The German Federal Council passed the Act for the Advancement of Volunteering On 1^st March 2013. It aims to improve the legal environment for charitable organisations by limiting the liability of people acting on their behalf and promoting activities that serve the public good.

The act involves civil law amendments for associations, foundations and charitable corporations. They clarify that members of the executive board of an association are not remunerated unless otherwise stated, expand the limitation of liability for executive board members who are modestly remunerated (up to €720 per year), and clarify that a charitable corporation may use the abbreviation GmbH.

Spend-down foundation are legally admissible, the Act also clarifies. It standardises the recognition and regulation of spend-down foundations through an amendment to German Civil Code provisions.

Tax law amendments include changes to the recognition of tax-exempt status of charitable organizations. Fiscal authorities will now issue a statement regarding the compliance of tax-exempt organisations with the statutory requisites for public charity. This means that, for the first time, foreign organisations can provide certainty to German details as to the deductability of cross-border donations by letting the German fiscal authorities certify that their statutes comply with the German law on charitable organizations.

The Act also covers the liberalisation of rules regarding timely disbursement of funds and the creation of capital reserves.

More information is available in a briefing from German law firm P+P Pöllath + Partners.