Annual Tax Act 2025: Important changes for non-profit organisations from 2026 onwards

The Annual Tax Act 2025 will bring numerous changes for non-profit organisations on 1 January 2026. The changes range from significantly increased lump sums for volunteers to the recognition of e-sports as a charitable purpose and extended exemption limits for commercial businesses. For foundations, associations and other non-profit organisations, these adjustments mean both new opportunities and a concrete need for action.

1. 2026 flat rate for trainers and volunteers: Higher tax-free amounts

What exactly will change? Tax-free income for secondary employment will be significantly increased from 1 January 2026:

The instructor allowance under Section 3 No. 26 of the Income Tax Act (EStG) will increase from the current €3,000 to €3,300 per annum. The volunteer allowance under Section 3 No. 26a EStG will increase from €840 to €960 per annum.

Who are these flat rates applicable to?

You can use the trainer allowance for part-time work as a trainer, instructor, educator, supervisor or similar activities in the non-profit sector. This includes, for example, coaches in sports clubs, choir directors or lecturers in adult education.

The volunteer allowance applies to other part-time activities in the service or on behalf of a non-profit organisation, such as for board members, treasurers or groundskeepers.

What do you need to do now?

Review your existing regulations in the statutes. If you currently remunerate volunteers with the old lump sums, you will be able to make higher tax-free payments from 2026 onwards. This will make your commitment more attractive.

2. E-sports officially recognised as a non-profit activity

The legislator has explicitly included e-sports as a charitable purpose in Section 52 (2) No. 21 of the German Fiscal Code. This clear legal recognition removes existing uncertainties and opens up access to charitable status for new organisations, with all the associated advantages: corporate income tax and trade tax exemptions, issuance of donation receipts, reduced VAT rates and access to subsidies. If your association already engages in e-sports activities, review your statutes and, if necessary, explicitly add e-sports as an association purpose.

What is e-sport?

E-sports encompasses competitive video gaming. Players compete against each other individually or in teams. Recognition as a sport requires that the activity requires specific motor skills and that ethical values such as fair play are upheld.

3. Commercial business operations: exemption limit of €50,000 from 2026 onwards

The exemption limit in Section 64(3) of the German Fiscal Code (AO) is being raised from €45,000 to €50,000. If your income from economic business operations remains below this limit, the organisation does not have to pay corporation tax or trade tax. Please note: This is an exemption limit, not an allowance. If the limit is exceeded by even one euro, the entire amount becomes taxable. You should therefore continue to systematically record all income from economic business operations and keep clear accounting records for each area.

What happens if the limit is exceeded?

If you exceed the limit, you must pay corporation tax and trade tax for all commercial business operations. You must then also submit a corporation tax return and a trade tax return. The administrative burden increases significantly.

4. Timely use of funds: Extended exemption for smaller organisations

The de minimis limit in Section 55(1)(5) of the German Fiscal Code (AO) is raised from €45,000 to €100,000. Organisations with annual revenues of up to €100,000 are no longer subject to the principle of timely use of funds. This means that these organisations are no longer required to provide evidence of timely use of funds. This relieves the burden on smaller organisations in particular, which can now build up substantial reserves without having to justify this separately. The administrative burden is significantly reduced.

5. Photovoltaic systems do not harm charitable status

According to Section 58 No. 11 of the German Fiscal Code (AO), non-profit organisations may now also use their funds to purchase or manufacture photovoltaic systems and other systems for generating electricity from renewable energies. The investment does not have to directly serve the purpose set out in the organisation’s statutes. You can supply your buildings with self-generated electricity, reduce energy costs and, under certain circumstances, feed surplus electricity into the grid.

6. New system for value added tax on catering services

Section 12(2) No. 15 of the Value Added Tax Act (UStG) has been reorganised. Beverages will continue to be exempt from the reduced tax rate (= 19% VAT), while food will now be subject to a uniform reduced tax rate of 7%. This means that, from 1 January 2026, it will (once again) no longer be necessary to distinguish between deliveries, which have already been subject to preferential treatment, and restaurant services, which have not. However, if you sell food and beverages at events, you must apply the different tax rates correctly: separate food and beverages in your cash register entries, adjust your cash register systems if necessary, and train your staff.

Recommended actions

The changes introduced by the Annual Tax Act 2025 (effective from 2026) offer opportunities, particularly in terms of increasing the flat rates for trainers or the flat rate for volunteers. However, the changes also require adjustments: non-profit organisations should review their statutes in a timely manner with regard to the new regulatory options and consider the impact of the new legal situation on their own organisation.

Have it checked now: We will analyse whether your articles of association, remuneration regulations and economic activities comply with the new requirements.

This article is for general information purposes only and does not replace individual advice. We are happy to assist you with all legal and tax issues relating to NPOs and non-profit status. We can provide all services professionally from a single source: we support you from the establishment of an organisation, through ongoing tax and legal support in all relevant matters, to disputes with authorities, the tax office or third parties.

Answers to important questions on the topic (FAQ):

Can the trainer allowance and volunteer allowance be used at the same time?

Yes, but only within very narrow limits, if there are actually two completely different fields of activity that are also remunerated separately. A person may also work for different organisations.

What happens if the exemption limit of €50,000 is exceeded in commercial businesses?

If the exemption limit is exceeded, all income from economic business operations becomes taxable, not just the amount exceeding the limit. This is an exemption limit, not an allowance.

Does an e-sports club have to change its articles of association in order to be recognised as a non-profit organisation?

If the promotion of sport is already enshrined in the statutes, e-sports may fall under this category. An explicit mention is recommended, but not mandatory. The decisive factor is that the statutes meet the requirements of Section 60 of the German Fiscal Code (AO).

Does the exemption from the requirement to use funds promptly apply automatically to income below €100,000?

Yes, if your total income does not exceed €100,000, you do not have to comply with the principle of timely use of funds.