, if necessary, we will draw up the required verification documents together with their local lawyers and tax advisors. On request, we can also carry out appropriate audits on site at the recipient organization.
We have particular expertise with regard to U.S.-American 501c3 charities and private foundations. We are happy to prepare corresponding affidavits and confirm that the charitable purposes pursued by the German recipient organization comply with the requirements of U.S. tax law and the IRS.
You would like to transfer funds to a German nonprofit organization and need to prove that your grants are being used properly in Germany? Our team consists of German attorneys and tax consultants specializing in nonprofit organizations. Our U.S. Desk also employs lawyers and CPAs who are admitted to practice in the USA. We would be pleased to be at your disposal and check the use of funds by the German recipient organization.