Communication from the Commission on promoting the role of voluntary organisations and foundations in Europe
COMMISSION OF THE EUROPEAN COMMUNITIES Brussels, 06. 06. 1997 COM(97) 241 final COMMUNICATION FROM THE COMMISSION on PROMOTING THE ROLE OF VOLUNTARY ORGANISATIONS AND FOUNDATIONS IN EUROPE TABLE OF CONTENTS I. Introduction II. Scope III The role and importance of Voluntary Organisations and Foundations IV The sector and the European Institutions working together V Problems and challenges facing the sector VI Conclusion Annex I. The survey 1. 1 3 6 8 11 16 Annex II. Overview of the Legal and Fiscal Framework for Voluntary Organisations and Foundations 26 Annex III Legal and Fiscal Framework for Voluntary Organisations and Foundations 31 fcA INTRODUCTION PURPOSE in the social economy This Communication concerns one sector 1 of the European Community - that of voluntary organisations and foundations. These organisations are playing an important role in almost every field of social activity. They contribute to employment creation, active cîtîzerjship, democracy, provide a wide range of services, play a major role in sport activities» represent citizens' interests to various public authorities and play a major part in promoting and safeguarding human rights as well as having a crucial role in development policies. the years 1. 1 Over they have made an increasing contribution to the development of Europe which is something that should be encouraged and developed, this importance, 1. 2 Given the European Commission carried out an extensive survey in order to gain a better knowledge of the sector and to identity issues to be addressed. The results of the survey are given in annex 1. 1. 3 The aim of the document is to illustrate the growing importance of the sector within the European Union, to show what problems and challenges these organisations are facing and to open up a dialogue on the basis of a set of ideas, in order their development at European and national level, to improve their capacity to meet future needs and maximise their contribution to European integration. favour to 1. 4 This document presents a series of measures which could be taken at Member State level, but does not seek to impose on Member States specific solutions or actions. It is up to individual Member States the different issues as they see fit. However, conforming to the principles of subsidiarity and proportionality there are some objectives which can be dealt with at Community level. These ideas are outlined in the "Conclusion \ take on to II. SCOPE J Voluntary organisations 1 Of the three sectors - co-operatives, mutual societies, and voluntary organisations - which go to make up the social economy, that of voluntary organisations is by far the most difficult to delimit or define. their most 2. 1 At voluntary organisations are simply groups of people who have come together for some purpose or other. basic, people 2. 2 At one end of the spectrum, the world of voluntary organisations merges imperceptibly into the tissue of everyday social, community, and family life; at the other end can be found great institutions of enormous national and even international importance such as universities, institutions, hospitals, research and cultural which many accustomed (erroneously) to think of as straightforward "public" bodies. Others, in contrast, have hundreds of professional staff, thousands of volunteers and a turnover of many millions of ECU's. Very many voluntary organisations work in conventional spheres like social work; others tradition of complete maintain a independence and are concerned with radical social programmes or "alternative" lifestyles. closely with public authorities strong are 2. 3 There is, however, some agreement that voluntary organisations share to varying degrees the following features: a) they are distinguished from informal or ad hoc, purely social or familial, groupings by some degree, however vestigial, of formal or institutional existence. they are non-profit-distributing^ that is (b) to say they have purposes other than to reap profits for their management or members. they are independent, in particular, of (c) government and other public authorities, that is to say free to govern themselves without interference according to their own rules and procedures. they must be managed (d) is sometimes called a "disinterested" manner. The in what use of this term is meant to indicate not just that voluntary organisations must not themselves be profit-seeking, but also that those who manage them ought not to do so in the hope of personal gain. (e) they must be active to some degree in the public arena and their activity must be aimed, at least m part, at contributing to the public good; 2. 4 The degree to which particular voluntary organisations share the above five features will for example, vary • considerably. Deciding, is indeed whether a voluntary organisation independent is not easy, and the notion of the "public good" is bound to be controversial. The definition does, nonetheless, offer a degree of coherence in a complex area. 2. 5 This paper deals with all organisations which share, to some degree, the above five features. However, three very specific kinds of organisation have been consciously excluded. These are political parties, which can be voluntary organisations but are clearly a special case; religious congregations (that is, in the strict sense, and not excluding organisations of religious inspiration active in work of general public benefit); and trade unions and employers' organisations. Foundations the vehicle pursuing 3 Like voluntary organisations, foundations also undertake a wide range of activities. In some countries the foundation is frequently the preferred purposes for indistinguishable from those typically pursued in other countries by voluntary organisations. legal point of view, however, From foundations form a more homogeneous group than do voluntary organisations, the only important distinction being between those that are for essentially private, and those that are for essentially public, benefit. is foundations which have some public purpose (even while remaining private bodies) which are the focus of this Communication. It 3. 1 For present purposes foundations are thus bodies with their own source of funds which they spend according to their own judgement on projects or activities of public benefit. They are entirely independent of government or other public authorities and are run by independent management boards or trustees. Types of voluntary organisation 4 Voluntary organisations and* foundations are difficult to categorise and define. Part of the difficulty at the European level lies simply in the different national traditions which they reflect, and their strong tendency to combine several different voluntary organisations and foundations can, however, be considered as having one or more of the following functions: objectives. Most (a) Service delivery or provision to provide to their members or clients services such as social information, services, health care, advice or support. training, (b) Advocacy: Le. organisations whose purpose is to campaign, lobby, and otherwise argue on behalf of some cause or group with the aim of changing public perception or policy. (c) Self-help or mutual aid: organisations typically formed by groups of individuals with some common interest or need in order to provide mutual help, information, support and cooperation. (d) Resource and co-ordination: so-called "intermediary bodies" which co-ordinate the activities of, or provide information and support to, either individual organisations working in a particular field or to the sector in general. Such organisations fulfil the important function of providing an interface between the sector and public authorities. voluntary organisations 4. 1 Many and foundations are, of course, national and even international in scope. The great majority, however, carry out their activities in regions or localities. their geographical focus the greater the range of functions voluntary organisations tend to fulfil and the more difficult it is to separate these the narrower In general, at of the level the in effect functions one from another. Throughout Europe hundreds of thousands of autonomous local groups working the neighbourhood, city quarter, village, or small rural area, whose aim is to improve the quality community. Such of local for life organisations fulfil, typically in an informal way, all the functions described above - providing services and mutual support, drawing attention to the needs of the community or of particular groups within it, and providing a mechanism the community can make its aspirations known to public authorities. through which simultaneously The legal and fiscal framework for Voluntary and Foundations Organisations fiscal frameworks Organisations The importance of having clear, positive 5 legal and for voluntary organisations and foundations to work in cannot be underestimated. it difficult to develop their work when such frameworks do not exist, whether they be at national or European levels. Annex II gives an overview on the way that legal and fiscal frameworks for the sector are based in the European Union. find m. THE ROLE AND VOLUNTARY FOUNDATIONS IMPORTANCE OF AND ORGANISATIONS the that is clear results of large human from survey the It 6 voluntary Commission's organisations and foundations, though often very small, together command sizeable assets resources, both and mobilise salaried and volunteer. Like other forms of enterprise, and particularly small and medium sized enterprises many voluntary organisations and foundations are also economically active - they sell products, provide services for which they are paid, and generate surpluses which are then reinvested. significant has recently been revealed by the results of the first rigorous comparative survey of the sector in four Member States (the United Kingdom, France, Germany and Italy) directed by the John Hopkins University, Baltimore1. These results are of conceivable interest. 6. 2 The study found that: in Germany the sector accounts for 3. 7% of total employment and 10% of total service employment. That is no less than a million people. The non-profit sector is especially important in health: 40% of the hospital patient days are provided by the sector^ as are 60% of the residential care facilities. in France 4. 2% of the employed work in the sector or over 10% of the total employed in the service sector. In all some 800,000 people are employed. Non-profit organisations look after over half of those in residential care and about 20% of primary and secondary school students. Non-profits are especially prominent in social services and in sport where 80% of those with sporting interests belong to non-profit clubs. in Italy nearly 2% of the employed work in the sector or over 5% of those employed in the service sector. In total the sector, which is prominent in social services, employs about run 20% of 400,000 people. Non-profits kindergartens and over 40% of residential care facilities. In the UK 4% of the employed work in the sector or over 9% of those in the service sector. Altogether about 900,000 people are employed the sector, which plays an especially in important role in the provision of research and education: - all colleges are run by non-profits, as are 22% of primary and elementary schools. 6. 3 Finally, the combined expenditures of the sector in these countries was no less than 127 million ECU (17 billion in Italy, 31. 3 billion in France, 36. 6 billion in the UK and 42. 2 billion in Germany). 6. 1 The contribution of the sector to the economy is very considerable indeed. Just how Published in 1994. figures for non-profit The operating expenditures as a percentage of gross national product are no less impressive: 2% in Italy; 3. 3% in France, 3. 6% in Germany; and 4. 8% in the UK 6. 4 Moreover it is in terms of employment growth that the most interesting facts of all emerge. What the study found ~ in any event in France and Germany where figures were available - was that over the decade from 1980 to 1990 the sector has been a powerful creator of employment. In France the sector accounted for one out of every seven new jobs created in that decade and in Germany one out of every eight or nine! This is a very significant finding indeed. 6. 5 These figures should not, perhaps, come as a complete surprise, given the growth of the sector in the recent past and the reasons which seem likely to be behind it (see paragraphs 1. 4 and 1. 5 of annexe I). Some of these reasons are likely to be, historical, or to have been specific to particular Member States. Other factors, however - the discovery of new needs and the development of new social preoccupations, and above all the to engage voluntary organisations and foundations they in the delivery of services of which themselves were formerly both designers and providers have been increasing throughout the Community. tendency of governments 6. 6 But such policy developments have not developed evenly in all the Member States. The extent to which they have been accompanied by clear constitutional or administrative changes designed to favour the involvement of voluntary organisations and foundations has varied. the quality of 6. 7 The figures demonstrate clearly that the sector has shown itself capable of opening up new opportunities contributing not just to improving life but also employment and economic growth. It is for this reason the sector should be encouraged to play a bigger part in the quest the for "Employment Pact'% for example in the context of Local Employment Initiatives. creation stated that job as in later sometimes as providers training of whom 6. 8 Throughout the Community many voluntary organisations and foundations are engaged in the training and retraining of the of unemployed, government programmes but often on their own account, as well as providing services for less favoured people - for people with disabilities, for alienated youth, for those who for one reason or another have repeatedly failed to gain a hold in the job market. 6. 9 Voluntary organisations and foundations to numerous also give valuable volunteers, many find employment on the conventional jobs market as a result of the experience and expertise they have acquired. Volunteering is also for many people an invaluable means of preserving the work habit at a time when, particularly for the long term unemployed. The voluntary sector is likely to provide with enriching opportunities for new experiences aiming at gaining social abilities which will enhance employability and moreover, the feeling of ownership and citizenship among young people. The European Voluntary Service deals with this issue and provides an educational experience based on the active involvement of young people in a local project. Volunteering is also very important for older retired people who are looking to continue to use their skills and maintain a continued active role in society. Social importance 7 There are no accurate figures of knowing how many persons in the Union are members of voluntary organisations but, on the basis of some Member States1 estimates it is commonly reckoned to be somewhere between a third and a half of the population, approximately a hundred million. influence 7. 1 Historically and the achievements of voluntary organisations, and their sister organisations foundations, would be difficult to overestimate. It is to voluntary organisations and foundations to which we owe the origins of many of the services such as education, health and social services which we the been similarly favoured, take for granted today. Their contribution to the development of social and political ideas, and to the intellectual climate in which we now live, immense. Voluntary has organisations and foundations have played a vital role in the dissemination of scientific ideas and of technological developments and have provided forums for the exchange of thinking across the whole range of human concerns. They have led the fight for the recognition of human rights and the dignity of the human person, and for the preservation of our cultural heritage and of the natural environment. Many promote a spirit of solidarity on behalf of the sick or people with less disabilities, the poor and the excluded, the aged and the young, and between those who have jobs and those who do not, between men and women, between generations, between the more prosperous regions and the poor or struggling regions. Voluntary organisations make important contributions to the fight against social exclusion, sexual exploitation of women and children, as well as racism and xenophobia. the They have played a major mobilisation of public opinion in favour of development, promoted democracy, and have established the representatives of civil society in the developing countries, as well as providing much needed emergency help and food aid in times of crisis, often showing heroism working in troubled regions. links with privileged role in voluntary organisations interest or endeavour and 7. 2 Today and foundations are active in every conceivable field their of human contribution to the welfare and development of our societies and to our diverse cultures remains as essential as it has ever been, especially in view of the process of European integration. At the same time they continue to innovate, to discover new needs and to experiment with ways of responding to them. In this way voluntary organisations and foundations continue, as they have always done, not just to provide the seed bed or "gene poor from which future social and other policies may eventually grow but also the political, social and intellectual climate in which change comes to be seen as desirable on a wider scale. Political importance - Citizenship 8. For many people, membership of, or volunteering for, voluntary organisations and foundations, provides a vital means through which sense of citizenship, and demonstrate an active concern for their fellows and for society at large. they can express their in Article 8 of 8. 1 The part that voluntary organisations play in strengthening a sense of citizenship and is of its expression providing a means for growing importance at the European level. Indeed, they have an active part to play in creating a sense of European citizenship as mentioned the Treaty on European Union. Voluntary organisations and foundations have long fostered international contact and understanding between peoples and are now showing a keen interest in the part citizens have to play in the forging of the European Union and in giving substance to the citizen's Europe. Their experience and basic philosophy, their growing organisation at the-European level, fit them well for this role. together with Political importance: Promoting Democracy the organisations 9. Voluntary and foundations foster a sense of solidarity and of essential citizenship, and provide underpinnings of our democracy. In the light of the challenges now facing the European Community, and in the different indeed countries of East and Central Europe, these functions have never been more vital. 9. 1 There that voluntary organisations and foundations make a profound and indispensable contribution to the democratic life of Europe. Indeed, the existence of a well- developed association and foundation sector is an indication that the democratic process has come of age. For many people participation in a their only voluntary organisation may be is no doubt experience of democratic processes outside of the normal electoral framework. to the effectiveness 9. 2 Their contribution with which representative democracy functions should not, however, be underestimated. Above all, they now play an essential part as intermediaries in the exchange of information and opinion between governments and citizens, providing citizens with the means with which they may critically examine government actions or proposals, and public authorities in their turn with expert advice, guidance on popular views, and essential feedback on the effects of their policies. voluntary organisations 9. 3 That and foundations are important to the democratic process does not mean that they could ever take on the role occupied by elected representatives. There are, indeed, some dangers in the sort of "single issue" lobbying which some voluntary organisations Their preoccupation with particular causes or with particular individuals or groups can make them unjustifiably impatient with the balance between competing interests which all democratically elected governments seek to achieve There is a need the for greater understanding about constraints of policy decision making. espouse. tend to IV T HE SECTOR AND THE EUROPEAN INSTITUTIONS WORKING TOGETHER 9. 4 The European Institutions have a long history of contacts and informal consultation with the voluntary sector. This is the case with many of the European Commission's services, such as DGIB, DGVIII with Development Agencies and ECHO which have achieved an experience of particular their cooperation with humanitarian aid NGOs, DGV and the platform of European Social NGOs arising out of the Social Forum, DGXI and environmental organisations, DGXXIII and the Consultative Committee for Cooperatives, Mutuals, Associations and Foundations. DGX in particular looks to the voluntary sector to interest in disseminate information on European issues to the citizens. (1994-1998). funded within NGOs are involved in a significant number of the 4th research projects Framework Programme The targeted Socio-Economic Research Programme widely covers the issue of the role of the sector in the economy and its importance for social It is intended to put even more cohesion. the 5th topic within this emphasis on Framework Programme (1999 - 2002). The European Parliament also relies on a large number of voluntary organisations in order to obtain information and views on a wide range of issues. The heterogenity of the sector is valued, in particular, for its knowledge and experience of aid and development issues and for providing a vital link with citizens in their localities, especially to those most vulnerable in society. social policy, environmental, role increasingly pivotal 9. 5 The the voluntary sector plays in a wide range of issues central to the construction of Europe, including in particular, in many Member States, in the management and delivery of key aspects of social welfare services, has been acknowledged and the Commission's main statements on social and employment policy, for instance in the Green and White Papers on Social Policy and the White Paper on Growth, Competitiveness and Employment. reflected in the European Institutions and 9. 6 However, for many years the contacts between the voluntary sector took place on a completely ad hoc basis and it was not until the Treaty of the European Union, in 1992, that the importance of links with this sector was first formally expressed in the creation of Declaration 23 which is annexed to the Treaty. 2 Declaration 23 states: "The Conference stresses the the objectives of Article importance, in pursuing 117 of the European Community, of cooperation between the latter and as charitable the Treaty establishing associations foundations and level to ensuring 9. 7 A high level of political commitment exists that more at European the voluntary systematic consultation with the is sector development and implementation of policy, commensurate with their increasingly important role, especially in social policy, in the Member States3. instigated, as regards both Subsequent to the creation of Declaration 23, a number of developments have taken place which moved forward the process of consolidating co operation with, and instigating more systematic consultation of, NGO's and other voluntary sector organisations. these developments were: Key amongst the holding of the first European Social • Policy Forum in March 1996, which brought together over 1000 participants mainly from NGOs, on the eve of the beginning of the Intergovernmental Conference. This saw the launch of a new policy objective: the building over time of a strong civil dialogue at European the policy level to take its place alongside dialogue with the national authorities and the social dialogue with the social partners. It is intended that the Forum be held every two years. This emerging civil dialogue has two main aims: -to ensure that the views and grassroots the voluntary sector can be experience of taken into account by policy systematically makers at European level so that policies can be tailored more to real needs, and; from information -to disseminate the European level down to the local level so that citizens are aware of developments, can feel part of the construction of Europe and can see the relevance of it to their own situation, thus increasing promoting citizenship. transparency and • the creation in 1995 of a Platform of European social NGO's, representing a large to assist in number of organisations, in order the preparation of the European Social Policy Forum and to facilitate the development of civil dialogue. • the setting up of a "Comité des Sages" in 1995 to prepare a report on fundamental rights to be discussed at the Social Policy Forum with a view to it providing an input to the IGC discussions on the revision of the EU Treaty. This report which advocated a Europe of civic and social rights has also sparked off a Europe-wide debate through a series of national seminars involving, in particular, the voluntary sector and the Social Partners. • the creation, in 1997, of a new budget line, to promote co-operation with B3-4101, NGO's sector and organisations and to strengthen the capacity of these organisations to engage in civil dialogue at European level; voluntary other 9. 8 In the context of the preparations for the IGC an ongoing dialogue was developed between the sector, the Commission and the European Parliament, Important issues relating to the sector have been discussed in the framework of the IGC. These include: institutions responsible for welfare establishments and services ". a legal base for regulations concerning associations at European level It should also be noted that the Commission has had a long standing dialogue with the sector in other areas such as with Development NGOs through the EC-NGO Liaison Committee which receives 90% of its funding from the Commission. a legal base for incentive measures both in employment and the social field and specific the integration of Declaration 23 into the Treaty the consultation of, and dialogue with charitable associations and foundations on all policy matters which concern them provision for a modification of article 8a to take (by co- decision) measures to facilitate freedom of circulation. The European Commission is also working closely with NGOs in the fight against sexual exploitation of children and women. like its The Commission would sector developed cooperation with in view of deepening European further integration. Proposals to this end are made in the "Conclusion". to see the to make relevant intends The Commission proposals according to the outcome of the IGC. PROBLEMS AND CHALLENGES V FACING THE SECTOR With regard to future progress, in order to retain the maximum amount of creativity and free expression, it is important not to over- bureaucratise or institutionalise consultation of the voluntary sector and to strive instead for a flexible but systematic approach in developing the civil dialogue and relations between the voluntary sector and the European Institutions which takes full account of the principle of subsidiarity and of the specificities of each Member State. 9. 9 The Commission has also attempted to open up a wide range of funding programmes to the sector. This includes the Structural Funds, the PHARE and TACIS programmes for East and Central Europe, the Leonardo da Vinci Programme, the Declaration 23 and the new Third Sector and Employment budget lines, the SME and Social Economy budget lines, as well as the European Voluntary Service Programme which encourages transnational volunteering, the EDF for cooperation and development with the LOME countries, and specific budget lines for external actions, in particular cooperation with the ALAMED countries, to name but a few. It is estimated that overall some 800 million ECU (of which 196MECU is in the form of co- financing) annually development assistance is channelled through NGOs and the Commission looks to the sector in many policy issues towards developing countries. of EU it can respond in the way that 10. Voluntary organisations and Foundations are working under enormous pressure and within a constantly changing environment. In some cases organisations are taking on the running of services that were hitherto provided by the public authorities. However, there are very real problems and challenges facing the sector to providing these new services. Organisations which have traditionally played the role of providing a back up for state run services, suddenly find themselves having to run those services themselves. This may mean completely new staffing arrangements, new management structures and needs, a complete change in the financing of the organisation, a change in the way that it works with the public authorities, and indeed with other voluntary organisations and foundations. How will the organisation be resourced? Will funding come from public authorities in the form of long term grants or short term contracts: indeed, will there be enough funding? Will an organisation be able to increasingly draw on support from the public (individuals) or the corporate sector? This change may also mean a major rethink in the raison d'être of an organisation. Should an organisation which was set up to promote the needs of specific parts of the population (people socially excluded, ethnic with disabilities, minorities, etc. ,) and to provide some back up services, be asked to suddenly take on the running of the mainstream service itself? 10. 1 These are all areas that have major implications for organisations in the way that they are resourced and trained, and public authorities should be aware of the importance of giving voluntary organisations and foundations the resources and time to be able to adapt to new needs. on have not 10. 2 Despite their increasing reliance on foundations and voluntary organisations to carry out a wide range of functions, public authorities the whole acknowledged their responsibility to ensure that the sector is as well placed as possible to make its distinctive contribution to the public good, The result is that in many Member States the sector» as a sector, in in what amounts, at operates strategic terms, to a policy vacuum. This lack of a coherent framework of public policy has the inhibited optimum extent possible, to the solution of the problems which we face. It is time it was remedied. from contributing, least to it have social relating supplying departments 10. 3 One of the greatest problems facing policy makers is the present serious lack of information about the sector. In an important sense, policy making has also been inhibited by the structure of government itself, and in particular by the to habit of public authorities of associations and foundations as suppliers of services to particular client groups or as interlocutors in particular subject areas. Social contact with service organisations services, environment departments with those active in the environmental field, and so on. Over a period of time, such departments and their officials can acquire a close and detailed knowledge of the particular organisations with which they deal. Within government as a whole, however, such knowledge as departments may acquire remains fragmented. For the most part it is rare for public authorities to have an overview of the sector as a whole or of its needs, or of significant developments within it. The same phenomenon has no doubt also been one of the factors which in a number of Member States has the growth of a "broad sectoral" inhibited consciousness amongst voluntary organisations and foundations themselves. 10. 4 The urgent need now is for public authorities to complement their "vertical" approach and to begin to look seriously at "horizontal" issues affecting the sector as a whole with a view to developing appropriate policies. At the same time, the public role of foundations voluntary organisations and needs the acceptance of the sector as a full partner in the debate on all policy and implementation matters which concern them, needs to be actively encouraged at all levels. acknowledged to be and by done 10. 5 Over the past ten years the amount of transnational work voluntary organisations and foundations has increased dramatically. This is due to a growing number of European funding programmes being opened up to the sector which encourage transnational collaboration, and an expanding number of organisations who are interested in developing their services in other countries* for individual 10. 6. There is also a large and continuously growing number of European wide federations or networks of voluntary organisations and foundations. Some, such as the Red Cross Liaison Committee act as a co-ordinating organisation national organisations which share the same aims and objectives, as well as the same name. Others such as the European Foundation Centre or CEDAG (the European Council for Voluntary Organisations) act as a focus point for lobbying the public authorities on behalf of the sector, and providing and developing examples of good - diverse practice within membership. - often their 10. 7 There are also many development and emergency aid agencies which have a long tradition working overseas, but which are working more and more together at a European the European Commission. level and with Indeed, the EC-NGO Liaison Committee of closely with Development NGOs, works DGVIII (Development), with ECHO, DGIB and with other Dgs of the European Commission. limited by 10. 8 The ability of voluntary organisations to make their full contribution in transnational activities in the social and employment field has been the suspension of some European programmes since 1995 pending a European Court of Justice ruling on the legal basis of such measures. In its proposals to the to the Commission has endeavoured IGC, remedy this by proposing a legal base for the transfer of best practice, networking and exchange of experience on a transnational basis the fight against social in such fields as equal exclusion opportunities of the grounds of gender, discrimination on disability, race or age. This would enable the Community to adopt such incentive measures as have already been established for education, training and public health. the promotion the combating and and of other 10. 9 There are however, many problems to facing organisations develop their transnational European work: They include: trying difficulties minded finding * organisations in other countries in order to develop joint projects. like Although on paper an organisation may seem to have the same aims and objectives, in reality it may not. The role of an organisation working with a specific client group in one country may differ a great deal from one working in another. in organisations There are also difficulties working to differences in culture and language together which is often due inability of organisations * European funding* to access Decision making for many European funding programmes is frequently made at national rather than at European level. 10 Many organisations have trouble information on obtaining good up to date European They also may have funding. difficulties with Member States which are reluctant to allow voluntary organisations and foundations access to specific European funding programmes in which the Member States have a decision making role. difficulties finding matching funding * projects which are European funding programmes co-financed for through Matching funding for projects often comes from public authorities who may be putting forward their own rival bids, or not be interested in supporting the project. on over dependence European * Community Funds leading to difficulties m forward planning and continuity of management owing to the incompatability of the short term nature of this funding and the long term core funding needs of voluntary organisations. Difficulties in obtaining funds at national level has led some organisations to look for European funding which can be inappropriate to Failure to their main aims and objectives. continue receiving these funds can undermine their existence. difficulties faced by organisations due lo * late payments of European funding. Payments held up for various reasons at European or national levels can often cause problems out organisations transnational projects. carrying for lack of * organisations in other countries. legal recognition for for This can cause serious problems organisations wishing to open offices in other Member States, or provide services that are financed by public authorities from another Member State. The Commission has already proposed certain measures (notably the Statute for a European Association) aimed at giving legal personality organisations a countries within the European Union. in other weak representativeness of organisations * taking part in consultation In some cases European networks lack the structure and adequate membership to ensure that views of a wide spectrum of operating organisations at local, regional and national levels are taken into account. * tack of understanding by some public authorities on what European work voluntary organisations and foundations wish to do. Many organisations complain that public authorities are not aware or being supportive of the transnational work that they are in transnational projects being hindered. This often to do. results trying * lack of adequate training. Inadequate training can lead to poorly run organisations and the inability to respond to challenges and new needs. * lack of access to networking techniques Subsequent some to poor organisations are not able to develop links with other like minded organisations. training all problems 10. 10 Not are these insurmountable, and indeed some of them are already being dealt with by the European Commission and by some Member States. However, it should be stated that they are often dealt with on an ad hoc basis, and not as part of a coherent strategy and policy towards the sector. The following section presents a number of ideas which can be addressed by the sector itself, as well as at Member State and European levels. VI CONCLUSION MEMBER STATE LEVEL 11 The Commission believes that for the most part action will need to proceed, in line with the principle of subsidiarity, at the level of the Member State or, where appropriate, at the level of the region or the locality. The Commission proposes that the Member States examine attentively the following areas: acquiring a much deeper knowledge and the relationship ("partnership**} between • understanding of the sector at aD levels There is no doubt that policy making is at present severely hampered by the lack of systematic and reliable data about the sector. Indeed there are parts of the Community where the sector has had so little public profile that policy makers appear to have been scarcely aware of its existence. All concerned actors, local authorities European,national, regional, and the voluntary sector itself, need therefore to address the question of what practical steps they could each undertake to map the extent and contribution the voluntary sector makes. * public authorities and the sector Voluntary organisations are being asked to take on an increasingly important role, by public authorities across the Community and by the European Commission itself. It is therefore important that voluntary organisations are given the opportunity to be involved in planning services and policy making with public authorities at all levels. Relationships between voluntary organisations and public authorities should be clearer and new partnerships Partnership between voluntary developed. involve organisations and governments will contractual arrangements between individual voluntary organisations and public authorities their own which will properly constraints. But whatever relationship they may voluntary have with organisations are independent of government and must remain so. Public authorities should review public policy and make proposals about what would the to be done for policy to help need voluntary sector to increase its capacity and where relevant to improve its skills in order governments, and foundations involve the law governing voluntary organisations that it can best fulfill the new roles it is being called on to address. • and foundations The competent authorities should examine what scope exists for clarifying and adjusting legal frameworks so that they are conducive to the voluntary sector fulfilling its full potential at national, regional and local levels. the fiscal basis and competition rules on • which the sector operates The taxation rules applicable to the sector have to be clear and simple, and incentives as well as exemptions have to be studied attentively. Any individual tax treatment has to be justified in relation to the constraints specific to this sector and to its method of internal organisation which differentiates traditional economic actors. from it how the continued financial health of the • sector is to be secured Positive legal and fiscal regimes are important for the growth of the sector in each country, as accountability. ensure public well as However, public authorities should also ensure that the sector is seen positively by society and that funding by public authorities, the corporate sector and private donations are all encouraged. to training • The growth of the sector has not been matched by an increase in training to help voluntary organisations develop their skills and expertise in order to meet new needs. All too often, training budgets are the first to be hit when funding becomes difficult to obtain and voluntary organisations are asked to cut costs. Public authorities should ensure that voluntary organisations are given adequate training in order to provide the services and do the work that is being increasingly asked of them. information society developments • Voluntary organisations and foundations have a clear interest in being associated closely with The information participation of voluntary organisations and foundations in pilot projects, particularly in the applications field, should be encouraged. developments. society Support Insofar as better access to programs co-financed by • the Structural Funds Many voluntary organisations are concerned about access to finance from the Structural implementation of Funds. the Community and Frameworks operational Programmes is the responsibility of Member States, the latter are encouraged to examine and review current administrative practise so as to facilitate access to information and broader participation by the voluntary sector. the designation of beneficiaries for global grants is concerned. The same applies insofar as VOLUNTARY FOUNDATIONS LEVEL SECTOR AND It is important that voluntary organisations and to promote foundations make every effort themselves, through use of the media and new information technology. They should try to be open and accessible in order that the public and public authorities understand their aims and objectives and how they work. Organisations should encourage relevant training for their staff and volunteers, and when appropriate, should try to develop good links with public authorities and the corporate sector. The sector should look to diversify its funding base in order not to become too dependant on any one source of funding. Networks of organisations should also try to ensure that their is as comprehensive as membership base possible truly in order representative. to be them for EUROPEAN COMMUNITY LEVEL In addition, the Commission proposes the following at European Community level: Voluntary organisations play an extremely • important role as interfaces between citizens and government authorities, although in many cases this receive proper recognition. Voluntary organisations are asking for their work in this sphere to be recognised; they are no longer satisfied with a single still does not role 12 lobbying role, but are asking to be consulted systematically and regularly by Community bodies on all matters»and on all decisions which might affect the work they do, how they do it and their efforts to achieve their objectives. their work. For these reasons, and in order to support the effort to improve knowledge of this sector, the Commission will consider proposing a year of voluntary organisations and European citizenship. by the establishment The Commission will maintain and further develop a continuous exchange of information and points of view by establishing systematic and regular dialogue and consultation with the sector5. In this connection the Commission the welcomes aforementioned movements of the Consultative Committee for Cooperatives, Mutual Societies, Associations and Foundations, which aims to ensure the consultation and the horizontal co ordination of the sector. The Commission will also look to develop its dialogue with the sector through the European Social Policy Forum and the new budget line promoting cooperation with charitable associations, and will examine how the representation of voluntary organisations on other existing advisory committees can, where appropriate, be organised. The development of this dialogue and partnership will contribute to a better understanding and building of European integration at all levels. As well as this, the revised treaty should include such measures as the fight against exclusion, the promotion of employment, and measures in areas and immigration, which call for this strengthening of dialogue. discrimination such non as of and • The role of voluntary organisations in present-day society will not be recognised without more knowledge of how this sector operates, and its expectations. As people are very far from being fully aware of all this, particularly in all the Member States and at European level, an effort must be made in this direction. One of the ways of making progress in this matter is to give a higher profile to voluntary organisations and requirements In this context it should be recalled that the European Commission has published a directory on European Non Profit organisations in order to enable officials to consult more systematically and as widely as possible. 13 in that role recognises Commission the of the • The voluntary importance organisations can play as disseminators of information, and as bodies close to ordinary citizens, and proposes to involve them more its activities of disseminating closely information. Voluntary organisations have played an important role in the development of past "European years". This role has not always been acknowledged. The Commission therefore intends to ensure that the role of voluntary organisations is recognised and publicised in all "European Years" relevant to the sector. • The European Parliament has proposed that studies be made on the expansion of the social economy in the European Community, in particular the establishment of an observatory to follow developments in this sector in the single market. The Commission considers that for voluntary organisations and foundations, this task could be undertaken within the European observatory for SMEs, and proposes that the collection and analysis of information, in the framework of the existing structures, should be based on what voluntary organisations do and want level, and they particularly on encounter in doing so, i. e. problems arising from differences in their legal forms in the various States, money transfers, leasing or purchasing premises in other states, obtaining subsidies, the recognition of effectiveness of the mutual vocational to obstacles sponsoring in the Member States, etc. It would also look to identify areas of good practice which could be promoted and disseminated. the problems which qualifications, transnational to do at undertake transnational activities, • To voluntary organisations need instruments which are not yet widespread, but which are a sine qua this kind. These non for any activity of instruments a knowledge of from languages to familiarity with current differences the various Member States concerning in range to access European the part of taxation, working methods, administrative procedures etc. There is great demand for those voluntary training on organisations which are interested in expanding their transnational activities. The Commission will therefore give an impetus to promoting training better programmes which officials of voluntary organisations wishing to expand into Europe could use. On the other hand the involvement of the voluntary sector during the European year of life long learning gives evidence of the actual and potential contribution of this sector to life long learning, including adult education which is largely managed by the voluntary sector. In the years to come, this contribution is likely to become crucial to build a knowledge society for all. • have difficulty in finding partners or people to work with outside their own Member States who could help them in their transnational activities, and facilitate access for them to a number of Community funds for which this is a condition of eligibility. All the more because the numerous Community instruments and policies available to enterprises for finding partners at European level (BC-Net, Europartenariat, BCC etc. ) are not always suited to the needs of voluntary organisations. 6 Accordingly, the Commission will see that they are made easily accessible to voluntary organisations, and that they meet their specific requirements. organisations Voluntary often • Voluntary organisations and foundations have a clear interest in being associated closely with information society developments. An effort should be made to raise their awareness of the opportunities the information and communication technologies, services and applications can offer them. The Commission has already set up the Information and benefits that in this area. The Society Project Office as a "one stop shop" within the Commission to facilitate access to Information information Society Forum will seek to involve all parties including voluntary organisations concerned, and foundations, in the policy debate. The participation of voluntary organisations and foundations in pilot projects, particularly in the applications field, should be encouraged. they have • Many voluntary organisations are calling for easier access to sources of finances, including to the Structural Funds as well as other sources. The complexity of application systems and administrative procedures, which often lead to delays in payments can prevent small, lean voluntary organisations from making the the valuable contributions potential to make in the implementation of the various EU funding programmes. Insofar as the Structural Funds are concerned, the Commission will, in conjunction with the Member States, continue to actively explore ways of facilitating access to Community finance, including the possibility of pre-financing by the Member States and the increased use of global grant finance. In general terms, it will be proposing ways of streamlining and simplifying procedures in the context of the reform of the Structural Funds which is due to take effect from the year 2000. Likewise, it will continue interpretation of the to encourage a broad concept of partnership extended to economic and social partners7, compatible with the need for proper and effective systems for monitoring the management of public funds. The Commission will also explore ways of publicising more widely information on existing to Community Finance which voluntary organisations and foundations. 8 is available Article 4 of the Framework Regulation No. 2081/93 on the Structural Funds. and RECITE ECOS/OUVERTURE The programmes, and also the PACTE programme can facilitate internationalisation of voluntary organisations and foundations. the 14 DGVIII (Development) already has a document "Digest of Community Resources available for the activities of NGOs and other financing Governmental Bodies representing Civil Society fields of Development CO-operation and Humanitarian Aid". and/or Decentralised the in The results of activities financed under the new budget line B3-4013 will help shed some light on the employment dimension of the third In particular the actual and potential sector. role of the voluntary sector and foundations in the employment development process and their job creation capacity will be examined and examples of best practice The identified. the Commission will ensure resulting analysis are widely and disseminated. conclusions that The European Commission's support through training and the use of information technologies will improve their capacity to network in order for in European Community Programmes. to fully participate them The survey has shown that there is a • growing interest by voluntary organisations in developing their transnational work. Voluntary organisations are keen to learn different models and ways of working from organisations in other countries. Many organisations find this difficult to do, due to the lack of resources. The Commission could help organisations such as foundations to explore the possibility of them setting up a special fund in order to facilitate the voluntary organisations. In particular, the fund would enable voluntary organisations to pre-finance certain projects for which grants have been asked from public authorities, and also enable study visits, and the attendance of conferences, seminars and training events for organisations which normally lack the means to do so. transnational work of they when The numerous difficulties facing voluntary • organisations contemplate transnational projects are often the result of national legislations which are ill-suited to the new needs, but they can also arise from the effect of measures taken at Community level, which, since they were drafted with other objectives in view, may turn out to be obstacles for voluntary organisations and foundations. For this reason the Commission proposes to study and monitor closely the effects of Community policies, actions and legislation on this sector. This follow-up and analysis should be carried better out systematically through also inter-departmental co-ordination, with the aim both of monitoring implementation of the Community rules in the sector and of promoting the structures of voluntary organisations and their access to the Single Market. The Commission intends to conduct a broad dialogue involving the sector, the European Parliament, the Committee of the Regions, the Economic and Social Committee, Member States and other interested parties in order to fully discuss the issues contained in this document. The Commission intends to hold a series of conferences and seminars to discuss the Communication and issues arising out of it. 15 ANNEX! THE SURVEY I How many voluntary organisations and foundations are there? How are they financed? to voluntary How many people belong organisations? How many people do they employ? How many people work for voluntary organisations or foundations as volunteers? How big is the sector, and is it growing? How is it developing at the European level? What are its needs and aspirations for the future? 1. 1 Unfortunately, as has already been made clear, there is a serious lack of information about the voluntary sector in Member States, and still more at the European level. This lack of essential facts reflects not simply what has, until fairly recently, been a lack of interest amongst scholars and policy makers, but also the absence of any sort of convenient sampling frame. 1. 2 In an attempt to throw some light on the scene, the Commission therefore decided to carry out a questionnaire study of voluntary organisations in all the Member States. The method used was to distribute questionnaires to voluntary organisations throughout Europe via their representative organisations in Brussels and at national level. The survey was carried out between June and October 1993 and altogether some 2300 replies were received. This is a surprisingly good response and the Commission is grateful to everyone involved. The response may itself be taken as an indication of the lively interest that voluntary organisations in the different Member States have in developments at a European level. 1. 3 Given the method used, which was the only one open to the Commission, the study must be regarded as strictly exploratory and its results, which are not in any sense scientific, should be treated with caution. The findings are, however, of interest and are discussed below. Growth of the sector that increase suggests the evidence the very marked this phenomenon, highlighting 1. 4 All the associative sector has grown enormously since the end of the last war and the survey clearly in reflects particular in the number of voluntary organisations in the last twenty or so years. The growth of the sector in the last decade might justly be called explosive. Of the voluntary organisations which responded to the questionnaire, some 75% were founded after 1961, about 65% after 1971 and about 45% after 1981. There is no reason to believe that the sample was abnormally "young" nor does growth appear to be slackening. There are minor differences between the sector in different Member States - for example, for reasons which will be obvious, the sector appears to be on average younger in Spain and Portugal than elsewhere in Europe (84% of the Spanish and 85% of the Portuguese sample were founded after 1971 and 63% and 62% respectively after 1981) - but the same basic phenomenon can be observed everywhere in Europe. 1. 5 There are no doubt many reasons for this very marked growth but the following factors have almost certainly been influential; increases in prosperity the • second world war and latterly increased leisure time (shorter working week, longer holidays and two-day weekends) following the shift evident • economies during provision of services in most European the towards the 80's • the increasing delegation to voluntary organisations of services (particularly social services) previously delivered by public authorities ("social privatisation") • changes in public preferences away from uniform and relatively impersonal services of the kind typically provided by public authorities towards the more individual client-oriented approach favoured by voluntary organisations 16 the identification of a whole range of new • social needs and the growth of new preoccupations sexual equality, the (e. g. environment and preservation of the biosphere, foreign aid to developing countries following the granting of independence to former colonies in the 60% peace etc. ) leading the employment crisis in the late 70'$ and • early 30's the creation of to employment schemes involving voluntary organisations • historical reasons peculiar to particular Member States such as the release of pent-up associative demand following political changes in Spain and Portugal or the movement to create structures outside the purview of the state following the social and political upheavals of 196S • demographic changes taking place in Europe such as the increasing number of leading. Member retired/unemployed people States to offload services from the State to the private and associative sectors as a way of cutting public expenditure Numbers of members in the sense explained 1. 6 One well-known voluntary organisation in the Community has over 13 million members. Most voluntary organisations, however, are small, often having no more than a handful of active adherents. Because of the methods used by the Commission, the sample contains a disproportionate number (30%) of "intermediary in organisations" paragraph 4 and of national organisations. The results will considerably overestimated the average size of voluntary (Most organisations intermediary organisations responding to the survey were federations - that is, umbrella bodies providing some centralised services (such as information and combined lobbying) for a number of separate voluntary organisations or branches (usually with their own legal identity) working in the same field. Nonetheless the figures are of interest. the Community. therefore have in 1. 7 In the sample, about 40% of voluntary organisations had fewer than 100 members and more than half had fewer than 200. The range was, however, very wide. Thus 13% of the sample had between 1 000 and 5 000 members, and 15% had over 5 000. As would be expected, national organisations tended to have more members than those with a regional focus - they appear, roughly speaking, to have twice as many members as regional organisations. 1. 8 Of the federations responding to the survey very nearly half represented more than fifty organisations, with 9% representing over indirectly 500. Such bodies do, of course represent large numbers of members of individual voluntary organisations: in our sample over half (55%) of federations indirectly represented more than 10 000 members with 32% representing over 100 000. The average number of members indirectly represented was over 1 300 000. 1. 9 The size of voluntary organisations and federations appears to vary according to a number of factors. Larger bodies tend to be older, as do organisations working in fields of obvious and enduring interest, such as social services and education. As has already been remarked, voluntary organisations with wide geographical scope tend to be larger than those with a relatively parochial focus. The size of the membership also reflected to some degree the size and relative wealth of the Member State and the relative maturity of the sector. Employment 1. 10 The numbers of staff employed by voluntary organisations varies very widely - from none at all to many thousands. The great majority of voluntary organisations are, in effect, their counterparts in the conventional economy, most employ no more than a handful of staff. A few, however, are large organisations by any standards, employing large numbers of full and part-time salaried staff. enterprises small and, like 1. 11 The average voluntary organisation in our sample employed 40 full and 10 part-time staff. The equivalent average figure for intermediary 17 organisations was a little higher. These averages do, however, conceal wide variations. Thus some 14% of our sample employed no paid staff at all, 17% employed over 50 people (full and part-time), 6% between 101 and 500, and 4% over 501. The commonest number of employees was between 1 and 5. Full-time staff appear to work on average for 36 hours a week and part- timers for 20 hours. These figures varied less from country to country than they did according to the area in which the voluntary organisation was active: for example, as might be expected, voluntary organisations active in the health or social services field tended to employ many more salaried staff than those active in, say, civil rights. Volunteers 1. 12 Another very important source of support for voluntary organisations is, of course, volunteers. 81% of our sample said that they employed volunteers. Voluntary organisations in some countries appeared to make rather greater use of volunteers than others, but in no country did the proportion of voluntary organisations which have volunteers working for them fall below 60%. Again, the numbers of volunteers employed varied widely: 30% of voluntary organisations (including federations and other intermediary organisations) told us that between 1 and 5 volunteers were active their organisation; about 18% reported that they were supported by between 6 and 10 volunteers; 60% had over 51 volunteers, 10% had between 101 and 500, and 7% had over 500. A few voluntary organisations (3%) were supported by over 2 000 volunteers. On average each volunteer spent about nine hours a week working for the organisation they supported. in 1. 13 Although there did not appear to be major differences between the number of organisations in different Member States using volunteers, the ratios of salaried staff to volunteers varied widely from country to country - from about 1:1 to about 1:8. Such differences did not appear to be related to the size or wealth of Member States or any other particular factor. It may be that they simply reflect varying traditions, or the extent to which volunteering is, or is not, organised. 1. 14 The numbers of volunteers employed also varied markedly according to the voluntary organisation's main field of activity. For example, voluntary organisations working mainly in the field of culture and recreation, or in human rights, clearly depended to a much greater extent on volunteer workers than did voluntary organisations working in health, education, or social services. However, while there was for voluntary organisations to rely on either salaried staff or volunteers, it was not necessarily the case that voluntary organisations with few salaried staff had few volunteers, or vice versa - the mix varied a great deal. tendency some Assets 1. 15 The federations in our sample had: voluntary organisations and financial assets amounting to 2,208 • thousand ECU, • ECU;' • equipment thousand ECU; • thousand ECU; property amounting to 702 thousand amounting to 1,102 other assets amounting to 835 total assets of 10,068 thousand • ECU. though These averages conceal wide variations between voluntary organisations themselves and between countries. By and large it is, as would be expected, voluntary organisations in the richer Member States which have on average bigger these the variation assets, countries is as wide as anywhere. Voluntary organisations in Member States where there are still remnants of the old mortmain laws, or where the laws governing inheritance are still relatively rigid, have discernibly fewer assets in the form of property. in even Expenses 1. 16 Data on organisations' annual expenditure was broken down into salaries and wages, administrative costs, and other costs. On average the costs incurred by our sample organisations amounted to the following: salaries and wages: thousand ECU administrative costs: thousand ECU other costs: thousand ECU total costs thousand ECU 27,743 465 1,044 31,149 differences between There were minor countries: broadly voluntary organisations from better off Member States spent more than average on wages and salaries. Not surprisingly rather more on larger organisations spent administration than did federations, which were generally more expensive to run than simple voluntary organisations. Sources of Income their voluntary 1. 17 Very many organisations depend to some degree on external subsidies of one kind or another, typically from public authorities, but often from individuals or other private donors. Many others are virtually self- supporting, obtaining from membership fees or by the sale of services or other products. To get an idea of how they financed their expenditures, we asked voluntary organisations in our sample to state what proportion of their income was from their own resources and what proportion came from so- called external sources, such as gifts and subsidies. income 1. 18 For the purposes of the study, income from the sale of services (whether to members or (e. g. or non-members) publications), membership investment income and income from contracts, were all counted as "own resources". Under "External resources" were from included government bodies and other public authorities, products fees, subsidies a typical European individuals, international and support from bodies, foundations and companies. 1. 19 On average membership fees (30%) and the sale of services (30% of which 20% were to members and 10% to non-members) made the largest contribution to voluntary organisations' "own resources", followed by contracts (17%), sales of products (15%), and investment income (8%). To put the matter in another way, on average voluntary organisations derives some 62% of its "own resources" from economic activity of one form or another - i. e. from selling services directly or under contract, or from selling products such as publications. Again did, however, conceal wide variations in the amounts that voluntary organisations gained from various sources and in their relative importance. For in two Member States example, the most important source of the "own in resources" category was sales to non-members; and in another membership fees apparently contributed little in comparison with contracts with public authorities. averages income these individuals 1. 20 There was less variation apparent when we looked at "external resources". By far the most important source of external income for voluntary organisations in all but one Member State was reported to be subsidies from public authorities (52%). This was followed by support from from from international foundations lastly support from companies (7%). Again to put these averages into perspective, grants from foundations were generally not an important source of income (between 3% and 6%) in all but two Member States, as were supports from business. support (10%), grants bodies (9%), and (22%), subsidies were clearly 1. 21 Of all the sources of internal and external income, the most important, followed by membership fees. The following diagram compares all the sources of internal and external income and gives their mean percentages of the total. 19 Own and External Resources 0,15 0. 20 avaraga part in % there were 1. 22 Additional information was also sought from voluntary organisations and federations about the balance of "own" to "external" income over the last three financial years. The ratio of own resources to external resources was on significant average about 45:55, with no fluctuations over the three years. In each year, however, voluntary organisations/federations claiming that 100% of their income was derived exclusively either from their own or from external resources. In other words most voluntary organisations appear to income little under half generate a themselves, relying for the remainder mainly on subsidies of one kind or another; but there are numbers of voluntary organisations which are either wholly self-sufficient or alternatively, wholly dependent on external aid. some their Sphere of Activity 1. 23 The questionnaire used the following ten main spheres of activity with which to classify voluntary organisations/federations: indicate in brackets 1. 24 The figures the proportion of respondents naming each of these areas as one in which they were active. These figures take account of the fact that, as has already been made clear, many voluntary organisations are active in a number of fields at once. This is clearly revealed by the following diagram showing the proportions of voluntary organisations whose main activity may lie in one field but which are also active in others. There were, as would be expected, differences between countries, though it is noteworthy that social services was named most frequently in all Social Services Education and Research Development and Housing Culture and Recreation International Activities Civil Rights and Advocacy Health Philanthropy and Voluntarism Environment Business and Professional Voluntary organisations 20 (57%) (46%) (40%) (36%) (35%) (35%) (26%) (23%) (18%) ( 8%) Areas of Activity and Main Areas of Activity - frequencies in % £ Social Services Culture and Recreation Development/Housing Education and Research International activities Health Civil Rights Environment Philanthropy Business 30 frequencies in % 60 but two countries (it is unlikely that this finding simply reflects our particular sample). Greater differences appeared, however, when we looked in more detail at the type of social services in provided where voluntary organisations different countries appear in to specialise different sub-areas such as family care, youth work or services to elderly people or people with disabilities. The latter three groups were, in fact, most often mentioned. This may reflect the fact to voluntary organisations to provide services for these particular groups. that governments most often turn for "culture 1. 25 Looking in a little more detail at the example, figures on, and recreation", reveals that 41% of voluntary organisations whose main activity lies in this field are also involved with other cultural and artistic activities - 37% with sport, 29% with recreational and entertainment clubs and 27% with the media and communication. Voluntary organisations which gave another area as their main field of activity were also active in "culture and recreation". 1. 26 A further example is provided by "health": 36% of voluntary organisations which claimed that health was their main area of activity were involved in rehabilitation, 35% were involved with public health services, and 26% were active in nursing homes. Nursing homes were also mentioned by, for example, 29% of voluntary organisations which gave "Philanthropy and Voluntarism" as their main area of activity; and 17% of voluntary organisations who were mostly involved in "social services" were also involved in "rehabilitation". a for either reflects 1. 27 This "multi-functionality" is typical of the philosophical approach adopted by voluntary organisations and often also their circumstances as key sources of aid or information in a particular locality. Voluntary organisations in. this sense are rarely entirely "subject-oriented": their focus is above all on people and their problems. In this spirit, many is, in voluntary organisations provide what effect the "one-stop-shop" inhabitants of a particular area, or for the group which is their special concern. Thus a voluntary organisation dealing with, for example, people with disabilities, will deal not simply with the immediate results of a particular disability, but will the information and advice needs of its clients and with the whole range of concerns affecting them, including, most importantly, their rights as citizens. This latter is a particularly important point: as a glance at the diagram will show: regarded while only 6% of our themselves as primarily concerned with human rights, 35% gave it as a field in which they were active. The same multi-functionality is evident throughout the diagram. itself also with to occupy sample tend 1. 28 When we looked at the expenditure and assets of voluntary organisations working in different fields we found that bodies concerned with social services and health had the highest expenditure. The voluntary organisations and federations whose main concern was with civil rights and advocacy had the lowest costs and the smallest assets. Environmental voluntary organisations/federations and those whose main objective was education and research were best off from the point of view of assets. regards the most the "own resources" of 1. 29 As important voluntary organisations, source of income for bodies in the field of culture and recreation was the sale of services to members and membership fees, both providing 29%o. In the fields of education and research and international activities, contracts, (25% and 27% respectively) were the most important source of self-generated income, while in the area of health it was membership fees (36%). social Voluntary services also fees constituted a significant part of their "own resources" (33%), as did those dealing with civil rights (38%), development and housing (31%) and the environment (35%). In contrast, charity organisations obtain the bulk of their own resources by selling services to members (28%) and non-members (26%). For business and professional organisations, membership fees are by far the largest element in the "own resources" category. organisations said that membership providing of charitable to 73% of Ï. 30 As regards external sources of income, organisations working in all fields are largely supported by subsidies of one kind or another. Subsidies provide from 31% of total external voluntary income organisations/federations such income for business and professional bodies. As has already been noted, support from individuals income. is also an Charitable and federations, for example, said that support from individuals represented 37% of their external income. Environmental voluntary organisations claimed the proportion to be 29%, and in the fields of social services, education and research and international activities^ it represented a fifth of external resources. The major exception to this picture was provided by business and source of organisations important voluntary professional voluntary organisations, which derived only 2% of their external income from individuals. Geographical scope 1. 31 In asking about the geographical area covered by voluntary organisations, we were chiefly interested in gaining an impression of what sample sort of proportion of our considered Europe as a significant, if not the only, focus of their organisation. The results varied surprisingly widely: in one country only 4% of respondents regarded their scope as to 35% in extending to Europe, compared another country. They should, however, be considered together with our findings (reported below) on the number of actual or intended partnerships or other activities undertaken by voluntary organisations at the European level. Interestingly, little correlation between how important a focus organisations consider Europe to be and their propensity to form European partnerships. appears to be there to 1. 32 The scope of a. voluntary organisation's interest is not, of course, necessarily closely its organisational structure. For related example, an internationally active voluntary organisation may well be locally based, whereas one which may be active at a national level within a particular Member State may lack any interest in Europe. As a broad rule, however, the greater an organisation's geographical scope the more it appears to play an active role at all levels. Thus most national organisations considered that they were also active at local and regional level, but few local organisations considered that their scope extended to national level. In line with this, most of the voluntary organisations that are active at the European level are, in fact, nationally organised. Target groups and beneficiaries. 1. 33 We asked voluntary organisations which particular groups of people their organisation worked with or was concerned with and to indicate to whom, or to which bodies they offered services and on what basis. The great and majority of voluntary organisations 22 significance federations defined their target public widely - 46%> of respondents said that they served the "general public" or alternatively "young people" (37%>) or "adults" (35%). In contrast, very few organisations mentioned more voluntary narrowly-defined groups as their particular concern. It may be doubted whether there is much finding. Since in voluntary organisations were not, in practice, confined to one choice from the list provided in the questionnaire, the likelihood is that most respondents whose activity was directed on the one hand at a specific group of people e. g. "drug addicts" or "veterans" and, on the other hand at the population as a whole (whether to draw attention to their work or to canvass for support) indicated both the specific group and "general public". this 1. 34 When we asked voluntary organisations to whom they provided services the answer was, again, most often the "general public" (39%), followed as the next most frequent categories by the "target group" (38%) and members. (36%), governments or other public bodies (22%). The extent to which these services were provided free or in return for payment varied according to the country concerned and to whom the service was provided. Free services were most often provided to the general public and to members, and voluntary organisation's particular target group or clients or to public authorities. services paying the to voluntary organisations 1. 35 Overall, more free goods or services were provided by voluntary organisations/federations than goods and services against payment. Not surprisingly, and federations that mainly offer their services free rely more heavily on support from outside than do bodies which charge. To what extent services are provided free or, alternatively, have to be paid for depended heavily on the voluntary organisation's field of action. For example, the support of the homeless is likely to involve the provision of free (or at least very cheap) goods or services whereas it may be reasonable to charge for, say, adult education. Similarly, sports clubs, where perhaps relatively costly equipment is needed, or which are prestigious, will provide fewer free benefits than those voluntary organisations in social services, especially of a relatively informal kind. involved together with These findings, those on voluntary organisations* sources of income are a clear important redistributive effect which these bodies have. indication of the European Community-wide partnerships between voluntary organisations and foundations contained 1. 36 Because of the method we used, our a greater sample undoubtedly proportion of voluntary organisations which are active at the European level than would be expected in a more scientific sample. The figures impressive evidence of the are nonetheless extent to which the sector is already beginning to come together throughout the Community: 50% of those voluntary organisations answering the relevant question, or nearly a quarter of the total sample, said they were already that involved in cross-border activities in some form of partnership with nationals or organisations from other Community countries. 1. 37 Given that the inspiration for the majority of the well-known networks already working at European level came from countries in the north of the Community, it might have been expected that the tendency to form partnerships might be less marked in the south than in the north. In the findings did not event, this the hypothesis: there were differences between countries, which are not altogether easy to explain, but no clear division was discernible between the overall picture north and south. support 1. 38 Looking ahead, 46% of our respondents said that they envisaged entering into cross- border partnerships at some time in the future. Interestingly, an analysis by country showed, in effect, that it is voluntary organisations in those countries that have hitherto formed a below- average number of partnerships which have the strongest future intentions. In other words, when it comes to operating on the European stage, voluntary organisations in countries now lagging behind appear to have every intention of catching up. 23 in L39 Of voluntary organisations already partnerships, 27% were active in "social services", 14% in the field of "culture and recreation", 13% in "international activities". 11%» in "education and research" and 10% in "development and housing". Again, there was evidence that voluntary organisations working in some fields where few partnerships have yet been formed have stronger future intentions as regards cross-border work: for example, no than 75% of our sample voluntary fewer organisations which are active in the field of "development and housing" said that they were planning partnerships for the future. On the other hand, only 22% of voluntary organisations active in the health field said that they were planning to enter into partnerships. This may that many voluntary well reflect organisations supply what are, in effect, public services - and furthermore in a highly regulated circumstance, sorts these In field. partnerships may voluntary simply offer organisations less and thus be less attractive. the fact of Problems in forming partnerships in 1. 40 Just over half the voluntary organisations they had met involved that their running in problems or partnerships. The broad findings were as follows: them said forming M. lt*j~t* ' Vrt ''t •<*<• Mr C »/ "" '+ trtt'ttt 'tt or regional national, The figures in brackets indicate the proportion of respondents encountering each kind of apparent problem. Few differences were local between organisations, though there was a tendency for smaller organisations to be less preoccupied with difficulties. The outstanding finding is, of course, the extent to which "communication" has caused difficulties, though the extent of legal and fiscal problems is also noteworthy. It seems likely that the legal difficulties, at least, will be largely removed by the proposed Statute for a European Association. Language is probably the most important impediment to "communication" but it is likely that there are other complicating cultural factors at work as well, such as misunderstanding of role and importance of the sector in different countries, misunderstanding of how organisations work, the lack of understanding of cultural, legal and fiscal backgrounds, the existence of different ways of working etc. Main future needs of voluntary organisations 1. 41 We asked respondents to tell us what they felt were their voluntary organisation's main needs for the future. The results are given below. 24 Main needs of European associations/foundations 30 40 50 frequencies in % Points for the Commission: the - development sector at the European level of 1. 43 Finally, we invited respondents to let us know of any points which they would like to bring to the attention of the Commission and to put forward any suggestions they might have about how the Commission might help the development of the sector at the European level. The answers we received ranged widely from simple demands for "recognition" in a quite general sense (either of the non-profit sector or of some particular organisation) to relatively complex in, or extensions to, European Community policies. suggestions changes for the sector It is clear from the results that the perceived need for more funds and more staff, and above all the former, is more or less universal. The same demand exists in the sector in all the Member States, though there is a tendency for in poorer countries, voluntary organisations where less well tends developed, to feel their comparative lack of funds more keenly. Voluntary organisations are not, on the whole, capital-intensive, and it is not surprising, therefore, that there should not be the same desire for more capital. Nonetheless almost a quarter of our respondents mentioned capital as a need. to be 1. 42 The desire for more paid staff appears to be felt most by older voluntary organisations (those founded between 1945 and 1950): younger voluntary organisations, in contrast, appear in relatively greater need of information and management advice. The desire for more volunteers was very widespread but particularly organisations evident working in the fields of "health" and, for and in obvious voluntarism". The need for more training was mentioned by almost a quarter of respondents and appears to be felt by voluntary organisations working in all fields regardless of their age. "philanthropy voluntary amongst reasons, 25 ANNEX H OVERVIEW OF THE LEGAL AND FOR VOLUNTARY ORGANISATIONS AND FOUNDATIONS FRAMEWORK FISCAL II. 1 The following is an overview of the legal and fiscal basis on which foundations and voluntary organisations operate in each of the Member States. Following the definition given is taken of in paragraph 2. 3 no account "economic" associations which exist in some Member States and which can engage in commercial or other profit making activities, nor of the several varieties of private foundation. Legal basis to under establish (normally guaranteed in all Member States of n. 2 The freedom to establish or join, or indeed to leave, a voluntary organisation is nowadays a the right constitution) the Community. The right of association is, of course, also guaranteed under the European Convention on Human Rights. Generally speaking it is possible for nationals of any Member State a voluntary organisation or foundation anywhere in the Community, although some Member States there should be a minimum stipulate number of their own citizens or residents involved10. Some Member States have however, foreign special statutes precisely nationals to establish voluntary organisations which, though subject to the same national registration or publication requirements as any then run other voluntary organisation, are according to such internal regulations as may be laid down the founders originate. in the country from which to enable that II. 3 Generally speaking, where jurisdictions make the distinction between private and public Article 16 of the ECHR permits derogations to the right of association in the context of a political activity of non-national citizens. This is in fact in contravention of Articles 6 and 52 of the Treaty on European Union. 26 both either States voluntary organisations law and foundations are entities of private law. Not all Member voluntary define organisations or foundations explicitly, and not all make a fundamental legal distinction between voluntary organisations on the one hand and foundations on the other. For present purposes, however, voluntary organisations can be taken as groups of private individuals who have come together for some non-profit end in the public interest. In contrast, foundations are entities which have charge of assets set aside for purposes in the public interest in the form of an endowment or of a regular dedicated source of income. IL 4 That part of the sector of interest here is, therefore, neither wholly private nor wholly public in nature. It follows that fundamental to the law must be some means of demarcating its proper sphere of operation from the territory occupied by purely private activity, by government, or by commercial companies and other forms of profit making enterprise. Within the Community this has been achieved either formally - by setting but the basic features of internal organisation and governance to which non-profit organisations must conform, or by objects - by laying down what spheres of activity count as in the public interest and by establishing other rules defining how the non profit status of the organisation is to be secured. the first of these 11. 5 Broadly speaking approaches - that of defining non-profits by their formal features is characteristic of the civil code tradition, and the second - that of delineating the sphere of non-profit activity in the public interest ("charity") by the purpose of the activity itself- is the fundamental feature of the common law tradition. a commentators draw 11. 6 Many sharp distinction between these two approaches, and it is certainly true that the legal traditions from which they derive are very different. The practical effect of the difference in approach can, exaggerated. Many jurisdictions contain special legal provisions for voluntary organisations with certain aims regarded as of public interest which, combined however, be (and in particular with different levels of tax relief, means that in practical effect organisations in many Member States are defined in terms of both their formal structure and their objects. It is also true to say that in practical terms the basic provisions of the law on foundations the emphasis given to the preservation of assets, with all that that implies) in code countries are also very similar to those found in common law jurisdictions. The clear link here is probably historical. The common law on charity has enjoyed an unbroken tradition and has never drawn a fundamental distinction between foundations and voluntary organisations - both are charitable trusts. Since foundations are the older form, it appears that the law was simply applied later to voluntary organisations without any major adaptations. In contrast many code countries have not enjoyed the same continuity, the result being that the law has diverged. organisations may be 11. 7 Voluntary incorporated or unincorporated and both forms are found in all jurisdictions. It seems likely that the majority of voluntary organisations in the Community are in fact unincorporated and thus without legal personality. There are some disadvantages to being unincorporated: it is not always easy for the voluntary organisations to acquire any assets it may need, and its individual board members or trustees, in whose names the business of the voluntary organisation is carried on, may be uncomfortably exposed to liabilities. In most places the law has, however, developed ways of mitigating the difficulties - by the use of the law of agency, for example, or by a common fund to which members contribute and to which in most creditors have first recourse, and jurisdictions voluntary the unincorporated organisation does not appear to be prevented from taking part in legal process as a voluntary organisation (that is to say under its own name rather than that of a responsible board member), 11. 8 In code countries the incorporation of voluntary organisations is generally achieved by the publication of statutes conforming to the law in the relevant official journal, together with a list of (board) members. Incorporation (or, more its accurately, registration which the is from carefully distinguished condition) may be refused on the grounds that the statutes of the body are non-conforming. A refusal to register a voluntary organisation in these circumstances is an entirely administrative matter and implies no political judgement on the status of the organisation. It needs, therefore, to the be circumstances in which organisations may be refused special status for tax purposes (see below, paragraph 5. 14 and 5. 15). The statutes (and often a full or partial list of members) are typically required to be registered with either the local court or with the responsible ministry, regional or local authority. All foundations have legal personality, which again is normally achieved by the publication of statutes etc. Unlike however, organisations, to some foundations are generally subject degree of a priori control to ensure that the statutes are in strict conformity to the law, that intended to exist "in (since they are often perpetuity") management succession has been properly allowed for, and that their intended assets are adequate to achieve their ends. voluntary 11. 9 In common law jurisdictions no special form' of incorporation is available for. either voluntary organisations or foundations. Instead bodies seeking the convenience or protection of incorporation have a number of different forms to choose from depending on the area of activity in which they are engaged. By far the most common is the so-called "company limited by guarantee'" - in effect a non-profit-distributing company - but there are other forms available such as the "housing association" or the so- called society". There are also (comparatively rare) examples of charitable voluntary organisations and foundations which have been incorporated by Royal Charter or by special Act of Parliament. "friendly 11. 10 Incorporation is available everywhere by one means or another, but the resulting degree of legal capacity is not always as great. In a number of Member States legal capacity is effectively unlimited (in any event as long as the body concerned acts in accordance with its statutes). In others, however, neither voluntary organisations nor foundations can receive gifts 27 and legacies or own real property without the express permission of relevant public authority. the H. 11 There are differences too when it comes to the difficult question of the degree to which voluntary organisations and foundations (but in particular voluntary organisations) are allowed to engage in economic activity without the loss of tax privileges. Some degree of economic activity is allowed in all Member States, the rule generally applied being that such activity must not be voluntary organisations1 principal activity in the sense that it must be carried out not for its own sake kit for acme non-profit ain\ and must ke ancillary to the objects of the voluntary organisations in the sense that it must be directly tied to the voluntary organisation's objects and the not organisation's general financial position. In line with the non-distribution constraint under which all voluntary organisations operate, any surplus from economic activity has, of course» to be put towards the voluntary organisation's aims. In some jurisdictions, it is for a voluntary organisation or possible foundation to supplement its income by creating or acquiring an entirely separate commercial company which then remits its income to the parent body. the achievement of designed improve simply to from property taxes on real property owned or occupied by the voluntary organisation or foundation, In addition there may, rarely, be partial relief from employment taxes. in different voluntary spheres. In organisations 11. 13 If the principle of a degree of tax exemption for some voluntary organisations and foundations is universal, the approach adopted by Member States differs significantly, as does the extent to which relief is given to bodies working some and jurisdictions, foundations are in principle subject to the same tax regime as companies and receive no relief from direct taxation unless they are recognised (either, as having certain objects, by law, or individually by the relevant authorities) for tax purposes. In others (and in particular those where voluntary organisations and foundations are defined as being in the public interest) tax relief is accorded as of right but may be lost if is regarded as the voluntary organisations carrying on commercial or lucrative activity law or recognised by outside jurisprudence. the such privileged tax status of the organisation may be removed altogether. Alternatively relief may be withdrawn only in respect of those activities which are regarded as profit making in the relevant sense. circumstances limits In the As far as competition rules are concerned, all competition rules will be adhered to, taking into account the specificities of the sector. Taxation n. 12 All Member States allow some voluntary organisations - broadly speaking, those which are regarded as having purposes in the public interest - some degree of relief from direct taxation either by exempting them from taxes imposed on companies and other forms of profit making enterprise, or by imposing a lower rate than that paid by companies, or by establishing a minimum income threshold below which tax is not incurred. These forms of relief are not necessarily mutually exclusive. Where voluntary organisations are exempt from company tax they may have to pay income tax instead. Some Member States allow partial or full exemption 28 the area of public foundations working 11. 14 Besides in approach these differences there are significant variations in the way in which Member States delineate the sphere of activity that they regard as being in the public interest. There are thus considerable differences in the extent of tax relief for which voluntary organisations and in different fields are eligible. Some jurisdictions define the tax relief very generally and purposes of broadly, including, for example, any activity of public utility or benefit. Such jurisdictions typically give full relief to all bodies meeting this broad criterion. Other Member States take a much more restrictive approach. In one, for example, reliefs are presently available only for a small number of individual organisations named by the law. Yet other Member States take both a restrictive approach and one which also interest for discriminates between different sorts of bodies. Thus only very limited relief may be granted to all non-profit bodies, fuller exemption being confined to bodies operating in a restricted number of fields - such, typically, as health, culture or social services - and subject to accountability stringent management requirements. Such special tax status is subject to administrative and political discretion and in some Member States appears to be increasingly rarely accorded. and Tax relief for donors 11. 15 All Member States grant a measure of tax relief to donors to voluntary organisations or foundations, whether they be individuals or companies or other forms of organisation. Reliefs may be granted up to a maximum amount in any one tax year or, alternatively, up to a maximum proportion (expressed as a percentage) of an individual's gross or after-tax income. The arrangements for companies are usually similar, relief generally being granted either up to a maximum amount or up to a tax. proportion of profits before or after Minimum amounts or proportions may be imposed and, in the case of companies, the permitted base for calculating the maximum gift may be turnover rather than profits. to to gifts tax relief to donors 11. 16 Some Member States grant some degree to any voluntary of organisation or foundation active in the public interest as broadly defined. In others, more restrictive criteria are applied, relief to donors those typically being restricted voluntary organisations which are themselves granted special status for tax purposes. Indeed, unless status, voluntary organisations in these Member States do not normally have the capacity to receive gifts at all (see paragraph 5. 10 above). In jurisdictions where voluntary organisations or foundations legal capacity, voluntary organisations given a general dispensation to receive gifts may nevertheless be required to dispose of any gift of real property within a specified period. In some Member they possess normally required limited have the their estate States the voluntary organisation or foundation may be charged tax on the gift received. take a different 11. 17 Member States also attitude when it comes to legacies. In some Member States individuals are free to leave all or part of to a voluntary organisation or foundation of their choice and, while this appears to be a less common practice than in the past, many still do so. Alternatively they may create a new body - usually a foundation - with some cherished aim. Such testamentary gifts are generally tax free both to the donor's estate and to the recipient body. In those countries where voluntary organisations and foundations have limited legal capacity, however, it may be impossible to leave anything but a notional part of an estate to a voluntary organisation or foundation unless the recipient body has received the required dispensation from the authorities. Willing an estate may be further complicated by strict laws governing inheritance or by requiring that considerable assets be set aside before a foundation can be created. Indirect tax 11. 18 Article 13(A)(1) of the Sixth Directive 77/388/EEC of 17 May 197711 requires Member States to exempt from VAT "certain activities in the public interest". These include hospital and medical care, goods and services closely linked to welfare and social security work or the protection of children and young persons, education and training for young persons and so and on. Many voluntary in the foundations are, of course provision of just such services and their transactions are exempt from VAT, provided organisations involved Known as the "Sixth Directive", it governs the harmonisation of the laws of the Member States relating to turnover taxes and introduces a common system of VAT and a uniform basis for its assessment. These exemptions are subject to certain conditions (see Anicle 13. A. lb),g). h),i)) and are not given automatically 29 that they obtain prior authorization from the Member State in which they are established, i. e. they are exempt from the need to file VAT returns, to charge VAT to their clients or to pay output tax. In addition, under Article 13(A)(2) Member States can make the granting of any of the listed exemptions to any body (other than those governed by public law) subject to a number of conditions designed in effect to ensure that exempt bodies are bona fide non profit organisations whose activities will not affect taxed the competitive position of commercial enterprises. On the face of it the ability to impose conditions on the granting of exemptions would seem to leave a good deal of scope treatment of voluntary organisations but in practice, with a few minor exceptions all Member States appear to have implemented the exemptions outlined in Article 13. 11. 19 In addition to the exemptions mentioned above, a number of Member States "zero rate" certain supplies. This can benefit non-profits by allowing them to reclaim input tax. for variations the in 30 ANNEXE m THE LEGAL AND FISCAL FRAMEWORK FOR VOLUNTARY ORGANISATIONS (ASSOCIATIONS) FOUNDATIONS AND BELGIUM ASSOCIATIONS LEGAL POSITION Right of association guaranteed by law? Yes - Article 27 of the Constitution as revised in 1994. Basic definition An association, in the strict sense of the term, is a contract via which several people agree to pool certain material resources with an aim other than the profits, production (associations a degree of involve permanence in the shared existence). sharing of or Minimum number of founders Three (for ASBLs). Two for AIs formed under Belgian or foreign law. Main types of association De facto associations (not incorporated in one of the forms laid down by law, and not having a legal personality). ASBL (Associations Sans But Lucratif) defined by the Law of 27 June 1921 as organizations which do not engage in industrial or commercial operations, and which do not seek to procure material gain for their members. International Associations under Belgian law (IA) (Associations Internationale de droit beige) limited to associations with philanthropic, scientific, artistic, or educational objectives (Law of 25 October 1919). religious, 31 International Associations under foreign law (Associations Internationale de droit same aims as the étranger) with associations under the IA Belgian law (cf. Article 8 of the Law of 25 October 1919, which entitles an association with its head office abroad to open an office in Belgium). Membership nationality requirements ASBL: Three-fifths must be of Belgian nationality or resident (established and registered) in Belgium; otherwise the association will not be able to claim legal status vis-à-vis third parties, who will themselves, however, be entitled to hold this against them; at law): one IA(Belgian administrator of Belgian nationality, no requirements for ordinary members. IA(foreign law): none least Legal personality, and how acquired. of the ASBL - by publication of statutes, plus the full names, trades/professions and addresses association's administrators in the annexes to the "Moniteur". IA (Belgian law) - by Royal Decree (published by extract in the "Moniteur"); legal personality effective vis-à-vis third parties ten days after publication of the statutes names, the trades/professions and addresses of the association's the annexes to the "Moniteur". administrators plus full in information as for IA (foreign law) - legal personality effective vis-à-vis third parties ten days after publication of the statutes, plus the same IAs under Belgian law (including the address of the in Belgium). Such publication office requires prior "recognition" by the Government. Legal capacity Immovable property All types of association are restricted to the permanent ownership of only such is university as the fulfilment of strictly immovable property required their for purposes (extension of legal capacity for the "Notre-Dame de la Paix" university departments at Namur and the "Saint Louis" at Brussels). Donations ASBL: acceptance of donations of movable property (including cash) above FBR400 000 immovable property must be authorized by Royal Decree. department and of IA: acceptance (irrespective of authorized by Royal Decree. donation its value) must be any of No authorization required for: goods transferred to one ASBL by another ASBL to promote activities similar to those of the donor, donations granted by public bodies to an ASBL, proceeds of collections, etc. Statutes ASBL: There must be a written document under (authenticated private seal) which must contain certain the items of objective for which the association was formed (Article 2 of the law of 1919). information, including or IA (Belgian law): idem (the statutes listed in Article 2 of the law of 1919 must be mentioned). IA (foreign law) - As for IA (Belgian law), plus the address of the office in Belgium; otherwise can exercise in Belgium all the rights accorded by its national statute. 9. Registration requirements None as such, but see publication requirements above (para 6). A list of international associations is kept by the Ministry of Justice. Commercial activity Unclear. In theory not allowed, but in practice acceptable so long as not the association's principal activity (i. e. not 10. 32 carried out for its own sake but for a non-profit end) and ancillary to its main object. (Ancillary means directly tied to the association's objects and not simply designed to improve the association's financial position, and any profits are put towards the association's aims. ) 11. Disposal of assets on liquidation To ends of no benefit to the individuals involved, in general as laid down in the statutes. TAX POSITION INDIRECT TAX 12. Article 13 of 6th VAT Directive exemptions of relevance All to Associations coming under Article 13 have been implemented. Organisations must meet the criteria set out in Article 13(A)(2)(a). 13. Other specific exemptions No. There is a lower rate (6%) for vehicles for the transport of disabled, sick, injured or blind persons, daily or general weekly de information récupération". publications and of "produits 14. Zero Rates DIRECT TAX 15. General position A. Income tax Not generally subject to company tax unless considered to be carrying on commercial/gainful activity outside the limits recognised by law (Article 182 of the Code des impôts sur les revenus: CIR) or case law. Associations are liable for the more favourable taxes on legal persons 220-226), (CIR Articles including in particular: income tax and capital gains tax, and to property tax unless the building is used for religious, educational, medical, social work or charitable purposes. 16. B. other taxes A "compensatory inheritance tax" of 0. 17% is payable on the association's total assets held in Belgium. Tax on gifts to Belgian associations is reduced to 8% (1. 1% if the donor is another ASBL or IA , a recognised mutual society, an establishment of public utility or a professional union). Inheritance tax on legacies made in their favour is reduced to 8. 8%. for tax particular impôts sur the "Code des Recognition of associations purposes Under Article 104, paragraphs 1 and 3-5 of les revenus", gifts to certain institutions and those organizations - in established in the form of associations or foundations to which approval has been granted by law or by Ministerial or Royal Decree tax-deductible. - are Approval by Royal Decree is granted for three years a maximum period of approved Officially (renewable). institutions are generally exempt from capital gains and property taxes. In certain cases, express authorization is of the required tax-deductible donations by approved institutions established in the form of (cf. 7 associations above). foundations acceptance for or 17. Criteria for recognition To qualify for recognition, an institution must have legal personality, be of a non-profit-making nature, both in itself and as regards its members, be able to provide documentary evidence of its accounts, be active in the country or one of the cultural communities, keep its list of donors open to inspection by the tax authorities and not spend more than 20% of its budget on administration. (libraries, fields: cultural promotion private radio and television stations, museums, sports groups, tourism and leisure associations), scientific research, development aid, or social work. 19. Gifts by individuals Tax-deductibility provisions apply solely to gifts to recognized bodies (including associations and foundations). Up to 10% of total taxable revenue up to a limit of Bfr 10 million (index-linked) is deductible. Gifts of major works of art to museums at are government valuation. deductible 20. Gifts by companies Tax-deductibility provisions apply solely to gifts to recognized bodies (including associations and foundations). Up to 5% of net operating profit up to a limit of index-linked) is Bfr 20 million (non deductible. ACCOUNTS AND AUDITING See paragraph 17 above for recognised associations. Other forms of associations do not have to publish accounts. In general, internal supervision external by members, verification by tax authorities. 21. accept To obtain authorization by Royal Decree a gift, ASBLs must to nevertheless have been their annual accounts with the civil court, public are open where inspection, since their establishment or at least for the past ten years lodging they to FOUNDATIONS LEGAL POSITION 22. Constitution 18. Qualifying purposes for recognition Apart from institutions recognised by law, the activities of approved bodies must fall within one of the following Requires agreement of public authorities to establishment and to statutes and Royal Decree. The statutes together the names and addresses of with 33 27. Disposal of assets on liquidation By court-appointed receivers for the purpose laid down in the statutes of the foundation or, failing that, to ends as close as possible to those for which the body was founded. TAX POSITION 28. As for recognised associations. ACCOUNTS AND AUDITING 29. The Government has a duty to ensure that the foundation's funds go towards the purposes for which it was created. All foundations must produce annual accounts and budgets and present them to the Government within two months of producing them. Both are published in the annexes to the "Moniteur". At the request of the government ministry, administrators found guilty of fraud or mismanagement can be removed by the court. In such cases, new administrators are appointed according to the statutes or, at the request of the court, by the Government. administrators must be published in the annexes to the "Moniteur", and any changes in the statute must also be approved and published. 23. Basic definition following non-profit Assets irrevocably given over to one of ends: the philanthropic, scientific, artistic or educational. No members (Articles 27 etseq. of the Law of 27 June 1921). religious, 24. Nationality requirements? Not for administrators, but siège must be in Belgium. 25. Legal personality and how acquired Yes, by Royal Decree approving the in the statutes (published by extract "Moniteur") and publication of the statutes in the annexes to the "Moniteur" (may be done retroactively to the act of constitution. 26. Legal capacity Cf. ASBL (7 above) 34 DENMARK ASSOCIATIONS LEGAL POSITION 1. Right to association guaranteed by law? Yes - under constitution 2. Basic definition None: NB Associations necessarily "non-profit" organisations. are not 3. Minimum number of founders Not stipulated 4. Types of associations Single 5. Membership nationality requirements - anybody None individual) Denmark can form an association. Legal personality and how acquired residing permanently (legal person or in 6. Yes - by will of the members. Legal personality is acquired as soon as members have signed adequate statutes management and committee. see below. ) a requirements nominated (For 7. Legal capacity Unlimited 8. Statutes in prescribed form? No. But statutes of unregistered associations must at least contain rules governing relations between members and the methods for nominating their management bodies. The statutes of registered contain bodies must provisions required by law - e. g. the name, head office, the number of members charged with managing the association and how they are nominated, membership conditions and relations between members, the accounting period and method of presentation of accounts etc. Changes have to be notified to the register. 9. Registration requirements and unions The following categories of association must be declared in the "Register of Foundations" within three months of their creation: employers associations; trade professional associations which have as their principal aim the protection of the economic interests of the professional group to which their members belong; all private law associations with assets of more than 250 000 Kroner (approx 31000 ECUs) except to carry out legal social aid obligations on behalf of communes or departments; bodies holding property connected with the national church; legally recognised religious congregations; or educational establishments authorised by the state, provided such bodies have no other powers or objectives. those:- contracted 10. Commercial activity like foundations Associations, (see below) can engage in economic activity, but receipts from such activity are the same taxes as those subject imposed on commercial companies. to 11. Disposal of assets on liquidation Freely determined by the association's statutes (but see paragraph 17 below). TAX POSITION INDIRECT TAX 12. Article 13 of 6th VAT Directive exemptions All to associations coming under Article 13 have been implemented. 13. Other specific exemptions relevance of Sales of second-hand goods in shops owned by recognised associations and special events organised by them. 14. Zero rates Newspapers. DIRECT TAX 15. General position 35 look after Employers' associations, trade unions and other professional groupings whose main purpose the is to economic interests of the occupational group to which its members belong (labour market groupings) are taxable the Funds Tax Act. Other under associations which simply look after their members' and professional interests of a market-and economic (trade nature service-oriented associations) are similarly liable to tax under the Funds Tax Act. The principle behind this Act is that foundations and associations must basically be subject to the limited companies. The rate of tax is the same as for corporation tax, i. e. 34%. rules as public same When reporting their taxable income, labour market groupings need to include only earned income, unearned income and profits. Membership subscriptions are thus not to be counted as taxable income. These groupings are entitled to deduct for tax assessment only that expenditure which relates to taxable income. Trade associations are taxed in full on earned income is income, but other taxed only if it exceeds DKr 200 000. Trade associations and labour market groupings are entitled to deduct amounts distributed for charitable or non-profit to purposes. They are also entitled for deduct non-profit or charitable purposes. provisions aside set Trade associations are also entitled to deduct amounts distributed for purposes which accord with their Memorandum of Association, provided that the recipient of any given distribution is liable to pay tax on the relevant amount in Denmark. Other associations, corporations and foundations (stifelser) not covered by the Funds Tax Act, are covered by the Corporation § 1. 1 (6). Tax Act, Associations are liable to pay tax only on Similarly, their income. earned 16. associations are entitled to deduct operating expenditure only if it relates to earned taxable income. Trade associations are also entitled to to meet deduct allocations purposes which accord with their Memorandum of Association, insofar as those purposes may be considered to be charitable or non-profit. intended of for tax tax the lists of bodies eligible Associations may set aside provisions to fulfil charitable or non-profit purposes at a later date. Recognition of associations purposes By law or, for the purpose of receiving tax-deductible gifts or annuities, at the authorities. discretion Separate to receive gifts or annuities are published tax authorities. the each year by Application may be made for inclusion in either or both of these lists. Exemption from tax on legacies may be granted at the discretion * of the tax authorities. Recognition for these latter purposes is, in practice, generally given to bodies listed as eligible to receive tax deductible gifts. 17. Qualifying criteria for recognition Bodies qualified to receive tax benefits are structured as non-profit associations or foundations. Precluded bodies include those performing solely political tasks. It is a condition that gifts (and legacies) be used solely for charitable or non-profit purposes to the benefit of a fairly large group of people, and that any surplus at liquidation be distributed in accordance with those same principles. In addition, the body must be resident in Denmark (i. e. the head office must be located in Denmark and most of the management functions must be carried out there). It appears that the rules qualifying the receipt of tax deductible annuities are stricter. 19. Gifts by individuals 36 Single tax deductible gifts can only be made to bodies on the list published by the tax authorities (see above, paragraph 16). Each gift must be at least 500 Dkr. up to a maximum of 5 000 Dkr. a year. The first 500 Dkr. are not deductible. In addition, deductible gifts can be made through (contractual annuities) up to a limit of 15% of earned income plus capital gains before tax, or up to a maximum of 15 000 Dkr. , whichever is the greater. Covenants must normally be for a minimum of ten years. covenants 20. Gifts by companies As for individuals, except that single gifts are deductible from taxable revenue and covenants are allowed up to a maximum of 15% of taxable profit (or 15,000 Dkr. ). ACCOUNTABILITY AND SUPERVISION 21. than for unregistered None laid down associations. Registered associations must produce accounts conforming to good practice and have them examined and signed by one or more auditors. These accounts must be sent to the Registrar of Foundations within six months of the end of the accounting period. If, at the time it is drawing up its accounts, the association has assets of more (approximately) ECU 380,000, then at least one of the auditors must be professionally qualified. In this latter case, the audit must be a full one and the auditor must be given every facility by the association. Failure or to management, accounting requirements is punishable by a fine. The Minister of Justice (who the Register) can require an association to include in its statutes any provision deemed necessary, and can ask for any is responsible for registration conform to information thought necessary to verify that the law has been complied with. FOUNDATIONS LEGAL POSITION 22. Freedom to establish? Yes, but the amount of capital given over should normally be at least 200 000 Dkr. (approx ECU 25,000). Foundations with a smaller amount of initial capital can be created with the agreement of the long as the Ministry of Justice, so the ends amount foreseen. 23. Basic definition is adequate for None in statute. Essentially, goods or capital given over to some purpose forming an entity with its own legal personality managed according to its own statutes by an independent board. No members. A Fund is a corporate fund if it passes rights, over goods or disburses services and similar things for which it normally receives payment, or if it exercises a profession with real estate selling or real estate demise, or if it can qualify as a holding fund. incorporeal 24. Nationality requirements? established they must be Foundations can be created by foreigners but in Denmark. In addition, at least half of the members of the managing board and all the foundation's administrators must be in Denmark. The authority resident foundations may, responsible however, grant an exemption from the residence requirement. In any event, the requirement is waived if this provision conflicts with international obligations. for 25. Legal personality and how acquired Newly-established foundations must report to the Ministry of Justice (Civil Law Directorate) and the tax authorities (Inland Revenue) in the foundation's home district within three months of 37 acquire being set up. This is simply a formal requirement and has no legal effect on the foundation's legal status. Corporate legal personality by funds registration in the register of Corporate Funds at the Danish Commerce and the Companies Agency, Minister of Industry, Trade and Shipping is responsible. for which 26. Legal capacity Unlimited 27. Disposal of assets on liquidation no are their their assets - can by Foundations can be merged or liquidated longer if commensurate with objects. Merger or liquidation - by distribution of take place after the capital application foundation's the administrators and with the agreement of the Ministry of Justice, or can be the Minister. Bodies imposed by authorised to receive gifts must agree to distribute any surplus on liquidation to a similar institution. Corporate funds can be merged or liquidated if their assets are no longer commensurate with their objects or if longer being their purposes are no served. Merger liquidation - by or distribution of the capital - can only take place after application by the board of the corporate the fund agreement of the Administration of the Corporate Funds, which normally is the Danish Commerce and Companies Agency, with consent from the Ministry of Justice. and with TAX POSITION Foundations covered by the Funds Act or the Commercial Funds Act are taxable in accordance with the Funds Taxation Act. The principle behind this latter Act is that funds and associations must basically be subject to the same rule as public limited companies. The 28. 38 rate of tax is the same as for corporation tax, i. e. 34%. Earned income must be included in full when taxable income is reported. The first Dkr 25 000 of other income is tax-free. to deduct Foundations are entitled amounts distributed for charitable or non-profit purposes. They are also entitled to deduct amounts distributed for purposes which accord with their Memorandum of Association, provided that any given distribution is liable to pay tax on the relevant amount in Denmark. They are further entitled to deduct provisions set charitable aside purposes. for non-profit recipient the of or ACCOUNTABILITY AND SUPERVISION can responsible in addition: For the most part as for registered associations (see paragraph 21 above). the administrative But authority remove members of the board who commit acts which render them unworthy of their position, who do not fulfil the nationality or residence requirements, who fail to act in conformity with the statutes, or who are demonstrably incapable of their role; the administrative fulfilling authority can also appoint members of the board (even in non-conformity with the statutes); bankrupt members of the board must resign; founders and their relatives cannot form the majority on the board without the administrative the permission of authority. Nor, the case of a in foundation created by a company, can anybody who owns more than half the voting capital form, conjointly with the founder and his or her relatives, the majority on the permission administrative authority; the board without of the for their services board members cannot receive larger fees than are considered normal for the type of work involved. board members cannot take part in debates in which they have an interest; all foundations must basically have their annual accounts audited, and if their own capital in the preceding year was over 3 million Dkr, the auditor must be a chartered accountant. The auditor must normally be resident in Denmark and must be absolutely independent of the foundation, its board members and of any of its employees concerned with accounting or the administration of its assets. The audit must be detailed and critical, and the auditor must abide by any requirements the relevant authority. He or she must be given every facility by the foundation; imposed by members of the board are responsible for any damage to the foundation due to their management, as if relevant are the foundation's auditors and the companies, if any, to which they belong; foundations can set aside reasonable sums to their reserves, but aside from this their funds must be spent on their objects. The amounts allocated for reserves or spending can be varied responsible. authority by the 39 GERMANY ASSOCIA TIONS (VEREINE) LEGAL FRAMEWORK By entry in the register of associations in the court local to the head office (Article 21 BGB). Legal capacity. Unlimited 7. Right of association guaranteed by law? 8. Statutes Yes: Constitution, Article 9, paragraph 1: German nationals have the general right of association. The legal position of the association is governed by Article 21 et seq. of the Civil Code (BGB) and by the relevant provisions of the Law on Association (VereinsG). Basic definition No legal definition. In legal practice and theory an association is defined as a permanent and structured group of persons (natural or legal) who form an entity on a voluntary basis with a view to attaining a common object. The concept of the communality of the members must be expressed at least by a common denomination and in a body which represents them. Minimum number of founders. Two founder-members. However, there must be at least seven when the statutes are registered with a view to obtaining legal personality. Types of associations. aim make The Civil Code governs non-profit associations (Idealvereine, Article 21 associations commercial BGB) and which profits to (wirtschaftliche Vereine, Article 22 BGB). However, the latter are of only require marginal authorization by the public authority concerned. The result, de facto, is that the concept of an association is more or less restricted in Germany to non-profit organizations, irrespective of whether they have legal status. importance, and Membership nationality requirements No restrictions. Legal personality and how acquired. 40 For registered associations (BGB 57 and 58). 9. Registration requirements. For associations wishing to acquire full legal personality. 10. Commercial activities. A non-profit association may engage in commercial activities if they are purely ancillary, do not constitute the main object of the association and play a very secondary role in relation to its main non-profit activity. If these commercial activities are not completely ancillary, they cannot constitute the association's main or statutory activity. In principle, ancillary activities are allowed only if the their purpose performance of activities to which tax concessions are attached (not only fund raising) and if this purpose can be this activity through attained only (Articles 65 to 68 of the tax code). The income, profits and assets arising from activities of an other association which is recognized as a public utility are liable to ordinary tax. commercial to help in is 11. Disposal of assets on liquidation that Assets pass to the non-profit association named in the statutes. The statutes may the Annual General lay down Meeting should nominate the non-profit association authorized to receive the assets, but in this case the authorization of the tax authorities is required. TAX POSITION INDIRECT TAX 12. Article 13 of the Sixth VAT Directive the All applicable exemptions associations under Article 13 apply. to 13. Other specific exemptions None 14. Zero rates No DIRECT TAX 15. General position 16. are are exempt granted concessions associations are liable for corporation tax. If their income does not exceed DM 7 500 from they corporation tax (concession). Associations which are recognized or which enjoy tax concessions. to Tax associations whose statutes and effective management are inspired exclusively by altruism and the general good and which are directly engaged in a philanthropic or religious activity (Articles 51 to 68 of the tax code). Tax concessions are not ^confined to associations, but are granted on the same conditions to any legal persons within the meaning of Article 1 of the law on corporation tax. 17. Criteria for recognition the and It must be clearly apparent from the statutes association's administration that in its actions it is pursuing an objective for the public good. The statutes must state very precisely: the object; the way in which the object is attained; the non-profit activity aimed solely and directly at this object; that if the association were to be wound up or deprived of its status as a public utility, its assets would remain in the public utility field; that the effective management must be in accordance with the statutes. 18. Recognized bodies 41 are Under Articles 52-54 of the Tax Code, any association whose statutes and actual management exclusively inspired by altruism and the general good and which is directly engaged in a philanthropic or religious activity is recognized as being of public utility for tax purposes. and financial this object In tax law, a distinction is made, with regard to the financial activities of an association of public utility, between activities strictly connected with the declared object in order to enjoy tax activities concessions unconnected with and therefore taxable. Activities strictly connected with the declared object are those for which the the receipts are wholly allocated has object which tax declared concessions. There are no limits on these activities, which are deemed to be without profit aim, and which enjoy tax concessions. to association enjoy to the in order to On the other hand, activities not directly related the declared object are taxable. These are mainly commercial activities engaged in by the association through enterprises engaged to raise funds to be used to attain the object for which the association has applied for tax concessions. These activities are taxed in the same way as any other commercial activity, but do not entail the loss of non-profit status provided that they do not take over from the main activity of the association (first paragraph of Article 55 of the Tax Code). 19. Gifts by individuals Gifts made by a natural or legal person liable to tax in Germany with the aim of promoting charitable, ecclesiastical or religious activities for activities which are recognized as being for the general good to an association recognized by the tax authorities as being of public utility can be deducted from the donor's taxable to certain ceilings; income up the ceilings vary, depending on the purpose of the gift, by between 5% and 10% of the donor's total taxable income. 20. Gifts by companies Companies may deduct gifts up to 0. 2% of the sum of total turnover and salaries and wages paid. forwarded either the Ministry of to Internal Affairs, which is empowered to dissolve an association covering more than one "Land\ or - if the association does not cover more than one Land - to the senior government authority in the Land concerned. FOUNDA TIONS (STIFTUNGEN) 20(a). Gifts to non-resident associations 22. Constitution Such gifts are not deductible. ACCOUNTS AND AUDITING 21. Accounts account. loss obligation The association must produce an annual profit This and vis-à-vis accountancy members is laid down in Articles 27 (3) and Article 666 of the Civil Code, and the vis-à-vis the tax authorities (for purposes of establishing the non-profit nature of the social object), in Article 63 (3) of the Tax Code. law is engaged If the association in a commercial activity, it is required by commercial to keep accounting records in the same way as businesses. In all cases, two sets of accounts must be presented, one for taxable activities and the other for non-taxable activities. Auditing The administrators are responsible to the Annual General Mmeeting for keeping proper accounts. The statutes may provide for a supervisory body and also for its powers. If a supervisory body (Aufsichtsrat) is set up, the provisions applicable to GmbH and AG forms of companies are not applicable. The responsibilities of such a body are determined by the statutes. inspectorate. The task of auditing associations has the passed It tax to regularly the process of comprises recognizing their non-profit status. As soon as a non-fiscal the file is is detected, infringement checking and By a Memorandum of Association subscribed to by any person, physical or legal, inter vivos (in which case it can be revoked up to the date of approval), or through a will. The memorandum must state the object of the foundation, the this resources available for pursuing object and the governing body or bodies. The resources provided must be adequate for pursuing the object which itself. An the application for authorization must be made the foundation has its head office (under the law of the Lander). An appeal against refusal of authorization may be made only on the basis that the administration had not applied its own criteria. foundation has the Land in which set to 23. Definition to which a Assets attaches. legal personality 24. Nationality requirements Any person may be a founder. Acquisition of legal personality 25. Through approval by the competent authority. Legal capacity 26. The maximum capacity required to attain the object of the foundation. It may do all that is necessary, or even simpiy useful, in pursuing its objective. 27. Disposal of assets on liquidation the If it has become impossible for foundation to accomplish its object, or if the foundation is jeopardizing the public good, the administrative authority may 42 amend its object while complying with the intentions of the founder as far as possible. The executive committee must be heard. The authority may also abolish and dissolve the foundation (Article 87 BGB). In this event, the assets go to the in the statutes. persons designated Otherwise, they go to the state. The liquidation for associations. procedure as is TAX POSITION 28. See associations ACCOUNTS AND AUDITING 29. Accounts See associations 30. Auditing The managing body for the foundation is subject to the competent administrative authority, which is concerned only with conformity with the rules of public order. It operates in the exclusive interest of the foundation. Auditing of the accounts is governed by the statutes. 43 GREECE ASSOCIATIONS LEGAL FRAMEWORK final and the association is entered in the register of that court. 7. Legal capacity legal capacity except Full inherent to physical persons. for acts 1. Right of association guaranteed by law? 8. Statutes Yes. Article 12 of the 1975 Constitution protects non-profit associations and unions provided that they conform to the laws of the State, which cannot make the exercising of this right subject to prior authorization. Basic definition Article 61 of the Civil Code. A union of persons with legal personality, formed with a view to pursuing a given object, as well as a collection of goods assigned to serving a given object. 2. 3. Minimum number of founders Twenty 4. Types of associations Common law associations Special associations legal Unions of persons personality and to which the provisions relating to companies apply if no other provision is made). (without They must be drawn up in writing and are subject to rules on publicity. 9. Registration requirements Registration constitutes acquiring legal personality. 10. Commercial activities Making a profit occasionally in order to obtain resources for the association is authorized. 11. Disposal of assets on liquidation Article 77 of the Civil Code. The assets of a legal person which has been wound up pass to the State, unless provided otherwise by law, the charter or the statutes, or by the decision of the competent authority. The State is bound to pursue the object formerly pursued by the legal person, using these assets. The assets of the association wound up may not under any circumstances be shared among the members. 5. Membership nationality requirements TAXATION The right of association is extended to non-nationals under Article 11 of the European Convention for the Protection of Human Rights and Fundamental Freedom 6. Legal personality and how acquired in office the area of Following the application to the Court of the First Instance (the administration's Memorandum of Association and the statutes must be appended), the legal authorities verify that the provisions of the law are complied with (check on legality). The association acquires legal personality once the Court's decision is INDIRECT TAXATION 12. Article 13 of the Sixth VAT Directive Application of the exemption laid down in Article 13. 13. Other exemptions Specific (4%) pursuing an object for the public good. for associations rate 14. Zero rates No DIRECT TAXES 15. General position Income tax. The basis of taxation for a legal pursuing persons not 44 16. profit-making object is constituted by the net taxable income arising from the leasing of buildings or land and securities. The tax is not payable on other income or receipts necessary for pursuing the association's object, such as members' regular subscriptions. In the associations, only foreign case of receipts necessary the for pursuing association's object are not taxed. for tax. Recognition of association purposes Associations with an object which is for the public good enjoy exemption from tax on income arising from the leasing of land and real estate and from securities. There is also exemption from paying inheritance tax and taxes on gifts made to legal persons which do not have a profit-making legally object, constituted in Greece and pursue an religious, object a philanthropic, pedagogic or artistic nature or for the public good. The exemption covers all non-national legal persons with the same characteristics regarding assets which they might inherit in Greece, subject to the principle of reciprocity. national, are of 17. Criteria for recognition A very broad concept of the public good. Covers any object which is not of strictly private interest and concerns the interests of large groups of persons (philanthropic, religious, social, artistic, educational). 18. Qualifying objects for recognition 20. Gifts by companies Tax-deductible provided that they have been deposited in a loan and deposit fund. 20(a). Gifts to non-resident associations Not tax-deductible. ACCOUNTS AND AUDITING 21. Accounts The auditing authority is generally the local authority. FOUNDATIONS 22. Constitution Concession system. Act of foundation (act intra vivos before a notary or a sworn statement - unilateral act by the founder) and presidential decree which approves the will of the founder and is the competent Minister, issued by the the objects of depending on foundation. 23. Definition Set of goods intended to implement a project for the public good (in principle) and with a non-profit object. 24. Nationality requirements 25. Acquisition of legal personality Concession system. Acquisition occurs on the day of publication in the Greek Official Journal of the decree granting authorization. 26. Legal capacity Full. Acquiring legal personality does not automatically imply acquisition of the assets assigned. The competent authority for granting exemption is the tax inspectorate in the region of the association's head office. 27. Disposal of assets on liquidation TAXATION. 28. As for associations. 19. Gifts by individuals Tax-deductible from taxable income, but the donor must have Greek nationality. If the amount exceeds DR 100 000 in one year, it must be deposited in a loan and deposit fund. ACCOUNTS AND AUDITING 29. Accounts Audit board. 30. Auditing The operations of the foundation are monitored by the State. 45 SPAIN ASSOCIATIONS LEGAL FRAMEWORK Right of association guaranteed by law? Articles 22 (on associations) and 34 governing associations (on foundations) of the Constitution. - Law 191/1964 of 24 December 1964 and Supplementary Decree of 20 May 1965. - Law 30/1994 of 24 November 1994 on foundations and tax advantages for private persons engaged in activities for the public good. Several Communities. Basic definition of Autonomous laws Group or union of several natural persons with legal capacity which carries out the wish of this group to pursue on a permanent basis a given permissible object laid down by the statutes of the association the strict sense). (definition in Minimum number of founders The law of 1964 specifies a meeting at which "several persons" agree, without anywhere stating the number of persons or required. Nevertheless, the usual practice is to require a minimum of three persons. founder members Types of association 1 - Associations governed by the Law of 24 December 1964 (which does not govern public or private foundations, civil or commercial organizations or corporate bodies). 2 - Associations governed preferentially by special statutes (associations of cannon law, associations established by the state to attain specific objects, trade unions associations, similar associations of civil servants and military personnel, administrative associations of and 46 property owners, political parties, sports associations, students etc. ). Associations with social, educational, cultural or sporting objects, or those seeking more generally to promote the public good, may be recognized as "public utilities" by the Spanish Council of Ministers, on a proposal from the Minister for the Interior, which gives them several advantages, including tax advantages. Membership nationality requirements Non-nationals legally resident in Spain have the right of association and may exercise it in conformity with the laws and regulations, (organic law 7/1985 on the rights and liberties of non-nationals in Spain) Legal personality Article 25 of the Civil Code grants the status of legal person to corporate bodies, associations and foundations for the public good recognized by the law, and specific interests, whether civil, commercial or industrial, to which the law grants their own personality independent of that of its members. to associations with In accordance with the legal practice of the supreme tribunal, legal personality arises from a contract of association. In Article 22 (3) the Constitution states that associations are entered on the register "for publicity appropriate purposes only". Legal capacity Article 38 of the Civil Code grants legal capacity to legal persons, which includes associations which are recognized in law. They may therefore acquire and possess goods, and contract debts or engage in civil or criminal proceedings. Nevertheless, associations which are not recognized as public utilities may not acquire premises which are not strictly necessary for achieving their object, and DIRECT TAXES 15. General position they must obtain authorization certain private donations. for 8. Statutes Article 3. 2 of the Law of 1964 lists the information which must be given in the statutes. 9. Registration requirements Entry in a register is obligatory. The procedures for such registration vary depending on the current provisions in the autonomous region of the head office For associations subject to the Law of 1974, there is a register for each province and a national register. association. the of There are also special registers for certain associations governed by specific systems. 10. Commercial activities Authorized 11. Disposal of assets on liquidation The procedure for disposing of assets in the association being the event of disbanded must be specified the statutes. in TAXATION INDIRECT TAXATION 16. 12. Article 13 of the Sixth VAT Directive: exemptions provided for in Article 13. Law 37/1992 of 28 December 1992 on VAT does not exempt associations directly, in that the different rates do not depend on the legal form of the entity its activities. but on it provides for numerous However, operations common associations which are exempt or are eligible for a deduction. the nature of to 13. Other specific exemptions See 12. 14. Zero rates No 47 have Associations been which recognized as public utilities and which fulfil the conditions laid down in Article 42 of the Law on Foundations and Tax Concessions for Private Participation in Activities for the Public Good have several tax advantages. 1 - They are exempt from corporation tax in respect of the activities which constitute their social or specific object, including additions to assets derived from acquisitions or transfers of cash bonds. They are also exempt in respect of any profit from commercial activity, provided this corresponds to the entity's object or specific purpose. Income from commercial activities or from capital is not exempt, but is also eligible in particular the tax band, which is a fixed rate of 10%. for certain concessions, - 2 - They are exempt from most local taxes. Associations which are recognized or which enjoy tax concessions Associations been which recognized public utilities and which fulfil the conditions laid down in Article 42 of the Law on Foundations and Tax Concessions for Private Participation in Activities for the Public Good, and in particular the following conditions: have they must pursue objects for the public good (social assistance, civic matters, educational, cultural, sporting, health, cooperation, environmental protection, promotion of the "économie sociale" , voluntary social work or research work etc. ); development they must allocate at least 70% of their net income to these objects; they must submit their accounts annually to the competent body in good order; in the event of liquidation, they must assign their assets to achieving objects for the public good; their statutory representatives must be honorary officials. 17. Criteria for recognition as a public utility. These are given in Article 4 of the Law on Associations of 1964, as amended by the Law on Foundations and Tax Concessions for Private Participation in Activities for the Public Good. The main criteria are: the statutory objects must be for the public good; activities must be open to all and not restricted to members; the association must be non-profit, any profits must not be shared out, and no fees must be paid to the committee for carrying out its duties; it must possess resources the human and for necessary material achieving its statutory objects. it must have been in operation to two years prior continuously for submitting its application. 18. Types of associations recognized cf. 16 and 17. 19. Gifts by individuals their from taxable Donors who are natural persons may deduct income donations or gifts to bodies which enjoy tax concessions, under certain conditions and with certain limitations. Normally, this deduction will be 20% of the value of the gift. However, total tax-deductible expenditure must not exceed 30% of taxable income. 20. Gifts by companies In addition, participation by businesses in activities for the public good, and - in particular - the acquisition of works of as a gift and art expenditure and promoting developing certain arts also attract tax concessions. to be offered on 20(a) Gifts to non-resident associations is no There associations foundations cf. 24). on legislation governing (for point this ACCOUNTS AND AUDITING 21. Accounts Article 11 of the decree of 20 May 1965 provides that associations must keep accounts which show all receipts and expenditure. These accounts must be sent to all members of the association, and the Annual General Meeting, with a budget for the following year. then submitted annually to to in they * must be sent the Lastly, in the case of provincial authorities associations an Autonomous Community which has no regulations on this matter, or to the Ministry of Justice in the case of associations which have been recognized public utilities. Auditing of associations the The law of 1964 provided for auditing the government authorities, but this was 1978 implicitly Constitution. repealed the by by Associations public recognized utilities must submit an annual report of their activities during the previous financial year to the Ministry of Justice. as FOUNDATIONS Organizations with a legal personality may under certain circumstances deduct gifts made to bodies which enjoy tax concessions. This deduction may not exceed 10% of taxable income in most cases. foundation may be 22. Constitution A constituted "inter vivos" or "mortis causa". In the first case, there must be a notarized written act, and in the second case, its 48 constitution must be stipulated in the will. Entry in a register of foundations, which falls within the competence of the Ministry of Justice, is compulsory and constitutes official formation of the foundation. 23. Definition defines foundations Article 1 of the Law on Foundations of as 1994 organizations constituted on a non-profit basis which, at the wish of their founders, have their assets assigned permanently to an object for the public good. 24. Nationality requirements Non-nationals may set up a foundation in Spain. In addition, like Spanish foundations, foreign foundations can also engage in activities in Spain which relate to their object and can enjoy the concessions foundations, Spanish granted to provided they are represented on Spanish territory and are entered in the register of foundations. if their Registration may be refused object is not for the public good or if they are not in accordance with their national legislation (Article 5 of the above law). legally constituted foundation, in accordance with the statutes. Notwithstanding, Article 19 of the above law sets limits to the disposal of the goods of the foundation and makes several transactions subject to the prior authorization of government authority. In addition, foundations may not have shares in trading companies in which to be responsible they are themselves for the company's debts. They may, however, hold shares in joint stock companies. liable 27. Disposal of assets on liquidation resulting Goods and assets from liquidation of the foundation must be assigned to private non-profit bodies and foundations pursuing objects for the public good which are specified in the charter or the statutes of the foundation. In the absence of such stipulations, the governing body or government authorities will decide which of these organizations will assume these rights. in the act establishing Nevertheless, by derogation to these the provisions, foundation or its statutes may provide that these goods must be assigned to other public bodies pursuing objects for the public good (Article 31 of the above law). 25. Acquisition of legal personality TAXATION Foundations assume a legal personality once they are entered in the register of the charter. Registration may be refused if this act is not in conformity with the above law. 28. 26. Legal capacity The assets of the foundation may consist of any kind of goods and assets which can be valued in financial terms. The foundation must be the owner of these and an inventory of them must appear in the register. The assets are managed and disposed of the the body which manages by in legally entered Foundations the register which fulfil the conditions laid down in Article 42 of the above law enjoy the same tax concessions as associations (cf. 15-20). To do so, they must be accredited by the Ministry of Finance and must expressly apply for them. ACCOUNTS AND AUDITING 29. Accounts 49 The management of the foundation must draw up an inventory, a balancé sheet and accounts, and a report on the activities of the foundation and its financial management every year. It must also obtain a discharge for the budget of receipts and expenditure for the previous year. All these documents must be sent to the government authorities. In addition, under certain circumstances, an external audit is compulsory. Lastly, within three months the preceding the end of each financial year the management must also draw up and forward to the government authorities the budget for the forthcoming year (Article 23 of the above law). 30. Auditing Supervision by a higher authority is intended to assist the foundation in exercising its right to exist and to ensure that its constitution and operation are legal. This supervision is carried out by a the case of government body foundations which the competence of the government. in fall within This government body is responsible for auditing the accounts. It can request the legal authorities to intervene temporarily in the foundation and can assume the responsibilities of the governing body during the period laid down by the judge. 50 FRANCE ASSOCIATIONS LEGAL FRAMEWORK 1. Right to association guaranteed by law? - (by the preamble the Yes to the Constitution of 1958 containing principles laid down in the Declaration of the Rights of Man and of the Citizen of 1789) and by the Constitutional Council (Decision of 16 July 1971, French Journal Officiel, 18 July 1971). 2. Definition the association convention is An whereby two or more persons have in common, on a permanent basis, their knowledge or activities for a purpose other than sharing profits (Article 1 of the law of 1901). 3. Minimum number of founders Two 4. Types of associations Non-recognized or de facto associations Recognized associations Associations recognized as a public utility this recognition is a discretionary act by the State). definition, legal (no 5. Membership nationality requirements No particular conditions intended An association declared in this way may acquire, possess or administer "only such premises as are for management of the association and meetings of its members, and only such buildings as are strictly necessary for the accompishment of aim" (Article 4 of the law of 1901). It may receive gifts and legacies only if it has as its exclusive purpose the provision of assistance and welfare services or scientific or medical research, or if it is a cultural or family association or an association affiliated federation to a recognised as a public utility. stated its An association which is recognized as a public utility has a somewhat wider capacity, since the term "strictly" is not applied. It may also acquire woodlands and land for forestry, and it can receive gifts and legacies. If it receives as a gift or legacy from a will a building which is not necessary for its operation, it must sell it and keep the proceeds. The charitable works proposed must be authorized by the authorities in each case and in advance. Statutes No prescribed form for the statutes, which constitute the law of the parties. Registration requirements see point 6 of declaration None, procedure. 6. Legal personality and how acquired 10. Commercial activities - not associations Non-recognized applicable Recognized associations - by declaration to the local authorities of the name of the association, its objects, its premises and the name, profession, domicile and nationality of each of the directors, with statutes. This the two copies of declaration must be published in the French Journal Officiel. Not prohibited, either in the law of 1901 or in legislation. Profits can be made. 11 Disposal of assets on liquidation The balance of the assets must not be assigned to the members; in accordance with the statutes and/or the Annual General Meeting, it is generally made over to a non-profit organization which pursues a similar purpose. 7. Legal capacity 51 TAX POSITION INDIRECT TAX 12 Article 13 of the Sixth VAT Directive. All the exemptions applicable under Article 13 seem to be included in the General Tax Code. 13. Other specific exemptions Certain exemptions from the registration taxes. 14. Zero rates None DIRECT TAXES 15. General position When they are exempt from VAT and are non-profit, associations are not liable to corporate taxes, such as corporation tax, apprenticeship tax and trading tax. When they are not liable to the taxes levied on businesses at the ordinary rate ,they are liable to tax on their assets. All associations are liable to local taxes, i. e. accommodation tax (except for unfurnished premises and those open to the public) and property tax payable by all owners of premises (except low-cost accommodation). When they are exempt from VAT they are liable to a payroll tax. If they have more than 10 employees, they are liable to the contribution paid by employers for ongoing vocational training and the employers' contribution to the buiiding effort They are liable to tax on income from their assets. 16. Recognition of associations If an association wishes to engage in certain specific activities, it must obtain official approval, e. g for tourism and leisure activities, certain "authorized" activities in the field of health, social work or medical/social work, activities recognized as being of the nature of recognized as public public services, i. e. engaging in hunting or fishing, organizing officiai sporting competitions etc. Associations utilities Application for recognition is made to the Ministry for the Interior and granted, under certain circumstances, by decree by the Conseil d'État. This recognition imposes certain obligations but gives broader entitlement to receive gifts and acquire and possess premises. 17. Criteria for recognition as a public utility Must be a recognized association, and have operated regularly as such for three years, must pursue an object for the public good, cover more than the local area, have at least 200 members, and must adopt model statutes drawn up by the Conseil d'État. 18. Criteria for recognition Recognition is conferred by the state, which assigns* tasks concerned with public services to associations. These associations receive various types of aid, to administrative which are subject constraints and rigorous monitoring. For instance, the "ordonnance" of 8 August 1985 gives sporting federations the monopoly for organizing competitions. 19. Gifts by individuals Private gifts are tax-deductible at the rate of 1. 25% of taxable income for recognized associations, and 5% for foundations and associations recognized as public utilities. These gifts give eligibility to a reduction in tax equal to 40% of the value of the gift (50% when they or accommodation for people in difficult circumstances). Only gifts which are made to a French association or a foreign association operating in France are tax-deductible. free meals are for 20. Gifts by companies 52 to Gifts from companies are tax-deductible at the rate of 37% or 42% of the taxable profit up to 2%o of turnover for gifts to recognized associations, and 3%o for gifts recognized public utility associations and to foundations. Only gifts which are made to a French association or a foreign association operating in France are tax-deductible. ACCOUNTS AND AUDITING 21. Accounts Only associations recognized as public utilities, associations subsidized by local authorities and associations engaged in commercial activities above certain their budget, thresholds balance or number of employees) have a legal obligation to provide accounts in a standardized form. (concerning FOUNDATIONS LEGAL FRAMEWORK 22. Constitution Public utility foundation. The draft must be submitted to the Minister for the Interior and then to the Conseil d'État, which in granting recognition as a public to utility authorizes the foundation receive its working capital. The statutes must be drawn up in accordance with the model statutes issued by the Conseil d'État, which lay down the composition of the administrative committee. This usually follows the principle of thirds, its members being one nominated by the founders, one third being members ex officio representing the public authorities, and one third the "conseil being nominated by d'administration" management committee. Sheltered foundation: set up within a public utility foundation without creating a new legal entity (rare). Business foundation (Law of 4 July 1990). There is no need for these to be third of - recognized as public utilities. They are established for a given period - generally 5 years renewable - and their action programme the administrative authorities. approved by is 23. Basic definition Irrevocable assignation of goods, rights and resources to work for an object for the public good which is non-profit. 24. Nationality requirements of persons one-third definition, representing By the administrative committee is composed of the eligible government authorities and designated persons. To in activities engage permanently in France or to have the same capacities as a French foundation, a foreign foundation must be recognized as a public utility. 25. Acquisition of legal personality This is acquired once the decree of recognition as a public utility has been approved by the Conseil d'État and published in the French Official Journal. 26. Legal capacity Same conditions for accepting gifts as for an association recognized as a public utility, but a wider entitlement to possess assets including premises. 27. Disposal of assets on liquidation As for associations recognized as public utilities (cf. 11), but the administrative authority's agreement must be obtained. TAXATION 28. As for associations ACCOUNTS AND AUDITING Auditing and the obligation to produce accounts are the same as for associations recognized as public utilities. 53 IRELAND ASSOCIATIONS LEGAL POSITION Right of association guaranteed by law? The general right to form associations is guaranteed by Article 40. 6 of the Irish Constitution. The more specific right to form associations for non-governmental organisations is set out in the Companies Acts and in the Industrial and Provident Societies legislation. Basic definition There is no specific definition of "associations" or similar term in Irish form which an law. The association takes on is determined by the type of legal structure which it opts for. This is discussed further below. specific Types of association to There are three main types of structure relevant non-governmental organisations: (a) Unincorporated bodies. Such bodies may have a written Constitution. This would set out the aims and objectives of the organisation and possibly details of and Management the membership the terms, legal In Committee. Constitution is a contract or binding agreement between the members of the group to abide by the terms of the agreement, i. e. to try to achieve the aim set out in the Constitution to carry out their activities in accordance with the Constitution, etc. However, while the as Constitution between the members of the group, it has no effect in relation to non members. Thus the group does not have a legal personality of its own. legally binding is (b) A company limited by guarantee. This is a variation on the standard form of legal personality for business firms in Ireland. In this type of company there are no shares in the company and the 54 members simply guarantee to pay a certain amount towards the debts of the company if it is wound up. nominal) (usually limited there , by is one (c) Industrial and provident society. This type of structure is frequently used by co-operatives. In practice, many of the rules in relation to the industrial and provident society are quite similar to the guarantee. company important However, difference in that whereas a group can become a limited company for any legal purpose, in order to be registered as an IPS, a society must be formed "for carrying on any industries, businesses or trades". There are also various other types of structure which may be of relevance to non-governmental associations including etc. Trusts, However, the above three are the main types of structure which would be used in Ireland. Societies, Friendly Minimum number of founders Both the company limited by guarantee and the industrial and provident society must have at least seven members. There is form unincorporated bodies. legal minimum no to Membership nationality requirements are no There requirements in main three types of legal structure. nationality relation to any of the specific Legal personality and how acquired legal personality. Both legal personalities. This The unincorporated body has no the separate company limited by guarantee and the industrial provident society do have separate is acquired by submitting the Constitution of the body in the required form to the relevant government organisation which is authorised to certify the particular body. The Constitution can then be inspected by members of the general public. 7. Legal capacity The legal capacity of the body is set out in its Constitution. In the case of the company limited by guarantee, this is known as the Memorandum and Articles. In the case of the industrial and provident society, this is known as the Rules. There are no specific limitations on legal capacity in relation to non governmental associations other than those generally laid down by law in relation to legal structures generally. 8. Statutes in proscribed form? In the case of the company limited by guarantee, the statutes must be drawn up in a form acceptable to the Companies Office which is the relevant registration body. Sample memorandum and Articles are published in the Companies Acts, and these or some variation on these would generally be utilised by such companies. In the case of the industrial and provident society, again the Rules must be acceptable by the Registrar of Friendly Societies, who is the relevant registration body. There is no official form of prescribed rules but the Registrar has approved rules drawn up non-governmental by organisations, and some these or variation on them are generally utilised. various 9. Registration requirements As set out above, both bodies must be registered with the relevant registration authority. Other than this, there is no specific registration requirement. 10. Commercial activity There is no specific limitation on the ability of these types of body to carry on commercial activity. However, where a body wishes to obtain exemption from the Revenue certain from Commissioners on the basis of its it must be "the charitable activities, subject of a binding trust for charitable purposes only", i. e. the Constitution or Rules of the group must contain a taxes binding clause which guarantees that any money received by the group will be used only for charitable purposes. In addition, it is unlikely that a Constitution which a commercial nature would be considered the Revenue to be charitable by Commissioners. contained elements of 11. Disposal of assets on liquidation The Companies Acts and the Industrial and Provident Societies legislation do not contain any general restrictions in relation to disposal of assets on liquidation. Again, where a company wishes to be recognised as charitable by the the revenue Commissioners, Commissioners will normally insist that on being wound up, any assets will be transferred to another body of a charitable nature. TAX POSITION INDIRECT TAX 12. Article 13 of the 6th VAT Directive Article 13 has been implemented in Ireland. 13. Specific exemptions Specific exemptions of relevance to NGOs (including those required by the 6th VAT Directive) include: (a) school or university education and vocational training or re-training; (b) hospital and medical care or treatment provided by a hospital, nursing home, clinic or similar establishment; (c) services for the protection or care of children and young persons; (d) supply of goods and services closely related to welfare and social security by non-profit organisations; (e) supply of services and goods for the benefit of their members by non profit making organisations whose aims are primarily of a political, trade union, religious, philosophical, philanthropic or civic nature. patriotic, 55 14. Zero rates Items which are zero-rated include medical equipment and appliances, i. e. invalid carriages and other vehicles, orthopaedic appliances, etc. , walking frames and crutches and similar items. DIRECT TAX 15. General position The Companies Acts and the Industrial provident Societies legislation do not contain any general exemption from taxation in relation to non-governmental organisations. 16. Recognised associations an industrial It is possible for either a company or, more guarantee by limited exceptionally, and provident society, to seek exemption from various taxes from the revenue Commissioners on the basis of its charitable status. In order to qualify as charitable, the objects and powers of the company or society must be so framed that every object to which its income or property can be applied is charitable and, as set out above, its main objects and the application of its income or property must be bound by a binding trust. This means that it must be obliged by law to advance only its stated main objects and to apply its income and property to these objects exclusively. 17. Qualifying criteria for recognition In order to qualify as a charity, the object of the company must fall under one of the following headings: (a) advancement of education; (b) advancement of religion; (c) relief of poverty, or (d) other works of a charitable nature beneficial to the community. In addition to satisfying the above, the company must keep annual audited accounts and make these available to the it Revenue Commissioners on request; 56 (other must prohibit the payment of fees and/or salaries out-of-pocket than expenses) to officers and directors for services rendered; it must also satisfy the other criteria discussed, including those in relation to the winding up of the organisation. The taxes from which an organisation include income tax, may be exempt corporation the case of (in tax companies), capital gains tax, deposit interest retention tax, capital acquisition tax and stamp duty on a transfer or lease of land. There is no exemption in relation to value added tax, and employees of a charity are liable to income tax under the PAYE system and Pay Related Social Insurance. 18. Gifts by individuals and companies some gifts by circumstances, In individuals and companies may be subject to tax relief. One of the main the non reliefs of to commercial that gifts of between £100 and £10,000 to certain educational establishments may be entitled to relief. relevance is sector ACCOUNTABILITY AND SUPERVISION 19. changes There is no specific supervision of unincorporated bodies. Companies are subject to reporting and accounting requirements to the Companies office. Annual returns and accounts must be submitted and records must be kept in members, concerning management, similar reporting requirements are imposed on societies industrial (reporting to the Registrar of Friendly cases, Societies). to investigators can be appointed investigate the operation of these bodies. Bodies which regularly fail to make returns will be struck off. Generally, etc. Broadly provident extreme and In the accountability however, and supervision requirements are not very stringent. In the case of charities, the a revenue Commissioners supervisory in practice, this is not very onerous. have function but again, FOUNDATIONS recognised is no specific There legislation on "foundations" in Ireland. A body which the Revenue by is Commissioners as having charitable status may apply to the Commissioners of Charitable Donations and Bequests to incorporated under the Charities be Acts, 1973. However, there are only about 25 such bodies in Ireland. 57 ITALY ASSOCIATIONS LEGAL FRAMEWORK 1. Right of association guaranteed by law? Articles 2 and 18 of the Constitution. Articles 14 to 22 of the Civil Code. Law of 27 February 1985, Law No 266 of 11 August 1991 on voluntary organizations. 2. Definition The law does not give a definition. In common practice stable organization of a number of persons pursuing a common interest, other than profit. is any it on consist acquisition to produce its effects. The non-recognized constraints associations restricted of autonomy on assets, in that persons who have acted in the name and on behalf of the association are also responsible for the debts of the association Law No 52 of 27 February 1985 now allows non-recognized associations to acquire fixed assets. Non-recognized association and committees may take legal action. Voluntary organizations which are entered in the register, even if they have the form of non-recognized associations, may acquire the goods necessary for their activities and receive gifts and legacies. 3. Minimum number of founders Statutes No 4. Types of association Recognized associations Non-recognized associations Committees 5. Membership nationality requirements No restrictions Legal personality 6. for Only associations, recognized following the decree of recognition by the government authorities. A condition for such recognition is to have sufficient assets to pursue the statutory objects. The faculty of recognizing legal persons may be assigned to the President of the Italian Council of Ministers, the Region the the Prefects, depending on or territorial coverage of their activities. There constraints certain non-recognized associations (cf. 7). are on 7. Legal capacity or assets Private legal persons may not acquire or fixed inheritances, or even legacies without government authorization. Authorization is considered to be the condition for the accept gifts The Memorandum of Association must be in the form of a public act for recognition to be granted. There are certain minimum requirements. Registration requirements No obligation, but if the association is not registered, the administrators are jointly and severally responsible, with the legal person, for its debts (Article 33 of the Civil Code). 10. Commercial activities. Associations may engage in commercial activities. Such activity should not be aimed at making a monetary profit, but exclusively at obtaining their purposes. If, on the other hand, the commercial activities are autonomous in relation to the the purpose of association may be considered as a de facto company, with important taxation and social consequences. Article 24 of the Civil Code provides that members have no right to profit-sharing. Disposal of assets on liquidation the association, The remaining assets are disposed of in accordance with the provisions of the the Memorandum of Association or 11 58 statutes. In the absence of specific provisions, the decisions of the Annual General Meeting which has decided on the winding up are implemented. In the absence the government authorities decide. decisions, such of TAXATION INDIRECT TAXATION 12. Article 13 of the Sixth VAT Directive Yes. 13. Other specific exemptions and services provided by Goods voluntary organizations are exempt from VAT. Exemption from registration tax and taxes relating to the Memorandum of Association and all acts relating to the activities of voluntary organisations. Exemption from the taxes on gifts, transfers, land registry and INVTM (tax on the increased value of fixed assets) for the associations which receive the gifts. This also applies to legacies and inheritances. 14. Zero rates No DIRECT TAXES 15. General position and Recognized non-recognized associations are liable to tax on the income of legal persons (IRPEG), which is proportional to the sum of the income received as land revenue, revenue of a land-income nature, income from capital or income arising from engaging in a commercial activity, whether occasional or not. Amounts paid by members as contributions associations' or subscriptions are not included in the taxable amount. Recognition of associations purposes The IRPEG is reduced by 50% for scientific, literary, historical, tax for 16. societies research experimental and pursuing essentially cultural objects. trading and from marginal Profits production activities earned by voluntary organizations are not taxable, provided they are used institutional for purposes of the organization. the 17. Criteria for recognition Must have legal personality in the first case and be a voluntary organization within the meaning of Law No 266/91. 18. Criteria for obtaining tax concessions laid down by For voluntary organizations, exemption must be the criteria established by an inter-ministerial decree (involving the Ministry of Social Affairs and the Ministry of Finance), which is being drafted. 19. Gifts by individuals research, Gifts for the public good, humanitarian, religious or political objects may be deducted up to a limit of 2%. This limit may Be exceeded when the gift is going to organizations for promoting study, of acquisition, the information, maintenance or restoration of part of the cultural heritage or to institutions which organize fairs and exhibitions with a particular cultural or scientific interest with the authorization of the Ministry of Culture. dissemination Gifts for the central institute for the support of the clergy of the Italian Catholic Church, and those for helping people in developing countries, may be of to up deducted LIT 2 million. ceiling a Gifts to voluntary organizations which are entered in the register are no longer tax-deductible. The only deduction possible at present is that concerning, on the one hand, an organization subject to corporation tax or, on the other hand, a voluntary legal personality. Entry in the regional register organisation with 59 Decree No 601/73 enjoy a reduction of 50% on taxable income on legal persons. Imports of godds for foundations with the object of giving assistance or carrying out charitable works, education, training, study and research are exempt from VAT. In addition, as a general principle, foundations which are not engaged in commercial agricultural activities or trade activities are not liable to VAT within the meaning of Article 4 of Presidential Decree No 633/72. ACCOUNTS AND MONITORING 29. Accounts No 30. Monitoring The government authorities have powers to monitor foundations, which consist essentially of the power to amend the objects of the foundation when these have been attained, or have become impossible or meaningless. They have the power to coordinate the foundations and may group foundations together have become when insufficient. assets their of voluntary organizations is therefore no longer sufficient. 20. Gifts by companies 20(a). As in the case of private persons, gifts for purposes concerning the public good, or humanitarian, religious, or political purposes, can be deducted up to a ceiling of 2%. Gifts to non-resident associations For associations with their head office in Italy, the system is the same, provided that they are entered in a regional register on Italian territory. ACCOUNTS AND AUDITING 21. The administrative authority has the power to audit and monitor. FOUNDATIONS 22. Constitution foundation Act of (unilateral act inter-vivos in the form of a public act or will). 23. Definition Private legal person with assets assigned to an object. 24. Nationality requirements No. 25. Acquisition of legal personality By government authorization in the form of a decree of the President of the Italian Council of Ministers 26. Legal capacity As for recognized associations 27. Disposal of assets on liquidation If nothing is laid down in the statutes, the government authorities assign the assets to other bodies with similar objects. TAXATION scientific, literary, Historical, experimental and research foundations with exclusively cultural objects within the meaning of Article 6 of Presidential 60 LUXEMBOURG ASSOCIATIONS LEGAL FRAMEWORK 1. Right of association guaranteed by law? Yes, under Article 26 of the Constitution of 17 October 1868 as amended, the Law of 21 April 1928 on non-profit associations and foundations, and the Law of 11 May 1936 guaranteeing freedom of association. 2. Basic definition Article 1 of the Law of 21 April 1928 defines a non-profit association as one which does not engage in industrial or trading activities, and which does not seek to obtain material gain for its members. 3. Minimum number of founders. Three 4. Types of association Non-profit associations (ASBL) De facto associations 5. Membership nationality requirements No restrictions. names, trades/professions and addresses of the administrators and the head office must be deposited with the register of trade and businesses. Any amendments must also so be lodged. An alphabetical list of members must be deposited with the chancellery of the court for the place in which the association has its offices in the month when statutes are published. They must be updated annually. the 10. Commercial activities not Profit-making prohibited but they must nevertheless be occasional and ancillary to the main activity. activities are 11. Disposal of assets on liquidation If the statutes contain no provisions, the decision is taken by the Annual General Meeting. If the meeting cannot make a decision, the receivers decide on a method of disposal which is as close as possible to the social purpose. TAXATION INDIRECT TAXATION 12. Article 13 of Sixth VAT Directive 6. Legal personality and how acquired Yes Acquired on the date when the statutes are published. 7. Legal capacity An ASBL may possess, as its own property or otherwise, only the premises necessary for attaining its statutory purposes. There is no limitation on furniture. Gifts exceeding LUF 500 000 must always be authorized by Grand-Ducal Decree. Statutes Written act duly authenticated or under private seal. 8. 9. Registration requirements The Memorandum of Association must be registered. The statutes and the full 1-3 Other specific exemptions by public scientific, Operations with an educational purpose organized or private establishments, operations carried out by youth hostels, the organizers of sporting or educational, cultural, economic or professional events when the income is intended mainly to cover organizational theatrical representations, conferences, medical and paramedical services, provided that exemptions do not distort these competition. costs, 14. Zero rates No DIRECT TAXES 15. General position 61 In accordance with Article 159 of the Luxembourg Fiscal Code, ASBLs are liable to tax on corporate bodies (ERC). Any person liable to the IRC tax is also liable to a wealth tax. Article 25 of the law of 29 December 1971 lays down the rights of registration and the rights of succession and transfer on death. For gifts inter vivos and legacies, the rate is 6%. good and other bodies recognized as such in law. 20. Gifts by companies The same rules apply to companies in Luxembourg 20(a). Gifts to non-resident associations These are not tax-deductible ACCOUNTS AND AUDITING 16. Recognition of associations for tax 21. Accounts purposes IRC from an exemption Article 161 of the Fiscal Code provides for for organizations pursuing directly and solely charitable or cultural purposes or purposes for the public good. However, they are still liable to tax if they engage in industrial or commercial activities. Only disinterested activities of ASBLs tax and not any are exempt from ancillary or occasional profit-making activities. The annual accounts must be lodged with the registry of the civil court on the establishment of the association, or at least the accounts for ten financial years, to obtain authorization to accept gifts. the past FOUNDATIONS 22. Constitution Assignment of assets by authenticated document or by will, with approval by Grand Ducal "Arrêté". 17. Criteria for recognition 23. Definition associations pursuing Non-profit charitable or religious purposes, or purposes for the public good (public health, youth and sport, sciences, arts, culture) may be recognized as being for the public good. 18. Qualifying purposes for recognition to Application must be made the Ministry of Justice. Purposes must be non-profit, and recognized as being for the public good in conformity with the statutes. A Grand-Ducal "Arrêté", adopted with the assent of the Conseil Tax d'Etat, concessions are then awarded on the basis of tax law. confers status. the 19. Gifts by individuals Gifts totalling over Flux 5 000 per annum are tax-deductible up to a ceiling or of Flux 10 000 000. Any gifts must be to recognized organizations for the public income 10% total of Foundations are circumscribed by law, since the only establishments recognized as foundations are those which are engaged religious, in philanthropic, scientific, artistic, educational, social, tourism or sporting activities, using revenue arising mainly from capital acquired either at the time when they were founded or subsequently, to the exclusion of the pursuit of material gain. 24. Nationality requirements None 25. Acquisition of legal personality Simultaneously with approval of the statutes by the Grand Ducal arrêté. 26. Legal capacity As for associations 27. Disposal of assets on liquidation As provided for in the statutes, failing which the Ministry of Justice assigns them to a purpose as close as possible to 62 that for which the established. TAXATION institution was 28. As for associations ACCOUNTS AND MONITORING 29. Accounts Every year, within two months of the end of the financial year, the accounts and budget must be forwarded to the Ministry of Justice. These documents are published in the "Mémorial". 30. Monitoring Article 40 of the law of 1928 provides that the Minister for Justice shall ensure that the assets of a foundation are allocated to the purpose for which the institution was established. 63 NETHERLANDS ASSOCIATIONS LEGAL FRAMEWORK 1. Right of association guaranteed by law? - the right of association is Yes recognized resident within the territory of the Netherlands (Articles 1 and 8 of the Constitution). for any person 2. Basic definition association In accordance with Article 2. 26 of the BW (Burgerlijk Wetboek - Civil Code), an legal person is a composed of members and constituted for a precise purpose other than that laid for cooperatives and mutual down societies13. is constituted by a multilateral legal act. It cannot share profits among its members. It 3. Minimum number of founders. Two 4. Types of association Associations under private seal Associations by notarized act Stateless (international associations not under any specific legal jurisdiction, not provided for in law but recognized by the law) associations 5. Membership nationality requirements No conditions 6. Legal personality and how acquired Full: associations whose statutes appear in a notarized act (incorporation of the statutes in a notarized act can also be done during the life of the association). Such an association must be entered in the register of associations; Limited: associations whose statutes are in a notarized act. not incorporated of the that claims responsibility Entry of such an association in the register of associations has the effect of limiting the directors, which will be invoked only if the other party the association has not met its obligations. Foreign associations: the Netherlands follows the principle of incorporation. association This means constituted abroad is recognized within the Netherlands, and that the foreign law applicable (which determines whether legal personality can be granted) governs the association under Netherlands law. that an 7. Legal capacity statutes are Associations whose incorporated in a notarized act have full legal capacity, they may contract debts, receive legacies and acquire fixed assets without restrictions. Associations whose statutes are not in a notarized act '(with limited personality) registered goods or cannot acquire receive legacies. incorporated 8. Statutes No obligatory form, except for statutes incorporated in a notarized act, for which the content is laid down. 9. Registration requirements for notarized except by associations None, constituted or act recognized in a notarized act. The act must be entered in the register held for this purpose by the Chamber of Commerce and Industry in the area of the head office. 10. Commercial activities engage association may An in commercial activities, but the profits must not be distributed to the members. The purpose of an association cannot be to make profits and distribute them to the members. These are types of associations in Dutch law. 64 11. Disposal of assets on liquidation or an statutes procedure The association of constituted by notarized act must specify how the assets are to be disposed of on for the liquidation determining such disposal (BW - Civil Code-and Article 2: 27 (f). Once creditors have been paid, the balance of the assets is assigned to all parties who are entitled to them under the statutes, pro-rata to their rights, otherwise to the members. If no-one has a claim to the remaining assets they pass to the state, which will assign them in accordance with the object of the legal person as far as possible BW, Article 23b (1). TAXATION INDIRECT TAXATION 12. Article 13 of Sixth VAT Directive All exemptions concerning associations apply. 13. Other specific exemptions There are several exemptions for goods and services supplied by associations, and special exemptions for the provision of services and related goods by associations to their members, provided that the exemptions do not produce restrictions on competition and that the organization does not to attempt distribute the profits to the members. 14. Zero rates No. Tax on fixed assets: Associations with a real title to fixed assets or the users of such assets must pay a local tax. 16. Recognition of associations for tax purposes is less No exact definition. Article 24(4) of the law on estate duty provides for tax exemptions for recognized organizations which exist for the public good. An association for the public good is completely exempt from corporation tax if the profits in any one year are less than HF1 13 000 or if the profit for the past than HF165 000, four years provided that there is no profit motive, or that the profit motive is secondary and the profits are used solely for the public good (Article 5 of the law on corporation tax and "arrêté" of 20 August 1971). Charitable institutions, institutions libraries, retirement funds, for the preservation and management of land for nature preservation purposes and certain other institutions on specific land. from income Tax on fixed assets: Associations not liable to corporation tax may apply for reimbursement of the fixed is deducted at source on dividends or interest. deduction, which assets There are provisions for exemptions {inter alia on buildings used for religious purposes) from property taxes. DIRECT TAXES 17. Criteria for recognition 15. General position tax is no special (legal Income tax. In general, associations are subject to the common law regarding taxes. There for persons). An associations association may to subject corporation tax (Vpb) if it is carrying on a business which brings into competition with businesses liable to corporation tax, in respect of the profit which it obtains from this activity. be it The relevant legislation does not give a definition of the public good. The law on estate duty specifies that a precise order in respect of a legacy or a gift precludes their being the public good. According to the law, the public good is the opposite of the good of an individual or of a restricted group. obtaining approval for or 18. Criteria for empowerment Recognition by estate duty inspectorate. the registration and 65 19. Gifts by individuals to Gifts made approved Dutch associations are tax-deductible at a rate of between 1% and 10% of taxable income on sums exceeding HFL 120 per annum and per donor. Gifts made under contracts in authenticated form for at least five years are tax-deductible in full in all cases where they are for the benefit of a Dutch association composed of at least 25 members (in which case public good is not a criterion), provided that such gifts are in the form of an annuity, legal that capacity and that it is not liable for corporation tax. the association has full 20. Gifts by companies in associations or to Gifts made foundations the registered Netherlands which have an academic, religious, charitable, cultural object or one for (including the public good political parties) are tax-deductible when they exceed a total of HFL 500 up to a maximum of 6% of taxable income. 20(a). same Gifts to non-resident associations to regulations The associations registered abroad, which are specifically mentioned by the Minister for Finance. apply ACCOUNTS AND AUDITING 21. Accounts Within six months of the end of the financial year, the administrative council forwards to the Annual General Meeting an annual report on the situation and management of It submits the balance and the profit-and- loss account, together with comments, the meeting for approval. These to documents are signed by the directors and other officials. the association. Auditing Internal: The statutes may provide that the association will have a college of commissaires. In the absence of such a college, and of an accountant within the meaning of Article 2. 393 (1) attesting the veracity of the documents, every year the Annual General Meeting shall appoint a commission of at least two members who cannot be members of the administrative council. External: by declaration of a qualified accountant attesting the reliability of the documents. There is no obligation to publish accounts. FOUNDA TIONS (STICHTING) 22. Constitution By authenticated act containing the statutes. These statutes must be entered in the special foundations register of the Chamber of Trade and Industry in the area of the head office. 23. Definition A legal person created by a legal act which has no members and which has the aim of pursuing the object laid down in the statutes using the goods assigned to this object. 24. Nationality requirements the The head office must be Netherlands, although foundations may have offices abroad. in 25. Acquisition of legal personality By notarized act. 26. Legal capacity Foundations have full legal capacity 27. Disposal of assets on liquidation According to the procedures laid down in the statutes. If there are no claimants to the remaining assets, they revert to the state, which will allocate them in accordance with the object of the legal person as far as possible. 28. Taxation As for associations ACCOUNTS AND AUDITING 29. Accounts 66 In accordance with BW 2 10 (2), the directors of the foundation are obliged to draw up a balance sheet and a profit- and-loss account for the legal person within the six months following the end of the financial year, and to keep them for ten years. 30. Monitoring is not forthcoming, Internal: In accordance with the statutes. External: The government authorities may ask the directors for information. If the cooperation President of the Court can order the the documents government authorities. At the request of the government authorities, or any other person concerned, the Court can order the directors to be suspended or dismissed and can appoint alternate directors. to be shown to 67 AUSTRIA ASSOCIATIONS LEGAL FRAMEWORK Right of Asociation guaranteed by law? law (Staatsgrundgesetz Yes, under Article 12 of the basic national StGG): Austrian citizens have the right "Legal" to form associations specifically 1951 Law on governed by Associations. associations. are more the Basic definition legal definition. The following No definition is based on legal practice and case is (1) law. An association voluntary, (2) intended to be permanent (3) a structured association of several persons (4) intended for attaining a given permissible purpose for the public good (5) through continuous communal activity. Minimum number of founders One founder (a person who declares himself willing to form an association) is sufficient. Subsequently, the association must have at least three members (cf. also 6). Types of association legislation Austrian distinguishes between "ideelle Vereine" (non-profit associations), which are governed by the 1951 Law and associations set up with profit in mind (Associations Charter of 1852). Membership nationality requirements on Associations, Non-nationals, even when not resident in Austria, are entitled to become members of an association in Austria. Legal personality and how acquired Every association founded in accordance with the 1951 Law on Associations has a legal personality. The notice of intention 68 5. to create an association must be submitted to the competent authorities and be accompanied by a draft of the statutes. against If no prohibition forming an association is issued within six weeks, or if the authorities declare that they do not prohibit its formation, the association may begin to function. At least three members must decide at an form an initial general meeting association on the basis of statutes which have not been rejected by the authorities. legal The personality by virtue of this decision. It acquires its legal capacity by electing representatives as the statutes. laid down association acquires its in to 7. Legal capacity Full legal personality after it has been constituted. L. 8. Statutes The statutes, as provided for under the the law of 1951," must state association is registered in accordance with Article 12 of the law of 1951. that TAX POSITION INDIRECT TAX 12. Article 13 of 6th VAT Directive Vereine enjoy the same exemptions in Austria as listed in Article 13 of the 6th VAT directive. 13. Other specific exemptions There are no exemptions covering a wider scope than defined in Article 13. 14. Zero Rates specific Zero rates do not exist in Austria. DIRECT TAX 15. General position subject Also to Corporation Tax (Korperschaftssteuer) are "nichtrechts- fàhige Personenvereinigungen, Anstalten, Gesetz (law on foundations) or general national legislation: with permanent assets for pursuing objects for charitable purposes or the public good. 2) Private foundation, with legal personality, which has been provided with funds by the founder to be used, managed and applied to object determined by the founder. permissible pursue a 24. Nationality requirements None 25. Acquisition of legal personality Type 1 foundations (cf. 23 above): these have legal personality, which is acquired when the appropriate authorities decide that the foundation can be authorized. Type 2 foundations: these have legal personality, acquired on entry in the "Firmenbuch" (register of companies). 26. Legal capacity Both forms of foundation have legal personality, i. e. they can complete legal formalities and be a party to legal proceedings. 27. Disposal of assets on liquidation Type 1: to be stated in the winding-up notice of the authorities concerned with foundations. Type 2: assets pass to the ultimate beneficiaries the named "Stiftungserklàrung" (declaration). If this is revoked, they pass to the founder or to the Republic of Austria in Stiftungen" Zweckvermôgen ". and àndere 16. Exempted from taxation Non-profit organizations for the general public, for the public welfare, churches (§§ 34 - 47 Bundesabgabenordnung), (60. 000 insurance associations small ATS), associations in the field of agricultural activities for the purpose of using common equipment (Weidw und Maschinengenossenschaften), etc. , private foundations, unions which are legal representatives, financing associations for small and medium-sized enterprises. professional important 17. Qualifying criteria for The most recognition is the object defined in the statutes of the association, such as charity, non-profit, public welfare, other specific purposes. criterion 18. Qualifying objects Religious communities recognized by und public "pensions Unterstutzungskassen" under specific conditions (§ 6 KSTG). law, - The exemptions do not apply to limited taxable persons. 19. Gifts by Individuals to individuals religious Gifts by institutions (up to 1. 000 - ATS p. a. ), high schools, associations in the field of can be research and development deducted from income tax. The amount of deductable gifts is limited to 10% of the total incomes the year before. FOUNDATIONS LEGAL POSITION 22. Constitution Free to create 23. Basic definition There are forms of two different foundation. 1) Foundation in accordance the Bundes-Stiftungs-und-Fonds with 69 PORTUGAL ASSOCIATIONS LEGAL FRAMEWORK 1. Right of association guaranteed by law? Article 46 of the 1976 Constitution, Civil Code, Articles 158 to 166 and 167 to 184, and Decree-Law 594/74 of 7 November 1974. 2. Basic definition The law does not give a definition. In accordance with general practice, a group of individuals who pool certain goods or services for an object which excludes making a personal profit. 3. Minimum number of founders No minimum. 4. Types of association Private associations under the general scheme Private associations under a special scheme (e. g. cooperatives and social solidarity organizations) Associations without legal personality (non-recognized associations and special committees) 5. Membership nationality requirements Unless the statutes provide otherwise, non-nationals can be members of an association 6. Legal personality and how acquired granted recognition, Standard on condition that the act of establishing the foundation is authenticated by a notary and that its content is in conformity with Article 167-1 of the Civil Code. Publication of extracts of the act of the establishing the foundation and the Portuguese Official statutes in association Journal recognizable in law by a third party. makes the 7. Legal capacity this rule, associations Associations have legal capacity subject to the ultra vires rule. In accordance are with recognized as having not only the rights and obligations which are necessary but also those which are appropriate for attaining their object. Only rights and obligations inherent to a human person are excluded. 8. Statutes for Yes. As the Memorandum of Association, i. e. the notarized act. There is an obligatory basic minimum. 9. Registration requirements For associations under the general sole registration has scheme, function of publicity, and has no constitutive function. 10. Commercial activities the Associations may have a financial object, not excluding financial advantages for the associates,-provided that these are not in the form of a profit as such. 11. Disposal of assets on liquidation In the case of goods bequeathed or donated with instructions or intended for a certain purpose, they must be assigned to another legal person, with the same instructions or object. In the case of other goods, Article 162-2 of the Civil Code authorizes members in accordance with the statutes or by decision of the their general meeting assignment. to decide on TAXATION INDIRECT TAXATION 12. Article 13 of Sixth VAT Directive Yes. 13. Other specific exemptions Medical or paramedical care, educational establishments, activities, insurance and social assistance services artistic 14. Zero rates 70 Foodstuffs, newspapers, reviews and cultural books, pharmaceutical products and transport, like, passenger medical services, entertainments. the DIRECT TAXES legal persons with also applies to non-profit objects belonging to, or established by, religious denominations, teaching or educational associations, scientific research or culture, literary, artistic etc. 15. General position 20. Gifts by companies taxable income) which Income tax for legal persons - ERC - (20% of is payable on total income less certain by Subscriptions expenses. members and subsidies to finance the attainment of the association's objects are not considered as income. Tax on assets. paid as or teaching Legal persons may deduct gifts given as cultural sponsoring or to organizations educational, such scientific research or cultural, literary or artistic associations from their taxable profits up to a total value equal to 0. 2% of turnover, and 50% of any sum in excess of that. 16. Recognition of associations for tax 20(a). purposes Gifts to non-resident associations ACCOUNTS AND AUDITING Legal persons of an administrative public utility (religious communities, voluntary firemen's associations etc. ) are exempt from IRC, as well as ordinary public utilities pursuing exclusively scientific or cultural objects, or performing charitable or social work; specific institutions for social solidarity (IPSS) and persons legally similar to these. 17. Criteria for recognition In the first two cases, the organizations must cooperate with the government authorities, at national, regional or local level. IPSSs and similar bodies must be registered with social the security department. Nevertheless, the the discretion of the decision authorities. The extent of the exemption may vary depending on the objects. regional is at 18. Qualifying objects for recognition Exemptions are granted by the Ministry of Finance at the request of applicants by means (despacho) published in the "Diâro da Republica decision of a 19. Gifts from individuals Natural persons may deduct gifts to the organization specified in Article 56 of the law on the 1RS up to a value equal to 15% of their net taxable income. This 21. Accounts The conseil de surveillance - supervisory council - is the body responsible for monitoring the administrative body. It ensures that the accounts of the association are properly kept. activities the of The accounts of associations which enjoy tax concessions must always be available to the tax authorities. FOUNDATIONS 22. Constitution By an act inter vivos or a will. The notarized form of the act is required, except in the case of a non-public will. The charter establishing the foundation must state the object of the foundation and specify the goods allocated to it. in The authenticated form. statutes must always be 23. Definition is no legal definition. There In accordance with general practice, the foundation is an organization pursuing a permanent object to which assets have been assigned. 24. Nationality requirements 71 No, but the head office must be in Portugal. 25. Acquisition of legal personality Foundations acquire legal personality by individual the is responsibility of administrative authority. recognition, which the 26. Legal capacity As for associations 27. Disposal of assets in the event of winding up The assets of wound-up foundations are disposed of according to the common system for associations and foundations TAXATION 28. As for associations ACCOUNTS AND AUDITING 29. Accounts 30. Auditing Foundations remain under the permanent supervision of the competent authority for recognition. Foundations must have a tax council. They may be wound up by them the authority which recognized once their object has been attained or has become impossible to attain, in the event of illicit use of resources, if public order is endangered or if the object being pursued no longer corresponds to that laid down in the statutes. 72 FINLAND ASSOCIATIONS LEGAL FRAMEWORK 1. Right of association guaranteed by law? Yes. Article 10a of the Constitution Act as amended in 1995 and Article 1 of the Associations Act of 1989. 2. Basic definition A contract by which several people act together for the common realisation of a non-profit purpose. (The association is a permanent body in the sense that it is not momentary 3. Minimum number of founders Three 4. Types of association A. Registered associations: - non profit associations - economic associations (for example co operative societies established before the entry into force of the Act on co operative societies of 1954) to permission - associations subject (provided by the Associations Act) - associations organised by a act/statute (for example Advocates Associations) legal the Finnish B. Non-registered associations which do not have legal capacity 5. Membership nationality requirements Associations Act: none Exceptions: if the primary purpose of the association is to exercise influence over State affairs, it may have as members only Finnish citizens, foreigners residing in Finland and associations whose or are Finnish members citizens or residing foreigners in Finland associations who have member associations made up of Finnish citizens or foreigners residing in Finland. Members of the Board: The chairman and at least half of the members of the board must be resident in Finland if the Ministry of Trade and Industry has not granted an exception. 6. Legal personality and how acquired is acquired personality Yes. According to the Associations Act, legal by registration. Only registered associations can have legal personality. The members of a registered association shall not be personally liable for the commitments of the association. 7. Legal capacity A registered association has full legal capacity as a legal person. A registered association may obtain rights, make commitments and appear before a court or another authority as a party. Non- registered associations do not have legal capacity 8. Statutes Yes. 9. Registration requirements Registration is not compulsory as such. If registration is wanted, requirements of registration the are Associations Act. provided in in a Memorandum A notification of formation shall be recorded of Association which shall include the rules of the association and the name and domicile of the chairman of the board and the persons who have the right to sign for the association. The notification of formation shall be signed by the chairman of the board 10. Commercial activities A non-profit association may only practise a trade or other economic activity that has been provided in the that otherwise association's rules or relates to the realisation of its purpose or that to be deemed economically is insignificant. 73 For economic associations there are no general statutes (see types of association n. 4) 11. Disposal of assets on liquidation the After liquidation, the remaining assets should be used as required in the rules of the association. In the absence of such a rule the remaining assets at the State's disposal to be used to promote the same or similar liquidated as association liquidators must put objects the TAX POSITION INDIRECT TAX taxable income) on their income from real property used for other than non profit purposes. The National Board of Taxation may grant exemption from tax on income from business or real property if the is socially operation of associations significant 17. Criteria for recognition Associations operate exclusively and directly for the public good in a material, spiritual or social sense; their activities do not concern only a limited group of persons; members must get economic benefits (shares of profit etc. ) from the operation not 12. Article 13 of Sixth VAT Directive 18. Qualifying objects for recognition for organisations, the public good Corporations (charitable sport associations etc. ) are liable to tax it their income is deemed to be income from business activities according the Income Tax Act. This means that in practice all exemptions of relevance to associations coming under Article 13 have been implemented 13. Other specific exemptions to None 14. Zero rates services Printing publications of associations for public good are subject to zero rate for membership the DIRECT TAX 15. General position Generally subject to company tax (28% of taxable income) on all their income; liable to real estate tax on taxable value of land and buildings 16. Recognition of associations for tax purposes According to the Income Tax Act, non profit associations (associations for the public good) are liable to company tax only on for business income activities, and communal tax (12,04% of their Dividends, interests and capital gains are not subject to income tax unless the property belongs to a business activity. Business income does not contain, inter alia: - sales proceeds, and other proceeds from occasions arranged for financing the operation of associations; proceeds from other bulletins membership the directly publications operation of associations and serving 19. Gifts by individuals taxable Gifts given to non-profit associations are income. Gifts are not not deductible taxation of individuals income in 20. Gifts by companies In taxable Gifts given to non-profit associations are company income. not taxation, gifts are, within certain limits (FIM 5000-150. 000), deductible if given for scientific or artistic purposes to associations nominated by The National Board of Taxation 20(a). Gifts to non-resident associations ACCOUNTS AND AUDITING 21. Accounts 74 FOUNDATIONS TAX POSITION 22. Constitution 28. See references above to the tax position for associations ACCOUNTS AND AUDITING 29. Accounts Foundation must have a minimum of two auditors and two deputy auditors to audit their accounts and administration 30. Auditing The Ministry of justice ensures that the administration foundation complies with the law and the by-laws of foundation the the of According to the Act on Foundations, as amended in 1995, the establishment of a foundation is subject to a permission granted by the National Board of Patents and Registration. 23. Basic definition A foundation is established with a deed of foundation which must include the purpose of the foundation and its property. A is governed by an independent administration, the board of which shall be set out in the by-laws of the foundation 24. Nationality requirements foundation The members of the board of trustees and the persons authorised to sign the name of the foundation must be resident in a member the EEA Agreement. However, at least one of in those persons must be resident Finland, if the Ministry of Trade and Industry has not granted an exception to this requirement. state of 25. Acquisition of legal personality Legal personality is acquired by registration. Registration of a foundation is compulsory. 26. Legal capacity Full legal capacity as a legal person; after a foundation has been registered, it can acquire rights and undertake obligations as well as sue and be sued in its own name 27. Disposal of assets on liquidation If the foundation, after its debts have been paid, has assets and if the by-laws do not provide for their use, they shall pass to the State, which shall without delay transfer the assets to be used to further a purpose related to that of the foundation 75 SWEDEN ASSOCIATIONS LEGAL FRAMEWORK 1. Right of association guaranteed by law? Yes. Chapter 2, Articles 2 and 20 in the Constitution of 1974 2. Basic definition An association (ïdeell fbrening") is a legal person in which several persons act together for a certain purpose. The association may not have any economic aims or at least no commercially organised activity 3. Minimum number of founders Not regulated 4. Types of association Ideell fbrening which is not regulated by statutory law 5. Membership nationality requirements No special requirements 6. Legal personality and how acquired The association is considered to have a legal personality if there are statutes and a board 7. Legal capacity The association is able to acquire rights and obligations, to sue etc. , without any special restrictions 8. Statutes No, but the statutes have to be as complete as necessary for the aim of the association 9. Registration requirements There are no general requirements. An association with an economic activity sometimes has to be registered in the Trade Register 10. Commercial activities In principle not allowed. The association may, however, carry on some business 76 activity as long as it is not commercially organised 11. Disposal of assets on liquidation The assets are divided in accordance with the statutes. If the statutes do not regulate this matter, the assets may be divided among the members TAX POSITION INDIRECT TAX 12-14 General position Associations with charitable purposes are generally not subject to indirect tax. Other associations are subject to indirect tax on the same conditions as other legal persons. DIRECT TAX 15. General position net wealth Normally not subject to income tax or to tax. Non-profit the associations pay no income tax for business with a natural connection to the non-profit activity. Income from other business activities are taxable. 19. Gifts by individuals Gifts over 10 000 SEK are normally subject to gift tax. With the exception of religious communities and associations serving educational, medical, national social work or research, defence, charitable purposes, the gift is not deductible for the donor. 20. Gifts by companies The same as 19. ACCOUNTS AND AUDITING 21. Accounts No special supervision for associations. FOUNDATIONS 22. Constitution All physical and legal persons can create a foundation. 23. Basic definition A property which according to the dispositions of the founder (gift or will), is singled out to be permanently managed for a certain purpose. 24. Nationality requirements None. 25. Acquisition of legal personality A foundation has legal personality as soon as it has been created, i. e. when the property has been transferred to the separate management. 26. Legal capacity 27. Disposal of assets on liquidation In principle, a foundation cannot be liquidated as long as it has assets. However, in special cases the assets may be used for a purpose which is very close to the original purpose. A special permit of a governmental authority is required for such a procedure. TAX POSITION 28. Foundations serving national defence, educational, medical, social work, research or charitable purposes are only taxable for business income. Foundations with a non-profit purpose are not subject to gift tax. Gifts are not deductible for the giver. Foundations are subject to indirect tax on the same conditions as other legal persons. ACCOUNTS AND AUDITING 29. Accounts 30. Auditing Foundations are generally supervised by a local government authority. 77 UNITED KINGDOM ASSOCIATIONS (Voluntary Organisations) LEGAL FRAMEWORK 1. Right of association guaranteed by law? there There is no written right to associations although freedom of association. There is a freedom to create trusts although in some cases trusts with non-charitable objects may be void. exists 2. Basic definition There is no single generally accepted legal definition of an association. In its widest sense, an association is one formed by two or more people who of their own volition join together in a common purpose which is not in pursuit of financial gain. 3. Minimum number of founders In practice two. Types of association 4. Unincorporated associations Trust Company limited by guarantee Industrial and Provident society Incorporated by Royal Charter Incorporated by Act of Parliament. 5. Membership nationality requirements No requirements for associations as such. In the case of a charity in England and Wales, the Charity commission will only register if within jurisdiction. This is normally construed to mean that in the case of an unincorporated charity a trustees should be majority of resident in England and Wales, in the case of a company registration within the jurisdiction is sufficient. the 6. Legal personality and how acquired register registration with Company limited by guarantee-obtained of by Companies. Industrial & provident Society-obtained by registration with Registrar of Friendly Societies. Incorporated by Royal Charter-obtained through Royal Charter. , Incorporated Parliament-obtained Parliament. of Act through Act of by Unincorporated associations-No. Trust no; however, the body of trustees can obtain through Certificate of incorporation issued by Charity Commission. legal personality 7. Legal capacity There are no restrictions in statute; however, in some areas capacity will be derived from the objects and powers included in the governing document. 8. Statutes No. 9. Registration requirements the For with Registration Charity Commission for charities in England and Wales. associations, other registration will depend on the legal structure. Registration with the Registrar of Friendly Societies for Industrial and Provident Societies, registration with the Registrar of Companies for companies limited by guarantee. 10. Commercial activities There is a restriction on the commercial activities of charities. They can engage in primary-purpose trading but not in permanent trading as a means of fund- raising. Charities that wish to trade to any substantial degree must set up a separate trading subsidiary which can then covenant its profits back to the parent charity and tax can be recovered. the 78 corporation inheritance tax. 17. Criteria for recognition tax, capital gains tax, To qualify for the exemption, the income or gains must be applied to charitable purposes only and trading income other than primary-purpose trading will often be subject to corporation tax. 18. Qualifying objects for recognition 19. Gifts by individuals When an individual or corporation executes a deed of covenant promising to pay a particular sum to a charity for a period to exceed three years, a sum representing tax at the basic rate must be deducted and the Inland revenue refunds to the charity the basic rate of income or corporation sum. Additionally, if the individual is a higher- rate tax payer, he can receive further tax relief trough the adjustment of his tax code. A company can claim a deduction from its profit for the gross amount, and obtains tax relief at its marginal rate. that tax on Similarly, since 1990 individuals have been able to make one-off payments under Gift Aid. Currently the minimum donation is £250 in monetary form 20. Gifts by companies 20(a). Gifts to non-resident associations ACCOUNTS AND AUDITING 21. Accounts 11. Disposal of assets on liquidation the this will be in governing In associations, accordance with document. In the case of charities, to other charities with similar purposes. If the governing document does not include provisions dealing with the Charity this, Commission may give directions by Order or Scheme. TAX POSITION INDIRECT TAX 12. Article 13 of Sixth VAT Directive Not all exemptions of relevance charities have been implemented. to 13. Other specific exemptions of supply or for (a) The education vocational training otherwise than profit. (b) The provision of nursing and medical care in an approved institution. (c) The provision of welfare services otherwise than for profit. (d) Fund-raising events. 14. Zero rates These include sales of donated goods, supply of advertising for fund-raising or educational purposes, certain aids for disabled people, vehicles and ambulances for disabled people, certain medicines and medical equipment supplied to charities. Construction of new residential property and buildings used for a certain charitable purposes are zero rated. DIRECT TAX 15. General position No specific exemptions for associations as such. 16. Recognition of associations for tax purposes Charities are exempt from most forms of direct taxation including income tax, 79 Financial Statement 1. TITLE OF OPERATION from Communication Organisations and Foundations in Europe. the Commission on Promoting the Role of Voluntary 2. BUDGET HEADING INVOLVED: B5-3202 3. LEGAL BASIS Council Decision of 9 December 1996 on a Third Multi-Annual Programme for Small and Medium sized Enterprises in the European Union 1997 - 2000. 4. DESCRIPTION OF OPERATION Expenses incurred in connection with meetings of experts and information campaigns with a view to defining future approaches on the role of associations in the European Union. 4. 1 Period covered and arrangements for renewal The meetings of experts and information campaigns will be for the period of 1997 only. 5. CLASSIFICATION OF EXPENDITURE OR REVENUE 5. 1 5. 2 NCE DA <Pz) A small proportion (meetings of experts and information ) is 100% financed. The other subsidies for cofmancing with other resources in the public and/or private sectors will be adjusted in accordance with Community interests. Conventional subsidies for colloquia, seminars and round tables are allocated at particular percentage rates, depending on the needs of the organizers and the importance of the event as regards the économie sociale sector 7. FINANCIAL IMPACT There will be a series of meetings and conferences in 1997. Total costs 100. 000 ECU 8. FRAUD PREVENTION MEASURES; RESULTS OF MEASURES TAKEN Bearing in mind contractual obligations and the principles of economy and sound financial management, all agreements and contracts between the Commission and the recipients of payments include anti-fraud provisions (monitoring, reports to be submitted, etc. ) for checking subsidies and acceptance of services and studies ordered by the Commission before payment. 9. ELEMENTS OF COMMUNICATION FOUNDATIONS COST-EFFECTIVENESS VOLUNTARY ON FOR ANALYSIS ORGANISATIONS THE AND 9. 1 Specific and quantified objectives; target population: The establishment of a co-ordinated policy for networks of European voluntary organisations and foundations. An information network on the économie sociale (European citizens' advice bureaus) has been set up by the European Committee of Workers Cooperative Productive Societies, the Euro-Citizen Action Service, the Comité Européen des Associations d'Intérêt Général and the European Foundation Centre in order to meet the need for enterprises in the économie sociale sector to interact with the fl Community's business community via the European Euro-Info Centres network (the network for networking); 9. 2 Justification: It is necesssary to discuss with the Member State governments and voluntary the policy organisations (associations) and foundations how best to recommendations set out in the document. implement 9. 3 Monitoring and evaluation of the operation The voluntary organisations and foundations sector is highly diversified. This situation calls for great attention at the preparatory stage of the proposed actions so as to strike the right balance between perceived requirements and resources employed. When the actions are launched, the indicators will be proposed in accordance with the specific features of the action on the basis of a standard fact sheet to be drawn up by the departments. This fact sheet must take account of the eligibility criteria for the various funds and sources of finance. Assessment of the results obtained The scheduled actions are of prime importance, since they must enable to take advantage of the benefits of the associations and foundations frontier-free Single Market while complying with competition rules and without sacrificing their identity as partnerships. The results will be assessed, for example, on the basis of the objectives for each action in the light of the European aspects identified on the ground, and of the difficulties encountered by économie sociale businesses, because of their involvement in local developments, in using the Structural Funds correctly and to the full. 10 ADMINISTRATIVE EXPENDITURE (SECTION III, PART A OF THE BUDGET) s-z Actual mobilization of the necessary administrative resources will depend on the Commission's annual decision on the allocation of resources, taking into account the number of staff and additional amounts authorized by the budgetary authority. 10. 1 Effect on the number of posts Type of p ost A B C Official s or temporar y staff Other resources Total Staff to be assigned to managing the operation Permane nt posts Temporar y posts 1 1 x A Source Duratio n Existing resource s in the DG or departme nt concerne d 1 Additio nal resourc es no 1 1 12 months The cost of a staff member 100. 000 ECU. ;A1 to A5 level) is estimated at n 10. 2 Overall financial impact of additional human resources Method of calculation" ECU Amount s Officials Temporary staff Other resources (indicate none budget heading) Total none 10. 3 Increase in other administrative expenditure as a result of the operation Budget heading Amount s Method of calculation ECU Total none within existing budget W ISSN 0254-1475 COM(97) 241 final DOCUMENTS EN 05 06 10 16 Catalogue number : CB-CO-97-282-EN-C ISBN 92-78-21231-8 Office for Official Publications of the European Communities L-2985 Luxembourg