The issue of the non-profit nature of esports is a tiresome topic in the German scene. The conservative parties now wants to recognize only esports simulation games as non-profit. What do the other parties in the parliament say? This article gives a plain overview of the difficult topic of the non-profit nature of esports in Germany and summarizes the current political status.
Reading time approx. 4 minutes (8500 words)
Much has already been discussed on the issue of the non-profit nature of esports. Closely related to this is the question of whether esports are sports or not, which has become a worn-out issue. In any case, the discussion was given new impetus by the recently published position paper of the conservative parliamentary group. It stipulates that only electronic sports simulation games, and not esports in general, should be recognised as non-profit. Much to the annoyance of the labour-related SPD, which insists on keeping the coalition agreement of 2018.
What are the benefits of being a non-profit organisation?
With the non-profit status the State wants to encourage associations, foundations etc. The idea behind this is, that those, who put themselves at the service of the community through voluntary and social commitment, should be honoured and supported.
The advantages of non-profit status are manifold. They range from immense tax exemptions to preferential access to grants and benefits and exemption from GEZ (broadcasting license fee). Even though it is accompanied by additional obligations, e. g. with regard to the strict use of funds and accounting, the advantages of non-profit status regularly outweigh them by far.
Why is esports not non-profit?
This is not so much a legal question as one that needs to be answered by the political leaders. According to the current legal situation, esports is not seen as sports in the sense of the non-profit law (section 52 para. 2 no. 21 of the tax law. For esports lack the physical strengthening that is essential for the interpretation of “sports” in the legal sense of the tax law. From a legal point of view, this argument can be heard – whether one likes it or not.
This result does not mean, however, that esports cannot be recognised as non-profit.
The positions of the lobby associations
Of the lobby associations involved, the German Olympic Sports Confederation (“GOSC”) and the Game Association have each published a comprehensive position on the issue. In view of the current legal situation, the Game Association advocates to amend the law in order to comprehensively recognize esports as non-profit.
On the other hand, the GOSC is conditionally in favour of the non-profit status of esports simulation games such as FIFA, NBA2K etc. The reasoning is, that esports is seen a “transfer of sports into the visual world”. All other esports disciplines would therefore be contrary to the ethical values of the GOSC and should not be supported.
However, the argument of the GOSC is open to attack. For one thing, because League of Legends and Counter Strike also involve no other physical activity than in esports simulation games. And secondly, because full-contact sports such as boxing then need to be reviewed, if they are also in violation with the ethical values of the GOSC. Unimpressed by this, the conservative parliamentary group as a coalition partner have, as is well known, joined the position of the GOSC.
What do the other parties say?
After the publication of the position paper of the conservative group in June 2020, I wrote to all the other parliamentary groups with the request for a statement on the issue of the non-profit nature of esports. With the exception of the liberal parliamentary group, all other parliamentary groups have submitted a statement:
In addition to the conservative parliamentary group already mentioned, the far-rights and the Left parliamentary group have also spoken out against a comprehensive non-profit status for all esports disciplines. These parties share the position of the GOSC, according to which esports simulation games could be accepted, however.
Instead the SPD, the Greens and (presumably) the FDP advocate a comprehensive recognition of esports. In particular, the SPD demands that the CDU/CSU comply with the coalition agreement of 2018 in that “esports are to be fully recognised as a separate sport” under relevant German law.
Today, more than 2 years after the coalition agreement was signed, the coalition and the parliament are deeply divided on the issue of the non-profit nature of esports.
A proposed solution
First of all, it should be noted that esports – despite debates about sexism and cheating – are in no way inferior in their importance for the general public than the promotion of flood protection and the help for late repatriates, both of which are recognised charitable purposes. The social importance of esports will even increase further, which means that more and more clubs and foundations are coming onto the scene that want to get involved in this field voluntarily and socially. Therefore, the recognition of the non-profit nature of esports is to be demanded.
However, to do justice to the importance of esports, it is necessary to recognise the non-profit nature of esports in whole. After all, esports simulation games only make up a small part of the current esports society. Other titles such as the aforementioned League of Legends or Counter Strike have a much greater impact on fans and players.
From a legal point of view, a solution could be achieved either by amending the German tax code or by supplementing the Application Decree to the tax code. As a result, both approaches would ensure that esports are treated non-profit.
The concession of the GOSC and the CDU/CSU parliamentary group to at least recognize the esports simulations will not be able to calm down or end the discussion. The GOSC and its supporters know that, in view of the increasing social and economic importance of esports, full recognition of their non-profit nature is only a matter of time.
For esports, it is therefore necessary to bring about that moment of time as soon as possible by constantly calling for recognition of the non-profit nature of esports.
Dr. Oliver Daum, Lawyer (Kiel, Schleswig-Holstein, Germany)