Update: Non-Profit Status of Esports on Course for Failure

After GamesMarkt had learned from sources in Parliament that the non-profit status of esports will probably not come this year, Esport Parliament group speaker Manuel Höferlin officially confirms that the current tax act draft by Lindner's Finance Ministry does not contain the esport cause.

Update from April 5 2024:

When asked for a statement, Manuel Höferlin, Speaker of Parliament group Gaming & Esports (FDP), critisised the current tax draft strongly: "In the current draft of the annual tax law, non-profit status is currently still left out, as the Greens and the Ministry of Family Affairs have announced a need for further discussion. As the non-profit status for eSports was agreed in the coalition agreement from the outset, I assume that this time Games Minister Robert Habeck will influence his cabinet colleague to honour the agreement and finally implement this overdue project."

Disclaimer: In an earlier quote, Höferlin told GamesMarkt the draft would include the non-profit status. This was a misconception based on a earlier draft, which the politician's office corrected later.

Original Article from April 4 2024:

The debate surrounding the non-profit status of esports seems to come to a detrimental halt for the games industry and the sport: So far, no agreement could be reached between the Federal Ministry for Family Affairs (Greens), which had raised concerns about the protection of minors when it came to the non-profit status of games that contain gambling-like mechanics, and the Federal Ministry of Finance (FDP).

If this compromise is not found by the time the Annual Tax Act 2024 ("Jahressteuergesetz") is ratified, the non-profit status of esports cannot become reality this year. Parliamentary sources tell GamesMarkt that the current assumption of involved parties find the inclusion of the non-profit status for this year's tax act unlikely.

According to a public statement the Federal Ministry of Family Affairs had given to GamesMarkt earlier this year, the ministry is of the opinion that esports which use games that contain gambling-like mechanics or glorify violence should not be granted non-profit status in order not to jeopardise the protection of minors.

The Federal Ministry of Finance, on the other hand, is according to parliamentary sources of the opinion that the protection of minors is covered by the general funding principles of non-profit status. These state that only organisations that promote morally, socially or materially to the general public can inhabit the charitable non-profit status. Organisations that use funding for purposes which do not fall under this can have their non-profit status revoked as a result of such misuse of funds.

However, the funding principles also include the so-called de minimis principle (“Bagatellgrundsatz”), according to which non-profit status does not necessarily have to be withdrawn for minor offences. In unsettled circumstances, the decision as to whether a game used in esports which contains gambling-like mechanics such as loot boxes is considered a misuse of funds would then lie with the fiscal courts. Although this view taken by the Ministry of Finance would benefit the industry and esports, it also entails a certain degree of legal uncertainty. It is currently unclear to what extent the Ministry of Family Affairs will insist on the elimination of this - after all, Family Affairs Minister Lisa Paus had already signalled her openness to esports in response to the public echo - or whether it intends block non-profit status based on the criteria. GamesMarkt has reached out to the Family Ministry for further comment.