Fri. Jul 19th, 2024

Brussels, 9 December 2021

A harmonised pan-European legislative framework is needed so that non-profit organisations can operate and organise themselves properly at a cross-border level.

On Thursday, the Committee on Legal Affairs adopted a series of recommendations aimed at harmonising and strengthening the legal status of non-profit organisations (NPOs) at EU level. The draft legislative initiative report was approved with 17 votes in favour and 4 votes against.

Non-profit organisations (e.g., associations, philanthropically organisations and foundations) are fundamental to representing the interests of citizens and civil society, as they support active participation in economic, democratic and social life. However, due to the lack a common EU legal status and existing discrepancies between member states’ rules, NPOs that work across borders face heavy legal and administrative burdens, preventing them from fully benefiting from the EU single market and contributing to democratic society.

To address this legal uncertainty, MEPs demand an introduction of a new legal form of European Association, including rules on its establishment, transparency and accountability. They also call for a common set of measures for NPOs in the EU, which would help create a level playing field for civil society. Such rules already exist at EU level for commercial undertakings and economic interest groups.

Quote

The rapporteur Sergey Lagodinsky (Greens/EFA, DE) said: “This vote marks an important step towards better representation of civil society at EU level. While companies could incorporate themselves for decades, civil society still lacks an appropriate legal form. Today’s proposal of a European Association and minimum standards for non-profits in the member states could be a game-changer, empowering civil society all over Europe”.

Safeguarding civil society and freedom of association

MEPs are concerned that the lack of harmonised rules at EU level will dissuade NPOs from extending their activities across borders and remind of their importance for democracy and policy making at all levels. NPOs are free to participate in political and public debates, underline MEPs, and warn of the dangers that the restricting of civic space on political grounds, and challenging NPOs’ status as public benefit association, would signify for European democracy.

Even if the freedom of movement and establishment is embedded in EU Treaties, the fundamental right of association is still not supported and promoted in many member states, caution MEPs, which hinders cross-national activities and civil society mobility, and causes legal uncertainty.

Common minimum standards for NPOs and a European Association statute

MEPs recognise the different approaches in defining and recognising NPOs at national level, but underline that there is now a growing understanding on the need for European minimum standards and legal status for NPOs, and increased awareness among policymakers about their benefits.

They therefor call on the Commission to:

  • Recognise and promote public benefit activities of NPOs with an EU public benefit status;
  • Develop a dedicated, comprehensive strategy to strengthen civil society in Europe;
  • Submit a Regulation (thus directly applicable in all member states) establishing a statute for a European Association, based on the recommendations set out in their report;
  • Propose a Directive on common minimum standards for NPOs in the Union, creating a level playing field for non-profit organisations by establishing minimum standards, following their recommendations.

For more details and additional recommendations, see the compromise amendments approved by the Legal Affairs committee earlier on Thursday.

Next steps

The final vote for this legislative initiative report is scheduled for the January 2022 plenary session.

Background

The legal, cultural, political and economic differences between member states continue to make the cross-border activities of NPOs very complex. The current administrative and fiscal treatment of the cross-border activities of these organisations results in higher transaction costs than at national level. Despite numerous calls by civil society and the European Parliament as early as 1987, the European Commission and member states have yet to introduce an appropriate European legislation for non-profit organisations, similar to that of their for-profit counterparts.

Forward to your friends