The Legal Essence of Religious Activity
Religious activity is the activity of a religious organisation registered in the established manner, whose purpose is the spreading of confession and faith. The law describes this activity through concrete forms: the organisation and conduct of religious rites, ceremonies, prayers and other cult acts; enabling believers to have and use houses of worship and ritual buildings for the satisfaction of religious needs both collectively and individually; the organisation of the reception and departure of religious delegations, pilgrims and representatives of various confessions, the holding of national and international religious conferences, assemblies and seminars with the provision of participants with accommodation, transport, food and cultural services; the maintenance of monasteries, monastic churches, theological educational institutions and charitable organisations, and the teaching and service activity connected with them.
Religious Enterprises and the Tax Demarcation
The activity of the enterprises of religious organisations which publish religious literature or produce objects of religious destination is equated to religious activity; so is the activity of these organisations or their enterprises connected with the realization (distribution) of such literature and objects, and the use of the funds received from such activity for carrying out religious activity — publishing and production work is thus itself recognised as religious where it is conditioned by this chain. Within the system of the Tax Code this matters because neither charitable nor religious activity is attributed to economic activity: economic activity is any activity carried out to receive income or compensation, and the liturgical activity of a religious organisation does not fall under that definition. Other exclusions exist as well — for instance, employment and the placement by an individual of funds on deposits and savings with banks — yet note that gratuitous provision of services by an enterprise or an entrepreneur individual is still treated as economic activity. The notion of organisation is defined broadly by the law — from nonprofit legal persons and religious associations to budgetary and international organisations — and where an organisation also carries on economic activity, the part connected with that activity is treated as the property of an enterprise; where such separation is impossible, the proportional share of income received from economic activity in the organisation's total income is used.
Exemptions and Benefits
The list of exemptions of individuals' incomes, alongside the charitable and social sphere, touches the religious-educational context as well: exempt from income tax are a received grant, state pension, state compensation, state academic and state scholarship, and also a benefit received within charitable activity from a nonprofit legal person founded by the state and a benefit received from a charitable organisation for financing the costs of treatment and medical services. The same list contains alimony, the value of property received by gift of up to 1000 lari within a tax year, and property of a value of up to 150 000 lari received by gift or inheritance by heirs of the third and fourth rank; the income of a person with disability from childhood of up to 6000 lari received within a calendar year is likewise not taxed. These norms are coordinated with the social services of religious organisations: the maintenance of theological institutions, hospitals and shelters is part of religious activity, and the exemption of the corresponding benefits works within that contour. It should also be borne in mind that the part of an organisation's property and activity connected with economic activity is treated as the property of an enterprise, so the demarcation of the liturgical and the economic components must be provided for in the accounting in advance.
The Practical Significance of the Classification
The classification of religious activity carries tax and civil consequences. On the one hand, the confessional character of the activity releases it from the regime of economic activity and grounds the corresponding tax classification. On the other hand, the organisation and conduct of cult acts, the use of houses of worship, the reception and departure of pilgrims and the maintenance of theological institutions are concrete forms named by law — the organisation's documents must therefore be tied precisely to these forms. The religious destination of published literature and produced objects distinguishes the production activity from the general tax regime as well. Such an approach prevents both the ordinary economic activity of a religious association from being wrongly treated as liturgical, and the reverse. Registered form matters here as well: the notion of religious activity is tied to an organisation registered in the established manner, so registration is not a formality but a precondition of the tax classification.
Frequently Asked Questions
Below we answer the questions most frequently asked on this subject.
Whose activity counts as religious?
That of a religious organisation registered in the established manner, whose purpose is the spreading of confession and faith.
Is the publication of literature religious activity?
Yes — the publication of religious literature and the production of objects of religious destination are equated to religious activity; so are their realization and the use of the funds received for carrying out religious activity.
Can religious activity be treated as economic?
No — the law directly excludes religious activity from economic activity.
Which benefits are exempt?
Among others — a benefit received within charitable activity and a benefit received from a charitable organisation for financing medical costs.
How We Help on Legal.ge
The registration of a religious organisation and the tax classification of its activity demand precise legal assessment. On Legal.ge you can consult a lawyer who will assess your organisation's activity and help you keep a lawful status. Submit a request on the site and receive qualified assistance.