Following the acquittal of the former CFO of the German Football Association (DFB) on February 4, 2026, by the Frankfurt am Main Regional Court, the question of the risks to charitable status has once again come to the fore: Does an incorrect assessment of a tax law issue in Germany “only” lead to additional tax payments or to the loss of charitable status?
Reason for withdrawal of charitable status no longer applicable
In the case of the DFB, the acquittal on the charge of tax evasion meant that the main reason for the tax office to withdraw charitable status no longer applied.
Tax evasion occurs when an incorrect or incomplete tax return is filed. However, “incorrect” does not mean incorrect classification in a tax sphere, especially not in cases where the nonprofit organization seeks tax advice on an open question and even clarifies the tax classification with the tax audit – as was the case with the DFB. In that case, the tax audit within the tax office had apparently not been coordinated with the assessment department.
Classification into tax spheres is often challenging for NPOs in Germany
In particular, the distinction between the two commercial spheres – tax-privileged special-purpose operations on the one hand and taxable business operations on the other – causes difficulties in practice. It must be clearly determinable whether the activity from which the income is generated already fulfills the purposes set out in the articles of association or directly benefits the target group to be supported, or whether the surplus generated can be used to promote the charitable purposes set out in the articles of association.
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The detailed classification of activities into pure asset management (e.g. long-term rental of own real estate or passive sponsorship) and taxable business operations (short-term rental or sponsorship with advertising in return) also poses a challenge. The decision on the allocation must not be made by the accounting department alone. In critical cases, the accounting department must consult with the board of directors or management, who in turn must seek the necessary advice in order to reach a conclusion.
Exception for organizations with a maximum income of 50,000 euros
The decision on classification into one of the two commercial spheres no longer applies to nonprofit organizations that generate a maximum of 50,000 euros in income from economic activity in a calendar year assessment period. However, this relief introduced by the German Tax Amendment Act 2025 only applies from the 2026 assessment year and only for the assessment year in which the upper limit of 50,000 euros is complied with. In all other cases, a clear classification into one of the two spheres is required.
If the tax office comes to a different assessment, e.g. in the course of a tax audit, additional tax will in any case be payable in the taxable business operation sphere.
Loss of charitable status only in the event of intentional breach of duty
The threat of losing charitable status remains. However, this is not a concern in every case of retroactive taxation, but only when the retroactive taxation is based on an intentionally incorrect or incomplete tax return, i.e. as a result of tax evasion.
However, classification in the correct tax sphere is not a matter of “correct” or “incorrect,” but usually involves tax law issues that are open to interpretation and require the necessary coordination between accounting, the board of directors or management, and the consultants involved. In the case of difficult legal questions, binding information from the German tax office can be helpful.
The appropriate measure in each case must be determined on a case-by-case basis. Our experienced advisors for nonprofit organizations will be happy to assist you.
