Social Enterprises and Tax: Living Apart Together?

Abstract

This chapter examines the complex relationship between social enterprises and taxation. The focus is not on a specific country, although various examples are mentioned. As specific tax measures for social enterprises are a form of tax incentives, the chapter discusses this public finance concept. In addition, an important legal constraint on introducing such incentives for social enterprises in the European Union (EU) is discussed: the prohibition of state aid. From an analysis of the taxation of profits of social enterprises, it turns out that only a few countries have implemented tax incentives to further social enterprise models. Some social enterprises may meet the charity definition and thus benefit from tax incentives for charities. The drawback might be that it may require social enterprises to use next best legal forms. The chapter also discusses the relevant tax aspects for funders of social enterprises. Tax rules can especially be detrimental to the funding of high-risk social enterprises. Social enterprises also encounter value-added tax (VAT) issues. The VAT that applies in the EU has been copied (with variations) by many non-EU Member States. For that reason, this chapter focusses on the EU VAT legislation as included in the VAT. Problems emerging from the impossibility to deduct input VAT can best be solved outside the VAT framework.

El impuesto sobre la renta, los incentivos tributarios y las cooperativas en América Latina

“…En este sentido, Venezuela aprobó beneficios para las cooperativas para fines del impuesto sobre la renta a partir de 2022, con vigencia de un año, en El Salvador la vigencia será por cinco años (prorrogables) y en Perú la vigencia expira el 31 de diciembre de 2023. Con lo expuesto, consta la reticencia para otorgar incentivos (Hemels, 2023).…”