The VAT number for an association is not always necessary. Let’s see together when it is necessary to open it, what changes between an association with and without a VAT number and what the tax obligations are.

When the association can be without a VAT number

An association is not obliged to open a VAT number if it receives only:

  • institutional revenues, which consist of the fees paid by the members for registration and renewals. Also included in this category are the liberal contributions made by entities, companies and individuals (associated or not) to support the aims of the organization
  • revenue “de-commercialized” by law. Generally speaking, this is the revenues for the activities and services carried out exclusively (or in any case primarily) towards the associates (e.g. fees for participation in a course linked to institutional purposes)

These revenues are not taxed and do not require the issuance of an invoice. However, it should be specified that this benefit is guaranteed only to associations that have regularly transmitted the EAS model. The latter represents a communication that all association bodies must submit to the Revenue Agency to take advantage of the tax concessions provided for the non-profit sector.

As a VAT number is not necessary, in these cases it is sufficient to request the tax code only. The code allows the institution to carry out the most basic operations (e.g. open a current account, enter into a contract) and it is also necessary if you choose to register the association to make the organization known to third parties and benefit from further benefits.

VAT number association

When the VAT number is mandatory

On the other hand, an association must open a VAT number if it generates revenues from one or more commercial activities. Since the association is a non-profit organization, it is specified that these activities must always be secondary and aimed at financing the association’s purposes. If the commercial activity, on the other hand, were carried out in a prevalent way, the association would see the company taxation system applied, losing the status of a non-profit body.

For associative bodies, revenues other than institutional and/or de- commercialized ones are deemed to be commercial. More generally, all revenues from activities aimed mainly at non-associated third parties are commercial. To cite a few examples, income from: paid admissions to events open to the public, administration of food and/or drinks (with some exceptions), sponsorships and advertising.

The realization of these revenues, therefore, obliges the entity to open a VAT number, but only if the commercial activities are carried out in a habitual way. By habitual we mean a continuous activity with a stable organization of vehicles and people (e.g. associates regularly involved during the year in the sale of gadgets to third parties). If the commercial activity is purely occasional (e.g. small annual paid show open to the public), the association is not obliged to open a p. VAT. No precise regulatory references have been set to qualify an activity as occasional. However, based on some sector tax provisions, it is considered advisable not to exceed the number of 2 events per year and receipts of € 50,000.

For an association required to open a VAT number, the latter is an alternative to the tax code. In fact, the entity can request it directly without acquiring the code in advance. In any case, even those who decide only at a later time to carry out commercial activities on a regular basis may still request the p. VAT, even if you already have a tax code.

How to request p. VAT?

To apply for a VAT number, the president of the association must fill in and submit form AA7 / 10 to the Revenue Agency. The request is free but filling in the form could be complicated as it is necessary to indicate the ATECO code corresponding to the commercial activities carried out.

In order not to make mistakes and be sure to open your VAT position correctly, it is preferable to contact a qualified professional (e.g. accountant) who will take care of choosing the activity code and preparing the forms.

If you set up your association with LexDo.it, our professionals will be able to follow you step by step also for the opening of the VAT number, taking care of all requirements.

Tax compliance

The associations with p. VAT must invoice for business receipts. As expected for companies, non-profit organizations also have the obligation of electronic invoicing. However, this obligation applies only if the commercial income exceeds € 65,000 per year and if the entity has not adhered to the “flat-rate scheme” provided for by law no.398 / 1991.

The flat-rate regime is a tax advantage regime initially introduced only for amateur sports bodies, and then was extended to all types of associations. Among the benefits of this scheme, the exemption from the application of VAT stands out. However, the concessions provided by the scheme are only available for non-profit organizations that do not exceed € 400,000 in annual revenues for commercial activities.

The recent reform of the third sector, not yet fully in force, has brought together non-profit organizations under a single large group. As soon as it is fully operational, the flat-rate scheme will no longer be able to be chosen by many organizations which will, however, be able to join new tax measures. Among the various provisions announced, the application of preferential rates on commercial revenues is envisaged.