E-sports finally charitable? What the government draft of the Tax Amendment Act 2025 really brings

On September 10, 2025, the Federal Cabinet passed the government draft of the Tax Amendment Act 2025 and submitted it to the Bundestag. The draft provides for e-sports to be anchored or explicitly defined as a charitable purpose within the meaning of Section 52 para. 2 sentence 1 no. 21 AO (promotion of sport). This would close a longstanding legal loophole that has made work difficult for clubs, associations, event organizers and marketers for years. As things stand at present, it is expected to be adopted before the end of 2025; formally, however, it is “only” a government draft until then.

At the same time, the draft contains several simplifications under charitable law that are just as relevant for e-sports structures as for traditional sports clubs:

• Increase in the exemption limit for taxable business operations to € 50,000 (Section 64 (3) sentence 1 AO).
• Elimination of the allocation of spheres up to € 50,000 income (Section 64 (3) sentence 2 AO).
• Increase in the limit for the obligation to use funds promptly to € 100,000 (section 55 (1) no. 5 sentence 4 AO).
• Increase in the lump sum for training managers and voluntary work from 2026 to € 3,300 and € 960 respectively (Section 3 no. 26, 26a EStG).

These points are included in the current overview of the Tax Amendment Act 2025 and are just as important for the practice of e-sports as the non-profit status issue itself.

Important for classification: The intended recognition relates to non-profit law. Other areas of law – such as state sports funding laws or association law – are not automatically covered by this. Separate legislation or statutes may therefore be required for funding scenarios, DOSB issues or sport-specific privileges.

From an advisory perspective, it is worth taking a look at the AO system: With the classification of e-sports under the promotion of sport (Section 52 para. 2 sentence 1 no. 21 AO), Section 67a AO (“sporting events as a special-purpose enterprise”) should in principle apply accordingly – including the well-known €45,000 limit for gross income from sporting events and the voting rights for “paid sport”. The legislator (explanatory memorandum/AEAO) and administrative practice will clarify detailed questions regarding the specific application, but the guidelines have been set.

Why this change was overdue: previous legal situation, BFH line and administrative practice

The starting point: “sport” in the sense of non-profit law was traditionally understood to be physical and motorized, with recourse to BFH case law; exceptions such as chess were explicitly mentioned in the AO. E-sports did not fall within this framework; existing recognitions were patchwork solutions via other purposes (e.g. youth welfare, education) or state-specific administrative leeway. This has created uncertainty for years – in statutes, in the use of funds, at events, in sponsoring and in the separate accounting.

This problem has been repeatedly addressed here on the blog for years: As early as 2018, it was pointed out that a clear justification of non-profit status in the association’s articles of association is mandatory and that mere buzzword purposes in the articles of association are not sufficient. In 2019, it was emphasized that sport recognition in itself is less important than functioning funding channels and non-profit status in accordance with the German Fiscal Code (AO) – with an explicit proposal to consider e-sports on an equal footing in Section 52 AO. In 2020, legal form issues and the limited suitability of the “association” for commercial goals were once again pointed out for team start-ups. All of this shows why a nationwide clarification of tax law is now the right step.

The government draft takes up this line and explicitly anchors e-sports in the catalog of Section 52 AO – not as an exotic special offense, but in the context of sport. From a legal point of view, this is clean: instead of dogmatic debates about the concept of sport, the legislator is creating clarity in tax law where it is most needed in practice (non-profit status, special-purpose operations, spheres, lump sums). This is precisely why this change is necessary – and overdue.

Practical experience (own mandates with e-sports games, clubs and marketers): The previous uncertainty regularly led to inconsistent administrative practice, risky drafting of articles of association and aborted funding/sponsorship projects because tax risks (e.g. permanent shift to commercial business operations) were not acceptable. Recognition as a charitable purpose and the simultaneous increase in limits and lump sums will make planning much easier.

What will change in practice: Corporation tax/business tax, special-purpose operations, sponsoring, personnel

Non-profit status and corporation tax

The recognition of the “promotion of e-sports” as a charitable purpose under Section 52 para. 2 sentence 1 no. 21 AO opens up the familiar tax privileges (including Section 5 para. 1 no. 9 KStG; trade tax exemption) for corporations that act in accordance with their articles of association and comply with the formal requirements (Section 59 et seq. AO, in particular Section 60 AO sample articles of association, Section 63 AO obligations to provide evidence). Non-profit status is not a VAT exemption, but it structures the income spheres and forms the basis for special-purpose enterprises. This is precisely where the draft’s simplifications help.

Commercial business operations and new €50,000 exemption limit

Previously, even relatively small commercial activities could cause difficulties for non-profit status if the separate accounting, use of funds and statutory purposes were not properly structured. The exemption limit of €50,000 for taxable commercial operations (Section 64 (3) sentence 1 AO) acts as a buffer here: profits below this amount are not subject to corporation and trade tax; profits above this amount are taxable – but the non-profit status as such remains unaffected, provided the commercial operations do not get out of hand. The fact that up to €50,000 there is no longer any need to allocate spheres (Section 64 (3) sentence 2 AO) saves additional bureaucracy.

Prompt use of funds: €100,000 limit

Income fluctuates considerably, especially in e-sports (events, technology, licenses, youth work). Raising the limit for the obligation to use funds in a timely manner to €100,000 (Section 55 (1) no. 5 sentence 4 AO) reduces the pressure to use funds: funds can be used more strategically (e.g. medium-term development of training and support structures) without jeopardizing the non-profit status due to formal “timeliness”.

Trainer and volunteer allowance

The increase to €3,300 or €960 from 2026 (Section 3 No. 26, 26a EStG) creates legally secure leeway for coaches, admins, supervisors and youth leaders. In e-sports practice, qualified personnel can thus be structured and remunerated more easily – with legal certainty and without immediately falling into the zone of regular employment relationships.

Special-purpose business “sporting events” (Section 67a AO)

If e-sports are classified as a sport in Section 52 para. 2 sentence 1 no. 21 AO, there is much to be said for including e-sports events (tournaments, leagues) under Section 67a AO in future – with all the consequences:

• Special-purpose business up to € 45,000 gross income p.a. (standardized framework).
• Electoral rights for the participation of “paid athletes”.
• Simplified differentiation from taxable business operations.

For marketers and organizers, this means that the event concept and contracts (entry fees, prize money, sponsorship areas, media rights, hospitality) should be designed in such a way that they consistently reflect the special-purpose operating characteristics; if the €45,000 limit is exceeded, the tax classification of the entire event year should be checked at an early stage.

Sponsoring, advertising, IP rights

Non-profit status does not prevent sponsorship and advertising revenue from being taxable. The decisive factor remains the separation of the nonprofit sector, special-purpose operations and commercial business operations. Sponsorship agreements must specify service descriptions (e.g. logo placements, naming, social media posts) in such a way that tax consequences and VAT obligations remain calculable. In e-sports practice, publisher licenses (tournament/broadcast rights) and trademark rights must also be clearly structured – not only under civil law, but also so as not to dilute the separation of spheres for tax purposes.

Our work for clients has shown that as soon as the tax law framework (recognition as a sporting purpose, Section 67a special-purpose enterprise, new exemption limits) is clear, sponsorship and marketing structures can be rationalized – with better results for clubs, teams and marketers. This law firm has been representing e-sports publishers/games, clubs and marketers for years and sees the new regulation as a practical breakthrough.

Articles of association, compliance, youth protection: what matters now

Statutory purpose and AEAO conformity

The articles of association must clearly define the charitable purpose. In future, the “promotion of e-sports” should be explicitly included with reference to Section 52 para. 2 sentence 1 no. 21 AO; sub-purposes are also suitable (e.g. youth promotion, education, health prevention – each with specific activities). Older posts here on the blog have already pointed out that mere empty formulas (“promotes e-sports”) are not sufficient; verifiable purposes, descriptions of activities and altruism clauses are required.

Addiction prevention and “healthy behavior” as a practical task

The overview of the Tax Amendment Act emphasizes that e-sports bodies should also devote themselves in particular to the prevention of addiction and teach a healthy approach to the medium. This is not a mere program sentence, but a mandate for action for statutes, activity reports and use of funds: prevention and education offers, protection concepts, coaching guidelines, age limits in training/competition operations. It is advisable to anchor these elements in the statutes and regulations and make them verifiable.

Separation accounting, documentation, governance

Even with the new exemption limits, separate accounting and documentation remain central. For each area – non-material, special-purpose operation (Section 67a AO), commercial business operation – cost and revenue streams must be mapped. Sponsorship packages, ticketing, merchandising, streaming rights and prize money need to be clearly allocated. In the case of prize money payments and expense allowances, the BFH and administrative principles must be observed; in case of doubt, lump-sum payments without documented reference to expenses jeopardize the special-purpose operation. (

Differentiation from sports promotion and association law

Once again, it is clear that tax recognition as a non-profit sporting purpose does not automatically open the door to sports funding programs and association structures. Funding law and association admissions follow their own criteria; “homework” is needed here in terms of structure, ethics/integrity rules, arbitration and game regulations as well as youth protection. In many areas, e-sports is already closer to media/event law than traditional sport – that remains the case.

Non-profit status as reflected in earlier debates – and what clubs, event organizers and marketers should do now

Review: What has been advocated here on the blog for years

• Quality of articles of association beats labels: It was already pointed out here in 2018 that the justification for non-profit status and the specific design of the articles of association are decisive – not the labeling.
• Sport recognition alone is of secondary importance as long as tax law becomes practicable: in 2019, with a view to Denmark, it was proposed to focus on funding opportunities and AO charitable status – this is precisely where the draft now attacks.
• Legal form and commerce: In 2020, it was explained why the association is not suitable for commercial objectives, while it makes sense for popular sport/youth. The new legal situation facilitates precisely this area of popular sport – professional/commercial structures still belong in corporate/personal company law vessels.

The fact that the legislator is now following suit in terms of tax law is therefore legally logical: the old BFH definition of sport (physicality) did not do justice to e-sports; transitional solutions (youth welfare/education) remained fragile. A legal clarification in Section 52 AO is the legally secure route.

Action list for the coming weeks

Adapt statutes & regulations

• Explicitly include “promotion of e-sports” under Section 52 para. 2 sentence 1 no. 21 AO; specify fields of activity (training, competitions, youth promotion, health/prevention, media skills).
• Establish a prevention/youth protection concept (training times, age limits, supervision, screen time rules, addiction prevention).

Separate spheres, plan budgets

• Map event calendar 2026 ff. to Section 67a AO (€45,000 limit, voting rights for paid sport, documentation requirements).
• Consider €50,000 exemption limit and €100,000 time limit in financial planning; structure sponsorship pipelines and merchandising in such a way that special-purpose operations are maintained as far as possible.

Contracts & rights

• Adapt sponsorship contracts (service profiles, VAT, consideration); properly license publisher/IP rights for tournaments/streams.
• Ensure that prize money/expense regulations are firmly documented (receipts, accounts) so as not to jeopardize § 67a status.

Personnel & remuneration

• Include trainer/volunteer allowances in HR guidelines (coaches, admins, youth leaders).
• Adapt sample contracts for fees and ancillary activities.

Communication & promotion

• Clarify with public funding bodies that the change is tax-related; if necessary, prepare separate procedures/applications for recognition under sports law.

What applies during the transition phase

As long as the law has not yet been passed and entered into force, the status quo remains. A “two-stage” solution is recommended for newly founded companies and amendments to the articles of association:

1. Formulate the articles of association now so that they are automatically compliant when they come into force (wording: “Promotion of sport, in particular e-sports…”).
2. Continue to cover the existing lines of recognition (youth welfare/education/media competence) until promulgation in order to avoid creating a “void”.

From a legal point of view, there is nothing to be said against drafting articles of association with foresight and preparing the initial audit at the tax office with reference to the draft. Commentaries and overviews of the government draft support this practice.

Conclusion

The government draft of the Tax Amendment Act 2025 brings decisive clarity: e-sports will be recognized for tax purposes as a charitable purpose in the sense of promoting sport (Section 52 para. 2 sentence 1 no. 21 AO). Together with increased exemption limits, less bureaucracy in the allocation of spheres, relaxed use of funds and higher lump sums, a viable framework is created under which e-sports clubs, organizers and marketers can build solid structures – without constantly balancing on the precipice of disqualification. For e-sports games, clubs and marketers, who are regularly represented here, this is the “great order” that has long been called for: fiscally clean, administratively manageable, with clear rules for events, sponsorship and youth development.

The fact that other areas of law (sports promotion law, association admissions) do not automatically follow is not a flaw, but rather correct in terms of regulatory policy: tax law creates framework conditions that professional and association rights fill out independently. This is exactly how e-sports can be sustainably anchored – with quality statutes, compliance, youth protection and professional contract work.

Now is the time to align statutes, regulations, contracts and financial planning for 2026 – and thus use the new opportunities in a legally secure manner.

Author: Marian Härtel

Marian Härtel ist Rechtsanwalt und Fachanwalt für IT-Recht mit einer über 25-jährigen Erfahrung als Unternehmer und Berater in den Bereichen Games, E-Sport, Blockchain, SaaS und Künstliche Intelligenz. Seine Beratungsschwerpunkte umfassen neben dem IT-Recht insbesondere das Urheberrecht, Medienrecht sowie Wettbewerbsrecht. Er betreut schwerpunktmäßig Start-ups, Agenturen und Influencer, die er in strategischen Fragen, komplexen Vertragsangelegenheiten sowie bei Investitionsprojekten begleitet. Dabei zeichnet sich seine Beratung durch einen interdisziplinären Ansatz aus, der juristische Expertise und langjährige unternehmerische Erfahrung miteinander verbindet. Ziel seiner Tätigkeit ist stets, Mandanten praxisorientierte Lösungen anzubieten und rechtlich fundierte Unterstützung bei der Umsetzung innovativer Geschäftsmodelle zu gewährleisten.