Quick answer. A foundation or association is a taxable person for VAT as soon as it makes supplies for consideration directly linked to them, even without a profit motive. An exemption, if any, then determines whether the VAT on costs is deductible. Donations, certain subsidies and membership fees for general representation of interests fall outside the scope of VAT.
Contents
VAT advice for foundations and associations
Understand how VAT rules affect your organisation and the deductibility of VAT on costs.
Schedule a consultation
Is a non-profit foundation or association a taxable person for VAT?
Yes, a non-profit foundation or association can be a taxable person for VAT: what matters is whether it independently makes supplies for consideration, not its purpose or the profit it makes. The legal form is irrelevant. A foundation or association with an idealistic objective can therefore just as well be a taxable person as a private limited company (bv).
The Supreme Court of the Netherlands confirmed this in June 2026 for a foundation that supports disciplinary proceedings for lawyers. It provided registrars, staff, hearing rooms and systems to the disciplinary tribunals and was paid for this through an annual contribution from the Netherlands Bar Association. According to the foundation, it acted exclusively in the public interest. The Supreme Court held otherwise: it acted independently, the disciplinary tribunals derived a concrete benefit from its services, and there was a direct link between those services and the contribution. The fact that a third party paid and that the work served the public interest did not change that.
The Court of Justice of the European Union reached a similar conclusion in 2024 for a Latvian association that carried out training projects with EU funding. Its non-profit character did not preclude it from being a taxable person.
What falls outside the scope of VAT for foundations and associations?
Outside the scope of VAT are gifts and donations without anything in return, subsidies that are not directly linked to the price of a supply or that are not matched by a direct supply, and membership fees for the general representation of interests.
For membership fees, it depends on what members receive in return. If members pay for the representation of the interests of the group as a whole, without their benefit being linked to the fee, the fee is not consideration for a supply. If the association makes facilities available, such as a golf course, the fee is consideration for a supply, even if a member makes little use of them. The Court of Justice ruled accordingly in 1988 and 2002 respectively. In 2023, the Court of Appeal of The Hague held that the membership fee of a motorcycle club for enthusiasts of a single brand was not consideration.
In summary, by source of income:
| Source of income | VAT consequence | Deduction of VAT on costs |
|---|---|---|
| Gift or donation without anything in return | Outside the scope of VAT | Not applicable |
| Subsidy not linked to the price | Outside the scope of VAT | Not applicable |
| Membership fee for general representation of interests | Outside the scope of VAT | Not applicable |
| Membership fee for use of facilities | Consideration: taxable or exempt | Only if taxable |
| Exempt supply (healthcare, education, sport) | Exempt | No deduction |
| Taxable supply (e.g. sponsorship with consideration in return) | Taxable | Deduction |
Which VAT exemptions apply to foundations and associations?
The Dutch VAT Act 1968 (Wet op de omzetbelasting 1968) contains exemptions for, among other things, healthcare, education, sport, social and cultural work, and childcare. Applying an exemption is not a choice: if the conditions are met, it applies. For a number of exemptions, one of those conditions is that the organisation does not aim to make a profit.
For fundraising activities, such as a bazaar or a lottery, a separate exemption applies to institutions that themselves make exempt supplies, within fixed turnover thresholds. A 2025 evaluation showed that these thresholds work well and do not need to be adjusted. A small foundation or association with a turnover of up to €20,000 per year can also make use of the small business scheme (kleineondernemersregeling).
Why is a VAT exemption not always advantageous?
A VAT exemption is not always advantageous, because the VAT on costs is not deductible. For running costs this is manageable, but for an investment the difference becomes significant. An association that invests €1 million in a new facility and is fully exempt bears €210,000 in VAT itself.
Sports associations, for example, have faced this since the broadening of the sports exemption in 2019: since then, VAT on sports facilities is no longer deductible for many associations, and compensation is provided through subsidies.
How is VAT apportioned for mixed activities?
With mixed activities, VAT on costs is only deductible to the extent that the costs are used for taxable activities. For costs that also serve activities outside the scope of VAT or VAT-exempt activities, the deduction is limited pro rata.
The apportionment must be based on an objective criterion, and at the end of the year it is recalculated in the final return. This is exactly where things often go wrong in practice: an allocation key agreed years ago, while the activities have since changed.
How does Port Sight Tax help foundations and associations with VAT?
For each activity, we map out whether it is taxable, exempt or outside the scope of VAT, review the cost apportionment and look ahead at investments and partnerships. Our VAT scan has a dedicated version for non-profit organisations.
Frequently asked questions
Does a non-profit foundation have to pay VAT?
It can. What matters is whether the foundation makes supplies for consideration, not whether it makes a profit. Whether it actually owes VAT then depends on whether an exemption applies.
Is a subsidy subject to VAT?
Often not. Only a subsidy that is directly linked to the price of a supply, or a subsidy that constitutes consideration for a supply, falls within the scope of VAT.
Are association membership fees subject to VAT?
That depends on what is provided in return. Membership fees for general representation of interests fall outside the scope of VAT; membership fees for the use of facilities are consideration that may be taxable or exempt.
Can a foundation reclaim VAT?
A foundation can only deduct VAT on costs to the extent that those costs are used for taxable activities. For exempt activities and activities outside the scope of VAT, the VAT is not deductible.
About the author
Xander Wamelink is Partner Indirect Tax at Port Sight Tax and heads the VAT practice, which also acts as a general fiscal representative through Taxander B.V. He advises businesses, foundations and public authorities on VAT in investments, transactions and cross-border flows of goods.
Sources
- Dutch VAT Act 1968 (Wet op de omzetbelasting 1968), Articles 7 and 11 · https://wetten.overheid.nl/BWBR0002629
- Supreme Court of the Netherlands, 19 June 2026, ECLI:NL:HR:2026:959 (disciplinary tribunals for lawyers) · https://uitspraken.rechtspraak.nl/details?id=ECLI:NL:HR:2026:959
- CJEU, 4 July 2024, C-87/23 (Latvian association, EU-funded training) · https://curia.europa.eu/juris/liste.jsf?num=C-87/23
- CJEU, 8 March 1988, 102/86 (Apple and Pear Development Council) · https://curia.europa.eu/juris/liste.jsf?num=102/86
- CJEU, 21 March 2002, C-174/00 (Kennemer Golf) · https://curia.europa.eu/juris/liste.jsf?num=C-174/00
- Court of Appeal of The Hague, 20 April 2023, ECLI:NL:GHDHA:2023:1603 (motorcycle club) · https://uitspraken.rechtspraak.nl/details?id=ECLI:NL:GHDHA:2023:1603
- CJEU, 13 March 2008, C-437/06 (Securenta) · https://curia.europa.eu/juris/liste.jsf?num=C-437/06
Frequently asked questions about this topic
Written by:
Xander Wamelink
Partner Indirect Tax
Xander is an experienced VAT specialist with a long track record in indirect taxation.
Get in touch
Free Consultation
Want to know more about this topic? Book a free consultation with one of our specialists.
Book an appointment
Takes just a minute
