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(BRUSSELS) – The European Commission adopted a proposal Tuesday to remove legal and administrative barriers for non-profit associations that operate or wish to operate in more than one EU Member State.
The EU executive says the move will promote the role non-profit associations play in generating economic and societal values in the EU and allow a level playing field between them.
Currently, when non-profit associations engage in activities in another Member State than the one they are established in, they do not receive uniform acknowledgment of their legal personality and capacity and often need to register for a second time or even form a new legal entity in that Member State. About 310,000 non-profit associations currently affected by those obstacles when operating in another country are estimated to reduce administrative costs with the new rules by up to EUR 770 million per year, potentially amounting up to EUR 8.5 billion within the time frame of 15-years. Moreover, about another 185 000 non-profit associations are potentially expected to engage in cross-border activities, if the identified barriers tackled by the proposal are removed, and could generate up to EUR 4.2 billion added value over a 15-year period.
The Commission’s proposal introduces an additional legal form of a European cross-border association (ECBA) in Member States’ national legal systems, which is specifically designed for cross-border purposes and will reduce legal and administrative burden when it comes to the recognition and establishment of non-profit associations engaging in activities in another Member State. Once established in one Member State, an ECBA will be recognised automatically and will be able to engage in activities in all Member States, including economic activities, thereby allowing non-profit associations to unleash their full societal and economic potential in the EU. ECBAs will co-exist alongside with other national associations at Member State level. For matters that are not covered by the proposed Directive, such as taxation treatment, Member States shall treat ECBAs in the same way as comparable national non-profit associations, thereby respecting Member States’ traditions in this area and not affecting existing associations.
The new rules will:
- Establish in each Member State a new legal form of non-profit associations specifically designed for cross-border purposes (the ECBA), next to existing national legal forms.
- Allow automatic recognition of this new legal form across the Union once an ECBA is registered in one Member State, thanks to the ‘ECBA certificate’.
- Provide for harmonised rules on transfer of registered office, thus allowing non-profit associations to reap the full benefit of the freedom of establishment and the freedom to provide services, goods, and capital in the Union.
- Ensure the ECBA fully enjoys the benefits of the Internal Market regardless of the Member State of registration by having free and non-discriminatory access to public funding in each Member State it operates.
The proposal will now be presented to the European Parliament and the Council for approval. Once adopted, Member States will have two years to transpose the Directive into national law.
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