On June 16, 2020 the largest parliamentary group in the German parliament (“CDU/CSU” holding about 35% of the seats) agreed on a white paper (German), which sets the goal of strengthening voluntary work in Germany. The paper outlines measures intended to be implemented in German law in 2021 – approximately nine years after the last modification in this area of law. Among other things, the paper addresses the question of whether esports can be considered sports in the sense of the German Fiscal Code. The German Fiscal Code also regulates whether a legal entity can obtain non-profit status. The question of whether esports clubs can achieve the non-profit status and thus benefit from a variety of tax advantages is currently one of the most discussed political question on the subject of esports in Germany. Although this only affects clubs that do not pursue a profit-making purpose, the implications of the intended legislative amendment could ultimately result in it becoming more difficult for esports to be considered as sports from a German law perspective.

Overall objectives of the white paper

A total of 24 different measures are listed, which follow three objectives:

1.    Providing more support for volunteers working for non-profit organizations

This focuses primarily on financial aspects including the increase in tax allowances and lump sums for volunteers.

2.    Making life easier for non-profit associations and clubs

Monetary limits are to be adapted to the current economic situation for the benefit of non-profit esports associations and clubs. At the same time, the aim is to create legal certainty for associations and clubs that find themselves in various legally unclear situations. Part of this is the proposed amendment regarding esports.

3.    Reducing bureaucracy The intention is to prevent too many resources of volunteer work from being wasted on excessive bureaucracy. For example, small associations and clubs are to be exempted from the requirements of the General Data Protection Regulation (GDPR).

Esports and the non-profit status

1. Legal advantageous of the non-profit status in Germany

The non-profit status has many advantages for associations/clubs, volunteers and donors. These advantages are primarily of a financial nature. At the same time, the public reputation of the association or club increases as well.

The most important advantages:

  • Non-profit associations/clubs are exempt from various taxes in Germany (e.g., corporate income tax, trade tax, capital transfer tax and gift tax). This applies primarily to non-commercial business operations (mainly membership fees, donations and government grants), but commercial business operations also remain tax-free for income of up to EUR 35,000.
  • Depending on the individual case, the remuneration of volunteers is also tax-free up to EUR 720 (lump sum for volunteers) or up to EUR 2,400 (lump sum for trainers). This enables many associations and clubs to pay volunteers.
  • In addition, there is the possibility of issuing donation receipts, which the donor can deduct from their income tax. Sports events are also particularly privileged.

2. Background: esports = sport?

The question of whether esports clubs can achieve the non-profit status and thus benefit from the advantages described above is currently one of the most discussed political questions on the subject of esports in Germany. In theory, the German Fiscal Code includes several criteria that could be applied to esports associations and clubs in order to justify granting them the non-profit status. Examples are:

  • “the promotion of youth and elderly people”
  • “the promotion of art and culture”
  • “the promotion of sports”
  • the altruistic promotion of the general public in material, spiritual or moral aspects (by means of this criteria, for example, tournament bridge was considered eligible to obtain non-profit status, although it is not considered to be sports).

Of these options, the most discussed criterion is the “sports” criterion and the related question whether esports constitutes “sports”. This question is subject to an intense debate in Germany, both in legal and social terms.

The German Olympic Sports Association (DOSB), for instance, considers only “virtual sports” to be eligible for membership in its organization, but not other esports categories (called “eGaming” by definition of the DOSB – see statement in German here). The DOSB considers virtual sports to be “sports simulations” and “virtual displays of sports integrating real athletic movement” (mainly enabled by movement tracking or virtual reality). The DOSB is strictly against applying the sport criteria to what they call “eGaming” which – according to the DSOB – is mainly conducted for commercial purposes. At the same time, the DOSB supports the recognition of “virtual sports” as sports. However, an expert report on behalf of the DOSB rejects even the position that “virtual sports” can be granted the non-profit status. This report is mainly based on the following arguments:

  • Esports is not sufficiently physical.
  • Esports is driven and controlled by for-profit global companies. These companies have full control over the game and its rules.
  • Esports usually consists of contents glorifying violence.

Naturally, other parties, including the video games industry, take a different view on the matter, mainly on the basis of the following arguments:

  •  Other activities with little physical exercise are also recognized as sports (darts, ballooning, game fishing).
  • Traditional amateur sports also involve economic interests and associations that hold full regulatory power.
  • Traditional sports also involve simulated violence, and even the use of real weapons (fencing, shooting) or violence (boxing).

There has not yet been any ruling of a German fiscal court on that matter.

3. The White Paper

To improve the situation of non-profit organizations, the white paper includes, among other suggestions, a declaration of intent to establish legal certainty for “sports clubs that operate esports departments” (point 2.6.). In order to “eliminate the risk of these clubs being deprived of their non-profit status“, the paper suggest to clarify the legal status of esports by amending a statutory order on the interpretation of the German Fiscal Code by adding the following: “Esports fall under the term sports, insofar as they are electronic sports simulations.”


This regulation would apply to traditional sports clubs that have an esports department in which only electronic sports simulations are performed. Esports clubs that are not limited to electronic sports simulations – and thus the vast majority of all esports organizations – would be excluded. The situation is unclear for the few esports clubs that exclusively participate in electronic sports simulations. While the suggested legislative amendment does not exempt them, the white paper explicitly states that its purpose is to protect traditional sports clubs. Thus, unless further clarifications are planned, which are not mentioned in the white paper, these organizations could also benefit from the proposed amendment.

The planned inclusion of esports does not apply to esports as a whole, but only to “electronic sports simulations.” The term likely refers to games that simulate physical sports that are traditionally recognized under the German Fiscal Code (e.g. Football). This would result in only a small aspect of esports being considered “sports” in the sense of this law. This is particular irritating as the 2018 coalition agreement of the current German government stated that “esports will be fully recognized as a separate sports“. Instead of implementing this position, the current white paper seems to be closer to the position of the DOSB which also differentiates between different esports activities (see above).

There are also a few games for which it is unclear whether they are considered electronic sports simulations. Football and certain parts of motor sports are classified as sports, but what about a game in which football is played with futuristic cars that can fly through the air and ram each other?

In addition, the suggested amendment might even result in it becoming more difficult for esports organizations to obtain the non-profit status. This is because the wording “Esports fall under the term sports, insofar as they are electronic sports simulations” implies that all other esports (i.e. those which do not constitute “electronic sports simulations”) are excluded from the sports criterion (and potentially all other criteria) under the German Fiscal Code. Furthermore, in order to interpret legal requirements in one law, German courts often tend to look at other laws to see how the requirement is interpreted there. Thus, it cannot be excluded that the proposed amendment might even have a detrimental effect on the general eligibility of esports being considered as sports from a German law perspective. The question whether esports constitutes sports from a legal perspective also plays a role in several other areas of law, e.g. with regard to gambling law and sports betting and advertisement restrictions. Thus, for esports in general, the current approach seems to be more a “One step forward, two steps back” solution.

For more information, please contact Sebastian Schwiddessen.


Nepomuk Nothelfer is a founding member of the Research Center of Esports Law of the University of Augsburg, Germany. He is also a mentee in Baker McKenzie's mentorship program. Baker McKenzie and the Research Center of Esports Law have engaged in a cooperation to further develop the still new area of esports law.