Are non-profit employees paid
Associations that employ employees and are therefore employers must comply with wage tax and social security law
Employees in the association
Employees of the association are all persons who are employed by the association and receive wages from it.
The drafting of the contract and the actual implementation of the contractual relationship are decisive for the classification as an employee. The designation of the contract or the payments are generally not decisive.
An employment relationship exists when the employee owes the association the workforce, is integrated into the business organization and must therefore follow the business instructions given to him regarding the type, place and time of employment. Granting vacation and continued payment of wages in the event of illness speak in favor of non-self-employed work (non-self-employed work according to Section 19 Income Tax Act - EStG).
The duration of the employment is basically irrelevant. Even people who only work on a temporary or part-time basis can therefore be employees. If the association is employed for an average of more than six hours per week, it is generally assumed that they are not self-employed. The employed person is regarded as an employee for tax purposes, the remuneration is subject to wage tax withholding.
Self-employed in the club
As a rule, self-employment is when the employee can decide for himself or herself about:
- Place of activity
- Type of activity
- Time of activity
In addition, the self-employed do not owe the association the labor, but rather a work success.
Remuneration paid to self-employed persons is not subject to wage tax. These payments - as well as the expenses related to the activity - are to be declared in the income tax return of the self-employed.
Assistance from association members / volunteer work
Association members whose work on special occasions is a mere courtesy or occasional assistance that is provided due to personal ties and not for commercial purposes are not employees in this respect.
This is the case, for example, when club members make themselves available for certain work at a club celebration or step in as helpers at sporting events and receive remuneration that does not represent more than compensation for expenses incurred.
In the same way, doing voluntary work free of charge (for example as chairman of the association) does not constitute an employment relationship in the tax sense if the volunteer is only reimbursed for the tax-deductible costs actually incurred - such as travel expenses, postage and telephone charges. Volunteers generally do not earn any taxable wages with expense allowances, as there is no so-called intention to generate surplus.
A surplus arises when the income is greater than the actual deductible expenses. Volunteers can achieve a surplus of up to EUR 256.00 per calendar year without a taxable wage being present. However, if this exemption limit is exceeded, the remuneration is fully taxable wages.
In the case of a flat-rate reimbursement of expenses that not only marginally exceeds the actual costs, however, it is usually taxable income. However, the tax-deductible expenses actually incurred can be deducted from this as part of the income tax assessment of the volunteer.
The association as an employer
Withholding, registration and payment of wage tax
If the activity for the association is not to be regarded as self-employed (employment relationship) and if there is no tax exemption for income (e.g. flat rate for trainers, honorary office flat rate), the association, as an employer, is obliged to withhold wages, to register with the tax office and to transfer them there:
- income tax
- Solidarity surcharge and, if applicable, church tax (surcharge taxes)
In certain cases (for example for mini jobs up to EUR 450.00 or for short-term employment) the association can calculate (flat-rate) the wage tax at a prescribed tax rate. It is not necessary to call up electronic wage tax deduction features (ELStAM).
In this case, however, the tax amounts - instead of being withheld from wages - are to be taken over by the association in addition to wages. Whether the association can pass the flat taxes on to the employee depends in particular on the regulations in the employment contract.
Payroll account and income tax certificate
The association must keep a wage account for each employee for the respective calendar year. For example, the type and amount of wages, tax-free remuneration and the employee's personal tax characteristics according to the retrieved electronic wage tax deduction characteristics (ELStAM) are to be recorded.
The salary account must be closed at the end of the calendar year or if the employment relationship is terminated during the year.
Based on the entries in the payroll account, the association must send an electronic payroll tax certificate for each employee no later than the last day of February of the following year. This does not apply to employees for whom he only collects wage tax at a flat rate (flat-rate wage tax); no income tax certificate is required for this. The electronic transmission of the income tax certificate must be authenticated by remote data transmission via the officially determined interface. A printout of the electronic income tax certificate based on an official model must be handed over to the employee or made available electronically.
As part of a so-called call information, both the employees and the association as employer can contact the responsible tax office with a request. The tax office will provide information on the wage tax treatment of the facts presented.
The tax office, to which the income tax is paid, is responsible.
The association is liable for income tax that is not withheld or that is not withheld in accordance with regulations. In cases of doubt, it is therefore advisable to contact the tax office.
Examination by the tax office
The tax office monitors the proper withholding and payment of wage tax through an audit (external audit) of the employer, which takes place at certain time intervals. Clubs are also subject to such tests. You are therefore obliged to contact the tax office employee responsible for the inspection
- to allow entry to the business premises during normal business hours,
- To grant access to the wage accounts and wage books and
- To grant access to the remaining business documents.
Compulsory social security
In addition to wage tax, you also have to pay social security contributions for your employees. In connection with this, there are statutory reporting obligations. You can obtain information about this from the statutory social insurance companies.
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