What is legal entity tax?
Legal entity tax applies to specific types of income for non-profit organisations (non-profit associations), in particular with regard to immovable, movable and miscellaneous income. Normal operating income generally does not have to be declared and many sports organisations submit a blank declaration.
Which sports clubs or sports federations must submit this declaration?
Only non-profit organisations must submit this declaration. Exceptions exist for entities with significant income or commercial activities (subject to corporate tax). Non-profit clubs must submit other declarations. Even inactive non-profit organisations must file returns.
How do I submit my declaration as a sports club or sports federation?
The digital declaration is done via the Biztax platform: https://financien.belgium.be/nl/E-services/biztax. Submitters must attach the annual accounts and minutes of the meeting. Documentation supporting all income and expenses is required.
What are the consequences if I do not declare the legal entity tax?
In case of non-compliance you risk a fine of EUR 625.00 plus possible additional sanctions. Board members can be held personally liable.
Legal entity tax or corporate tax?
The first question is not how to file, but which regime applies. A non-profit association falls under legal entity tax when it limits itself to activities that match its non-profit purpose. It falls under corporate tax when it runs what is in substance an enterprise, in other words a continuous set of operations of an industrial or commercial nature. The line is drawn on the facts, not on the legal form and not on the wording of the articles.
The consequences differ sharply. Under legal entity tax only certain categories of income are taxed, and ordinary membership fees, subsidies and gifts generally stay outside the charge. Under corporate tax the result of the whole activity is taxed, expenses become deductible, and the administrative obligations are considerably heavier. A club that drifts from one regime into the other rarely notices at the time, because the drift happens through decisions that each look small on their own: a bar that opens outside match days, a hall that is let out commercially, a shop that starts selling to the general public.
Which income is concerned
Under legal entity tax the charge attaches to income from immovable property, to income from movable property and to certain miscellaneous income. Letting a building or part of a site, interest on reserves and some capital gains therefore matter, while the ordinary running of the club usually does not. Many sports associations consequently file a return that reports little or nothing, and that is a normal outcome rather than a sign that something has been missed.
What a club should organise
Keep the accounts in a form that lets you show, per source, where the money came from. That single habit answers most of the questions an inspector asks, and it is also what the federation and the bank will want to see. Approve the annual accounts at the general meeting and keep the minutes, because the return is filed with those documents behind it.
Do not treat a dormant association as exempt from the obligation. A club that no longer plays still exists as a legal person and still has to file. Filing nothing is what turns a harmless situation into a penalty, and the board is the body that answers for it.
Where the activity is genuinely mixed, take advice before the situation settles. Moving from one regime to the other is not a box you tick on a form, and a change assessed several years later costs more than a structure that was set up correctly at the start.
Which income falls under the legal entity tax?
The tax reaches three categories rather than the ordinary activity of the association. Income from immovable property, such as the letting of a building or of part of a site. Income from movable property, such as interest and dividends. And certain miscellaneous income, for instance a capital gain on the sale of land or a building. Membership fees, subscriptions, sponsorship received for the ordinary running of the club and grants normally fall outside that scope, which is why so many clubs file a nil return.
When a club falls under corporate tax instead
A non-profit association is not automatically subject to the legal entity tax. Where it carries on activities that amount to a commercial undertaking, and those activities are more than incidental to its purpose, the authorities can subject it to corporate tax instead. Running a bar, letting facilities commercially or organising events for profit are the situations that raise the question. The consequences are significant, because corporate tax applies to the whole result and not only to the three categories above. That assessment is made on the facts, so how the activity is organised and presented matters a great deal.
The deadline, and how it is calculated
The filing period runs from the close of the financial year, and the exact date is published each year by the tax authorities. It is not the same date for every association, because it follows the accounting year that the statutes fix. Check the statutes rather than assuming a calendar year: a club that closes its year on 30 June has a different deadline from one that closes on 31 December. An extension is not granted as a matter of course, so treat the published date as final.
What to keep, and who is responsible
Keep the annual accounts, the minutes of the general meeting that approved them, the bank statements and the supporting documents for every item of income and expenditure. The return itself is short, but the authorities can ask for the underlying documents long afterwards. Appoint one board member as responsible for the filing and record that in the minutes, so the duty does not quietly disappear when the board changes.
Getting it wrong
A late or missing return can lead to an administrative fine and to an assessment that the authorities make on their own estimate of the figures, which is rarely favourable to the association. Directors can be held personally liable where the failure is attributable to them. If a return has been missed, file it and correct the position rather than waiting for a reminder, because a voluntary correction is treated differently from one made under assessment. We advise clubs and federations on tax law in sport and on the association law that sits behind it.