On July 3, 2025, a new policy decision was published regarding Public Benefit Organizations (ANBIs). This decision contains both clarifications and tightening of the existing policy. Among other things, the rules for forming earmarked reserves have become considerably stricter. Several of these tightening measures were already being applied in practice by the tax authorities and have been reflected in recent knowledge group positions, but had not been (explicitly) published until now. It is very important for directors and advisors of PBOs (ANBIs) to carefully analyze these changes. In this newsletter, we discuss the most important new or amended parts of the decision.
Spending criterion (anti-hoarding)
A PBO may not hold more capital than is necessary for the continuity of its intended activities. Which reserves are permitted in any case according to the decree?
- A continuity reserve
- Reserves for anticipated activities (earmarked reserve)
- Share capital
Noteworthy is the stricter interpretation of earmarked reserves and the possible tightening of rules for share capital. It is important to note that a general reserve, without further explanation, is in principle not permitted. The decree provides the following further rules:
Ad 1 and 2 Continuity and earmarked reserves
The following rules apply to the first two reserves:
- A continuity reserve is permitted, with a rule of thumb of 1.5 times the average cost level of the organization’s own work organization.
- A reserve for anticipated activities (in the RJ: earmarked reserve) may only be formed if it is substantiated with specific projects and associated amounts. This requirement was already applied in practice by some inspectors, but has now been formally established.
We consider the rules for the latter reserve to be very strict. PBOs that, for example, make annual reserves for average expected applications or for general emergency aid run the risk of these reserves being rejected from now on. In such cases, it may be wise to consult with the Tax and Customs Administration in advance. We do not fully understand why this stricter assessment framework has now been included in the policy.
Please note: the decision reflects the views of the Tax and Customs Administration and is therefore not law. Nevertheless, an institution that does not comply with the decision may face withdrawal of its PBO status. That withdrawal could then be challenged in an objection and appeal, but this would lead to uncertainty about important tax exemptions and facilities. We therefore advise you to carefully examine the amount of and explanation for all reserves.
Ad 3 Family capital
Family capital refers to capital acquired through a gift or inheritance that must be maintained on the basis of explicit conditions set by the donor or testator. If no such conditions are specified, the capital does not qualify as family capital.
Endowment capital must meet the following additional requirements:
- The board may not designate core capital.
- According to the policy, unrealized increases in value (such as capital gains on shares) are considered returns that must be spent, unless the donor has explicitly stipulated that the assets themselves must be retained.
- A PBO may apply a fixed spending percentage to the endowment capital, provided that this is substantiated by a multi-year return forecast and is reviewed annually. This offers some leeway, but requires careful monitoring.
Unfortunately, it is unclear whether a PBO may choose to maintain assets in order to generate structural income for its objectives. Consider, for example, a general bequest that is not spent immediately, but is invested so that the investment income can be spent for the public benefit. On the one hand, the decision seems to prohibit this, but on the other hand, it could also be argued that this is still appropriate, certainly on the basis of a broader interpretation of the law. Unfortunately, uncertainty about these types of reserves is increasing. In that respect, we consider the decision to be a missed opportunity. For PBOs that wish to reserve capital for the long term, it may be wise to seek further advice and, if necessary, consult with the Tax and Customs Administration.
Crowdfunding and collection agencies
The decision provides concrete guidelines for assessing so-called crowdfunding and collection agencies. Collection agencies that only transfer funds at the donor’s instruction, without pursuing their own charitable objectives, run the risk of losing their PBO status. According to the decision, this applies in any case to institutions whose sole purpose is to engage in these activities. In practice, we see that it remains possible to make earmarked donations based on a clear and concrete policy of a PBO.
New is an explanation of crowdfunding, in which the “crowd” determines which projects receive funding. A PBO that is not a support foundation may only engage in crowdfunding if it plays its own substantive role in it. The decision mentions a number of relevant assessment criteria for testing the public benefit requirement, such as pursuing an independent public benefit objective and carrying out project selection and payments in a critical and targeted manner.
These guidelines are more or less in line with previous discussions about the conditions under which support for non-PBOs is possible. It is striking that the decision says nothing about that very aspect—under what conditions a PBO may or may not support non-PBOs—even though this is a much-debated issue in practice.
Welfare activities
Activities that fall under the category of “welfare” can be classified as generally beneficial. In practice, this regularly leads to discussion about the scope of the concept of “welfare.” The policy clarifies that institutions that focus primarily on personal development or recreation are, in principle, not eligible for PBO status. According to the decree, activities in the field of recreation, entertainment (e.g., holidays), and personal development can only be considered generally beneficial if they are aimed at vulnerable target groups (such as the sick, the elderly, or people in social isolation). In our experience, this must often also be clearly laid down in the PBO’s policy.
Foreign institutions
Countries that are not member states of the European Union and with which the Netherlands has no relationship for the exchange of data on taxation, are classified as third countries. Institutions based in so-called third countries can still be classified as PBOs. However, they are now required to provide sufficient insight into their actual activities on an annual basis, for example through an auditor’s report. In the absence of such transparency, PBO status may be refused or withdrawn.
Other matters
The decree also addresses:
- The consequences of retroactive withdrawal of PBO status for gift tax, including for beneficiaries.
- Remuneration for directors and the Supervisory Board of a PBO.
- The extent to which a PBO may charge a (commercial) rate for its activities.
These three topics are in line with previously known principles, but it may certainly be useful to review them critically.
Conclusion
The new PBO decree may have an impact on certain aspects of your organization. We would be happy to discuss the consequences of the new decree with you and advise you on any actions that may be necessary.
