Tax offices target 'too political' charities

The outrage was palpable over the weekend when it was reported that Berlin's finance department had stripped Germany's oldest anti-fascist organization of its nonprofit status because of its ties to far-left parties. Politicians and Jewish leaders defended the Association of Persecutees of the Nazi Regime/Federation of Antifascists (VVN-BdA), founded in 1947 by Holocaust survivors and resisters of National Socialism. The organization itself pointed out that many of the original anti-Nazi fighters were communists.

Other nonprofits rallied round the VVN-BdA — not because they necessarily shared its political leanings, but because they believe tax authorities are now punishing charities for taking any political position at all.

The gates were opened in February, when the anti-globalization campaign group Attac lost a six-year legal battle to preserve its charity status before the Federal Fiscal Court in Munich. Attac is preparing a legal counterattack, but the ruling gave financial authorities a new precedent: The environmental campaign group Campact lost its charitable status in October, and DemoZ, a social and cultural center in Ludwigsburg, lost its status earlier this month.

"There are shrinking spaces for critical civil society," Attac spokeswoman Frauke Distelrath told DW. "There is a clear trend of taking away the charitable status of critical voices."

Read more: German men-only clubs could lose tax breaks

'A trend getting worse'

"There is a trend, and it will get worse," the VVN-BdA's Thomas Willms told DW. "This is about limiting the political engagement of charities."

That much was backed up by Selmin Caliskan, director of Institutional Relations at the Open Society Foundation's Berlin office. She told DW that many of the organizations that the OSF supports are now worried about letters from their local tax offices fluttering through their doors. 

"We were a little alarmed about the statements from Finance Minister Scholz, especially when it came to the VVN," Caliskan said. OSF, which supports civil society in 120 countries, is in a unique position, having recently moved its headquarters from Budapest to Berlin to escape new restrictions on NGOs imposed by Viktor Orban's government.

"Germany actually has a very strong pluralistic, democratic understanding of freedom," Caliskan said. "If Germany starts to limit this pluralistic civil society, that will send a signal to other countries. If Germany presents itself as a strong defender of human rights, say in the European Union, other countries can say: Well look at what you're doing in your country."

Nonprofit status exempts organizations from various taxes, and allows supporters to write donations off on their tax returns. According to the VVN-BdA, the decision could lead to five-digit back-tax bills that could endanger the group's survival. In addition, Willms said, the ruling is like "telling us we're not socially valuable, a problem, extremist, things like that."

What damned the VVN-BdA was a 2016 report by Bavaria's state intelligence agency that listed it among "left-wing extremist organizations and groupings" — an assessment not shared by any of the 15 other state intelligence agencies in Germany, or indeed their national counterpart, the Federal Office for the Protection of the Constitution (BfV).

Creating 'legal clarity'

For that reason, the German Finance Ministry is keen to separate the VVN-BdA case from the earlier decisions on Attac and Campact. Last month, Finance Minister Olaf Scholz said the court decision on Attac showed that charitable status needed legal clarity.

He said the ministry was engaging in dialogue with Attac, Campact and other NGOs to try to hash out a compromise, and even framed intended changes as an attempt to protect charities' ability to engage politically. "If organizations that campaign for democracy and human rights are worse off than any other club, than we have to change the tax law," he said.

The Finance Ministry's proposed solution is to create a new tax category for "political corporations," or charitable organizations that act more like political parties. But, according to advocates, the new measure is more likely to make many charities insecure. 

To be defined as a "political corporation" might mean benefits for organizations such as Campact and Attac because political parties have different kinds of tax privileges. "But we still rejected this, because many other clubs would have to then make a decision," Koch said.

The fear is that groups with no obvious political purpose, such as sports associations or the Rhineland's Carnival clubs, might think twice before taking part in an anti-racism demonstration, for instance, for fear of sanctions from the taxman. The effect, according to Attac and Campact, would be a political discourse narrowed to groups "allowed" to have an opinion, and a split in civil society.

The charities have suggested broadening the definition of civil society. They want the list of what counts as "advancement of the general public," as the German tax law puts it, to be extended to include more up-to-date concerns such as human rights, social justice and peace.

"At the moment, an organization like Amnesty International, for example, has to describe other aims, such as 'international understanding,' to even be able to claim charitable status," Distelrath said. "That's absurd and needs to be revised."

There's also a lag in the recognition of modern charities' methods. Koch said direct political action was vital to modern campaigning. "If you're a charitable organization, and you're campaigning to protect nature and the environment, for example, then at some point you have to get at those people who make those decisions," she said. "It makes no sense if you're not allowed to try and influence day-to-day politics."

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