Registration of non-profit organizations, creation of NGOs
A non-profit organization (NCO) recognizes a legal entity whose activities are not related to profit. NGOs are set up to pursue goals in sports, medicine, education, culture, philanthropy, politics, science and other social fields.
Legal advice from lawyers with a deep and comprehensive knowledge of corporate law and registration of non-profit organizations of any organizational and legal form;
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Requirements for non-profit organizations
Pm. 133.4.1 The Tax Code defines the requirements for the organization to obtain non-profit status: formed and registered in a manner defined by law, regulating the activities of the relevant non-profit organization; the founding documents of which contain a prohibition of distribution of income (profits) or part of them among the founders (participants), members of the organization, employees (except for their pay, the accrual of a single social contribution), members of the government and other related persons; The founding documents of which provide for the transfer of assets to one or more non-profit organizations of the appropriate type or to be enrolled in income to the budget in the event of termination of the legal entity (as a result of its liquidation, merger, separation, accession or conversion); entered by the supervisory body in the Register of non-profit institutions and organizations.
And most importantly, according to pp. 133.4.2: The income (profit) of a non-profit organization should be used solely to finance the costs of maintaining such a non-profit organization, the implementation of the goal (goals, objectives) and activities defined by its founding documents. The main difference from profitable (commercial) organizations: a commercial organization is created solely for profit and is a payer of income tax, and non-profit – the purpose of obtaining material benefits does not pursue. The non-profit organization is mainly based to create favorable living conditions for people and to achieve social benefits.
Types of non-profit organizations
Types of non-profit organizations according to pp. 133.4.6 Tax Code:
- Budgetary institutions;
- public associations, political parties, creative unions, religious organizations, charities, pension funds;
- Unions, associations and other associations of legal entities;
- housing and construction cooperatives, summer (dacha-building), horticultural and garage (garage-building) cooperatives;
- Association of co-owners of an apartment building, association of homeowners;
- trade unions, their associations and trade union organizations, as well as employers’ organizations and their associations;
- Agricultural service cooperatives, cooperative associations of agricultural service cooperatives;
- other legal entities whose activities meet the requirements of section 133.4 of the Tax Code.
Each type of non-profit organization is governed by the relevant legislation.
Non-profit organizations do not calculate income tax, do not file a declaration and accordingly do not pay it, but at the same time the status of non-profit does not exempt from reporting. Non-profit enterprises, institutions and organizations defined by Section 133.4 of the NCU, with the entry into force of Act 652, must file a report on the use of the income (profits) of a non-profit organization in the appropriate form within the time frame provided for the provision of a tax return on corporate income tax. The report is intended to control the expenditure of income (profits), because if the purposes of use will have to pay tax and become a payer of income tax on general grounds.
The most common types of non-profit organizations are public associations and charitable foundations.
According to the Law on Public Associations of Ukraine, a public association is a voluntary association of individuals and/or legal entities of private law to exercise and protect rights and freedoms, to satisfy public, in particular economic, social, cultural, environmental and other interests. In the previous commentary we have already written about the forms and types of public associations enshrined in the current legislation. There was also a commentary on the main founding document – the statute, and the basic requirements for it.
A charitable organization is a legal entity of private law, the founding documents of which define charitable activities in one or more areas defined by the Law on Philanthropy and Charities of Ukraine. It is developing its own charitable program, which is a set of charitable activities aimed at solving problems that meet the statutory goals of the organization. A charity can be established as a charitable foundation, a charitable organization or a charitable foundation. The charitable foundation recognizes a charitable organization that operates on the basis of the statute, has members and is managed by participants, is not obliged to transfer to this organization any assets to achieve the purposes of charitable activities.
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