Limitations of non-governmental organizations economic activity

Non-governmental organizations are not perceived regarded as entities leading economic activity.
Increasingly, non-governmental organizations have economic activity and they are important players on the market. This article presents possible systemic solutions of this issue. Speech is about the non-governmental, not non-profit organizations, precisely because appart from the socially useful mission they earn a profit, even if they do not work directly for it.

We have provided solutions in Austria, where such activity is permissible only to a very limited extent, across the Polish direct model, to the German, in which there are no restrictions on having such a business activity. At once, an attention to the fact that the admissibility, even unlimited, to leading economic activity by the organizations of the third sector should not be associated with the extension on this activity privileges accruing to them in scope of public-law benefits, especially profit tax, was drawn.

It was pointed out that common-law systems introduce concepts of related economic activity, for which, even it is not disposed on profit, it keeps tax exemptions. In turn, the Polish system introduces a number of restrictions for the organizations with status of public benefit organization.

The conclusions, however, are that the cost-shifting between the activitiy preferred and non-preferred tax can provide scope for abuse in any case. Therefore the easiest solution seems to be an unlimited admission of economic activity for all organizations, and profit taxation in any case.

Joanna Dominowska
Commercial Law Review, No. 10 (254), 2013