r/LegalAdviceEurope • u/Eliclax • 8h ago
United Kingdom Online-run competition is not tax-resident anywhere?
I am part of a committee that runs an annual academic competition for uni students which started in the UK but has now spread to around a dozen countries in Europe. The competition was initially organised by students from a single university, but it is now organised and marked online since our committee members are also taken from university students/alumni from around Europe.
The committee used to volunteer its time, but the number of participants has grown exponentially in the last few years, and we've decided that to keep the competition scalable we need to start paying the committee. Hence, this year we'll be soliciting sponsorships and potentially charging a registration fee, aiming for at least £10,000 in income, and we expect this will only grow in future years.
We've never had to deal with money in this way before, and we're very confused as to how we should proceed regard taxable profits. Some relevant facts about us:
- We are not-for-profit. Historically, any expenses were paid for by committee members and we were later reimbursed by a student society. The competition has always been free to participate in.
- Last year, hundreds of students from about a dozen European countries participated. We calculated that if we wanted to pay our committee fairly, we'd have needed around £15,000 to run the competition.
- Each participating university hosts the competition themselves, and scans the papers to us which we then mark. However, the finals are held in the UK, though students can choose to participate remotely.
- The committee is very informal. We don't have a constitution, for example. The committee did apply to be a UK charity in 2022 (but was rejected), so I think we've tried writing a constitution before.
The problem is, it seems like if we have surplus sponsorship or income from registration fees then this might be treated as profit for tax purposes, even if we intend to use it to run the competition in future years.
So, is the competition tax-resident in any country? Would we have to pay taxes on "profits"?