[Qgis-psc] Bad news: negative reply from Zurich tax office

[Andreas Neumann]

Hi all, 

Thanks all for the encouragement and ideas and links to how others dealt
with similar issues. 

I am now digging more into the issue. Even if we are not tax exempt, it
means that we don't have to pay taxes on donations, because there is no
direct service in return from QGIS.ORG. The same holds true for
sponsoring - if - and this would mean a change of our practice - we
don't do advertising for the sponsors. I dived into the VAT law, and it
mentions that a simple listing of sponsors is ok, also with their
location and logo. However, we wouldn't be allowed to mention what the
sposor does (e.g. company active in area xy) and we wouldn't be allowed
to link to the sponsors web page. Linking to a sponsors web page counts
as advertising. 

See also
https://www.gate.estv.admin.ch/mwst-webpublikationen/public/pages/taxInfos/cipherDisplay.xhtml?publicationId=1000283&componentId=1000543&lang=de&winid=520820
(german, but also available in french or italian). 

So what would it mean for us? If we remove the links to the sponsors web
pages from https://www.qgis.org/en/site/about/sponsorship.html and the
visual changelogs (e.g.
https://www.qgis.org/en/site/forusers/visualchangelog218/index.html#sponsors-for-qgis-version-2-18-0)
then we don't have to pay taxes on the sponsorships either. Would this
be acceptable? Note that this is only a problem for commercial sponsors
- local government organizations or non-profit donors can be linked.
However, if we decide to remove the URLs, I think we should better
remove them from all sponsors. 

Most likely, this will make sponsoring a bit less attractive to our
"commercial" sponsors, but maybe it isn't a problem to many of them. On
the plus side, this would probably mean that we wouldn't be contacted by
dubious organizations/companies who only want visibility/URL exchange
are aren't involved in the spatial domain. 

I will also do a phone call today to the person involved at the tax
office to double check if my findings above are true. 

Given that our income depends  to > 95% on donations and sponsorships
and if we don't do advertising for the sponsors, it would probably mean
that taxes only have to be paid for our training certificates. This
would be marginal and not a problem. 

Opinions? 

Greetings, 

Andreas 

On 2018-01-30 07:34, Paolo Cavallini wrote:

> Hi all,
> thanks Andreas for updating us, and for all your work on this.
> I believe we should not surrender, and try again to let them understand
> our good reasons. It is a plain fact that we are not, nor intend to be,
> a commercial entity of any sort.
> In the worst case, we might even consider moving under a more favourable
> legislation. Apart from the financial impact on our budget, we should
> also consider that missing a nonprofit status will make donation much
> less attractive in several countries, so it is worth insisting or
> finding alternatives.
> I realize this will imply more burden on Andreas shoulders, and I'm
> ready to help if useful.
> All the best.
> 
> Il 29/01/2018 23:09, Jeff McKenna ha scritto: Dear Andreas,
> 
> As someone who was in your shoes for many years for OSGeo, I must say to
> not be discouraged.
> 
> From my years of talking with other foundation leaders and watching,
> listening etc, I've noticed some interesting points:
> 
> - in 2017 a non-profit foundation did a lot of research and chose
> Singapore as the best place to register for many reasons including tax
> exempt status: https://blog.ghost.org/moving-to-singapore/
> 
> - a 2017 article on several different non-profit organizations in Europe
> and why they chose a specific country to register (Netherlands, Germany,
> etc): https://lwn.net/Articles/713073/
> 
> Also, even OSGeo's history, and reasons, can help give ideas as you
> travel down this path:
> 
> It took the OSGeo foundation 8 long years of battling, to finally
> achieve tax exempt status (credit to the early work of Tyler and
> Daniel).  To be fully honest, even in the 8th year we were stuck, but
> all along I was talking to other foundations, watching what was
> happening, asking questions to other leaders, back and forth; then one
> day in 2014 I noticed another foundation, OpenNTF, mention of their own
> success by changing to a "Social Welfare Organization" for the IRS tax
> people.  I mentioned this to the OSGeo Board, and our lawyer changed our
> application to that type, and our tax exempt application was quickly
> approved.  (!!?!!)
> 
> Now you might say 'yes but OSGeo is registered in the United States,
> what similarities are there for here' but I really feel that getting to
> know why OSGeo (and other foundations) choose to register in one
> location over another, can really help QGIS.ORG down this path.  For
> example, why do most fortune500 companies register in the U.S. state of
> Delaware (as OSGeo did):
> https://www.americanbar.org/publications/blt/2016/11/01_leitner.html
> 
> That article lists many reasons, that you could use as check points in
> your search for QGIS.ORG and the right location.
> 
> (to be fully honest and open here, as a Canadian I too often wondered
> why OSGeo chose, of all places, to register in Delaware, but after a
> long time I can understand the reasons why, as I'm not a lawyer at all)
> 
> Hope some of that history helps.
> 
> -jeff
> 
> On 2018-01-29 3:51 PM, Andreas Neumann wrote: Dear PSC members and community,
> 
> Unfortunately I got a negative reply for my application of tax
> exemption from the Zurich tax office. For those who can read German I
> attach the letter.
> 
> They claim that our statutes imply that we follow an economic intent,
> by dealing with software development, bug fixing and marketing of free
> software. They also state, that in general they don't do tax
> exemptions for Open Source associations. Clearly, they don't
> understand how Open Source works.
> 
> This comes at a real surprise to me, because when I had a look at the
> list of tax-exempted organizations in Zurich, that seem to follow
> quite clearly an economic intent, whereas I have the impression that
> there is a lot of voluntary work going into QGIS with the intent to
> make GIS software available to the ones who otherwise could not afford
> to use GIS software. Because the german QGIS user group got tax
> exemption in Germany, I had the impression that a similar thing in
> Switzerland is only a formality - apparently not.
> 
> What are the next steps? First I will ask other Open Source
> organizations in Switzerland about this topic and if they think,
> something could be done about it. Otherwise, I will suggest, that we
> move our organization to a country that better values all the
> voluntary efforts that go in to Open and free software. Any
> suggestions of other countries who may host QGIS.ORG international?
> 
> For the budget, it will mean that I can't commit to additional QGIS 3
> bug fixing currently - I will set aside a couple thousand Euros for
> tax payments.
> 
> I also don't know how to deal with VAT in upcoming sponsorship
> invoices - should I add the 7.7% VAT on top of the sponsorship
> amounts, or should we declare that the sponsorship already includes
> VAT, meaning that from a EUR 500.- sponsorship we can only keep EUR 461.5 ?
> 
> Any opinions and suggestions?
> 
> Anyway - I deeply apologize for my failing to deal with the matter -
> and I apologize for the misbehaviour of my country's tax office.
> Apparently, people and organizations are not "equal" in my country.
> While very powerful organizations like the world soccer organization
> (FIFA), the olympics and the world economic forum are tax exempt -
> organizations that have turnovers in the billions - small
> organizations with lots of voluntary people like QGIS cannot be tax
> exempt. I am personally very disappointed.
> 
> Andreas
> 
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