FAQ About Legal MattersWhy are there two companies - Bowspirit Kids gemeinnützige GmbH and Bowspirit Management GmbH?
When we first started to elaborate on our idea, we envisioned an organisation that collects donations for a camp to be created for sick and traumatised children or, if that ultimate goal is not achieved, will distribute the money to non-profit organisations.
Alas, all visionaries inevitably have to face the reality of the German tax laws at some point. Us included. It quickly became clear: unfortunately, it is not that easy in Germany.
Donations are funds given voluntarily without and consideration in return. In contrast, in the "world's largest floating pinboard" campaign, we promise you something in return, namely to post your message on the virtual ship side and, if both virtual side walls are completely filled in, to affix it the real side of an actual ship. Therefore, it is not considered to be a donation.
To combine all that together in a non-profit company would have presented major difficulties, especially in terms of accounting. Unfortunately, the tax office does not forgive even the smallest of errors and could revoke the non-profit status - for up to 10 years retroactively. The result would be substantial back taxes, in the millions if the campaign was successful. The long-term establishment of the Bowspirit Kids Group would thus be continuously at risk.
To efficiently and securely negotiate the hurdles of German tax legislation, we decided to create two companies - a non-profit one and a commercial one:
The camp will be organised by Bowspirit Kids gemeinnützige GmbH, based in Lübeck (www.bowspirit-kids.org).
This company is recognised as a non-profit corporation in accordance with Section 60a (1) of the German Fiscal Code (AO) by the competent tax office in Lübeck by way of a notice dated 2018-06-25, and thus donation receipts can be issued for donations in accordance with Section 10b of the German Income Tax Act (EStG).
The "world's largest floating pinboard" is operated by Bowspirit Management GmbH, Lübeck (www.bowspirit-management.com).
This company will operate commercially and will continue to be responsible for marketing, raising funds and operating the ship after the three stages of the campaign have been completed.
The articles of association stipulate that the profits made during the campaign may not be distributed to the shareholders, but instead must be transferred to the non-profit sister company.
The funds raised by both of the sister companies will be used for the intended purpose specified in the articles of association as well as for the establishment and suitable administration and management and also for the acquisition of the necessary equipment and facilities - in particular the passenger ferry.
If the two sister companies are dissolved, the articles of association ensure that the capital gains from the liquidation will be distributed to the non-profit organisations designated in the articles of association.
Why didn't you set up a foundation or association instead?
Initial capital of at least €50,000.00 is required to establish a foundation, and that capital may not be used or spent. A foundation may only invest the income generated from the foundation's capital in line with its purpose, but not the foundation's capital itself. We would prefer to use the six-figure amount available to us for the implementation of our project for the purpose of giving the venture the opportunity to get off the ground and to show that we are worth supporting.
We did not want to start an association because we wanted to keep the organisation streamlined and leave it with the initiators in order to ensure efficiency, little bureaucracy and quick decision-making.
As soon as we see that our vision is taking off, the shares of the two sister companies will be incorporated into the Bowspirit Kids Foundation (Lübeck) that will be established.