Tax-Exempt Organizations in Germany and the USA

Melina Kammerer, who is a PhD student at Bucerius Law School, tells us about her doctoral research project at Columbia Law School in New York.

Hi Melina, what is your field of research and your doctoral thesis about? Who is your supervising professor?

My field of research is tax law, or more precisely, the law of tax-exempt organizations. My doctoral thesis is essentially a legal comparison of exempt dedicated activities called “Zweckbetriebe” in Germany and their US counterpart, so-called substantially related activities. Professor Dr. Birgit Weitemeyer has been my supervising professor since 2018.


Why is your research topic relevant in this day and age?

In recent years, more and more for-profit organizations have entered historically tax-exempt domains, for example in the hospital and nursing home markets. The ensuing competition between non-profit and for-profit organizations raises the question on how to demarcate taxable and tax-exempt business activities of non-profit organizations in modern times. Both jurisdictions are facing similar problems; both want to ensure an economically neutral tax system.


How do you hope to contribute to international legal discourse with your work?

The major public policy concern in both Germany and the US is to avoid “unfair” competition between non-profit and for-profit organizations due to tax advantages for non-profit organizations. However, German law demarcates between taxable and tax-exempt business activities with an additional competition clause, whereas US law builds only on a relatedness distinction.

My hope is that my findings will not only facilitate that difficult demarcation with regard to German law, but also with regard to US law.

What motivated you to pursue a research stay in the US? Which results do you hope your research will yield?

During my research from May to October 2021, I came across the works of various US scholars who tend to focus more on the economic side of tax law. Since US law contains functionally similar provisions to German law but resolves the issue at hand in a different way, I wanted to find out more “on site”. I am hoping to show that business activities of tax-exempt organizations are not as big of a problem as German courts and legal scholars make them out to be.


How did you prepare for your research stay in the US?

I postponed my research stay twice because of Covid and did not think it would really happen until I boarded the plane. I spent a lot of time researching health insurance plans and got vaccinated on the day after my arrival in New York. In the end, the timing was perfect as the city came back to life during the summer and Columbia Law School finally eased their restrictions.


Could you share some impressions from your time abroad? How did you find the experience?

When I arrived on the last day of April, people in the streets and even in the parks were all wearing face masks. Over the next couple of weeks, as more and more New Yorkers got vaccinated, the city re-opened, and the mood completely changed. The city was full of concerts, fireworks, and various festivities.

Because most tourists were not allowed into the country until November, New York was not as crowded as it usually is, and everyone seemed to be enjoying that. I loved exploring the various neighborhoods and feel privileged to have spent that very special summer in New York City.


Melina, thank you for the interview.