Steps to obtain charitable status for a Swiss non-profit association (Verein) and ongoing compliance?

Hello,

I hope this message finds you well. I understand you are forming a non-profit association (Verein) in Switzerland to support local education and have questions about the process. Below is a guide covering the key steps for registration, achieving tax-exempt status (gemeinnützig), and maintaining compliance.

Establishing Your Association (Verein)
To legally establish your association in Switzerland, you will need to follow a few key steps.

Founding Members: A minimum of two founding members is required to create an association. These can be individuals or legal entities.

Articles of Association: You must draft written Articles of Association (Statuten). This legal document is the foundation of your organization and must define its name, purpose, and organizational structure.

Founding Meeting: A founding meeting must be held where the Articles of Association are formally adopted and the governing bodies, such as the management committee or board, are elected.

Commercial Register: Registration in the cantonal Commercial Register is not mandatory for all associations. It is only required if the association conducts commercial operations to achieve its purpose or if it exceeds certain financial thresholds, such as having a revenue of over CHF 40 million.

Qualifying for Tax-Exempt Status (Gemeinnützig)
To qualify as a non-profit (gemeinnützig) and receive tax-exempt status, your association must meet several requirements set by the cantonal tax authorities.

Public Purpose: The association's activities must be for the public benefit and not serve the private interests of its members. Purposes that are considered for the public good include charitable, humanitarian, health, environmental, educational, scientific, or cultural activities.

Irrevocable Charitable Purpose: The Articles of Association must include an irrevocable clause stating that the association's funds are permanently dedicated to the tax-exempt purpose. This clause must also specify that upon dissolution, any remaining assets will be transferred to another tax-exempt organization with a similar purpose.

Volunteer Board: The work of the board of directors must be voluntary. However, they can be reimbursed for their actual expenses. This should also be specified in the articles of association.

Application: You must submit a formal application for tax exemption to the relevant cantonal tax office. The application is typically a written letter accompanied by your Articles of Association, founding records, and any annual reports and accounts if available.

Annual Reporting and Compliance
Once your association is established and has been granted tax-exempt status, you must adhere to ongoing compliance obligations.

Financial Reporting: All associations are required to maintain financial records. An annual report, which includes a balance sheet and an income statement, must be prepared within six months of the end of the financial year and approved by the General Meeting.

Tax Filings: Every association is required to file an annual tax return with the cantonal tax authority.

Audits: An ordinary audit is only required for associations that exceed two of the following three thresholds for two consecutive years: total assets of CHF 10 million, revenue of CHF 20 million, or 50 full-time employees on an annual average.

Transparency: As of January 1, 2023, new transparency rules require registered associations to maintain a list of their members and appoint a representative domiciled in Switzerland.

This process can seem complex, and the specific requirements can vary slightly between cantons.

If you would like more detailed and personalized guidance, I can offer you a consultation via WhatsApp for a small fee to discuss your specific situation and help you navigate the process smoothly. Please feel free to reach out.