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I'm (being a resident of Germany) going to introduce a software foundation - keep in mind though that I'm using term "software foundation" in a non-legal sense; and actually the goal of this question would be to figure out what would be correct form of organization.

The idea behind this foundation is to survive on donations, both corporate and personal, and deliver open-source solutions, most of which would be free (that is, some still will exist as a paid software but will be always open-source - so one can just compile distrib by themselves).

The question is - is there any specific form of organization I can choose and register as to minify tax expenses? I do realize that why you are making money on some of products it's a commercial activity.

Still, many of them will be non-profit by design - and if I'll have like 40% in taxes for donations - well, it will be sad.

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  • The fact that the software is open-source doesn't really mean this would qualify for non-profit status, whatever that might be in Germany. The crux of that determination is going to be about who retains the rights to the profits of the company. If you retain the ability to reap the commercial rewards of its operations, then quite likely this would need to be a taxable entity. Do you expect to earn more in revenue than you pay in costs? – Grade 'Eh' Bacon Dec 18 '20 at 15:11
  • @Grade'Eh'Bacon well, no, the main goal is to make it possible to develop and distribute software so paying costs is the main goal, however. of course, it's never that easy - obviously I need to pay salaries and/or sign contracts and so on. – shabunc Dec 18 '20 at 19:33
  • And if you are successful, will you ever in your life take out the profits of success? If the answer is yes, then it is still unlikely to meet the definition of a non-profit entity. – Grade 'Eh' Bacon Dec 18 '20 at 19:56
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Nothing. SImple like that. It is not your form - in order for any donation to NOT be taxed, one of two elements must be in fact:

  • One, you are writing an invoice and the invoice is tax deductable. I.e. if a company donates to you for consulting. Private people are VERY VERY VERY limited on what is tax dedutable. Companies - particularly using open source - would be in a much better place for a sponsorship. Heck, you could write the expenses off as marketing if you do proper sponsoring. YOUR legal form is quite irrelevant then. But any non company - nope, no deduction.

  • Two, you are a non profit setup with LEGAL ACCEPTANCE - then your invoices are tax deductable ALSO for private people. This is not so much about legal form but about a check that you are there for the greater good in a VERY narrow definition which I am VERY sure you are not fulfilling.

There is not a lot more you can do. If people decide to donate their post tax money for whatever, the government is not reducing their tax burden. Hobbies are not tax deductible. YOU definitely can not choose anything to reduce a THIRD PARTY tax burden without going through the way to become a "Gemeinnützige Organisation"

A reference for that is here:

http://blog.socialfunders.org/2016/05/gemeinnuetzigkeit-wann-ist-eine-organisation-gemeinnuetzig/#.X9yz6thKg88

or here:

https://de.wikipedia.org/wiki/Gemeinn%C3%BCtzigkeit

Either you fulfill those steps, or - yeah, no way. And for businesses go the way or marketing.

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