Mastodon now a non-profit organisation

In June, I was able to officially register Mastodon gGmbH after nearly 8 months of legal work (“gGmbH” means “non-profit limited liability company”). A non-profit limited liability company in Germany is structered and operates similarly to a for-profit limited liability company with a few key differences. The founding document of the company is written such that the activity of the company is working towards goals that benefit the public; the shareholders may not receive any revenue from the company’s activities and can at most withdraw the funds that they originally paid in; employees may not receive extraordinarily high wages; and the company can receive donations which are then tax-free, although any other income that does not fit the definition of a donation continues to incur various taxes. To found such a legal entity the founding document must pass a review by the German tax office and the founders must pay in 25,000 EUR of starting capital.

Since I am the sole founder and shareholder, the 25,000 EUR are owed by me (with 12,500 EUR having had to be paid in at day of founding, and the remaining to be paid in the future). In terms of day-to-day operations, there are no changes. I will continue all my activities as the CEO of this legal entity. Starting July I’ve transferred everything related to Mastodon’s activities to the ownership of this new legal entity and redirected all sources of Mastodon’s income to it. Unlike the past 5 years that I’ve been running Mastodon operations as a sole proprietor, where Mastodon’s income was my personal income (minus all the expenses), I am now an employee with a fixed wage. My personal income will thus be lower but I was willing to go this route because I want Mastodon to have more resources for things like hiring extra developers, UX designers, developing official apps and so on, and I want there to be a clear boundary between fundraising for that cause and my personal income.

Since both Patreon and our custom sponsorship platform are based around rewards to patrons/sponsors, they cannot be classified as donations, so there are no changes to how those are taxed.

This would not have been possible without the generous help of the law firm Dentons that assisted in all aspects related to corporate law in the course of the foundation as well as employment law, telecommunications law, and privacy.