Exempt from VAT
In most cases, voluntary associations can choose to be fully or partially exempt from paying VAT. An association is only legally required to pay VAT if what it sells qualifies as a business operation, such as running a sports shop. However, if your association has a charitable or nonprofit purpose outlined in its bylaws and does not engage in commercial sales, it is not required to pay VAT.
Read more below about when an association’s sales are considered commercial.
Partially exempt from VAT
If your association operates a business alongside hosting charitable or nonprofit events and activities, you can choose to pay VAT on business-related sales while remaining VAT-exempt for your events.
Do you need to apply for VAT exemption?
If you want your association to be fully or partially VAT-exempt, there is no need to apply. You simply follow the VAT exemption rules.
Keep proper records
Whether or not your association pays VAT, you must keep proper financial records. If exempt, you must be able to prove that all surplus revenue from sales is used within the association and does not generate a profit in the traditional sense.
When are an association’s sales considered commercial?
Several factors determine whether sales qualify as commercial business activity:
Customer base - are the buyers members of the association or external customers?
Purpose - are the sales intended purely to support the association’s mission?
Continuity - is the sales activity ongoing or only event-based?
Opening hours - do they follow regular business hours or align with the association’s activities?
Scale - are sales large-scale with many external customers, or small-scale with only a few?
Location - is the business run from a permanent shop, restaurant, kiosk, or café, or is it a temporary setup?
Use of revenue - is the revenue exclusively reinvested into the association’s activities as per its bylaws?
Support-based sales
If products or services are sold to members or to individuals and companies purchasing specifically to support the association’s purpose, these sales are not considered commercial. This could include sponsorships or merchandise sales.
Sales from a permanent location
If an association sets up a shop or cafeteria as a permanent business with regular opening hours that do not align with the association’s activities and serves customers with no strong connection to the association, this qualifies as commercial activity.
However, if the opening hours strictly follow the association’s activities and most customers are members, their close relations, or visiting clubs, then it is not considered commercial business.
Sales from other locations
Sales or services provided outside a physical shop can also be considered commercial if they operate with consistent sales volume and continuity. Examples include a webshop, horse boarding (stable rentals), or boat slip rentals (marina services). This only applies if most customers are not members. If most customers are members and external sales are minimal, these activities are not considered commercial business.