Considerations on COM(2023)516 - European cross-border associations - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2023)516 - European cross-border associations. |
|---|---|
| document | COM(2023)516 |
| date | September 5, 2023 |
(2) The elimination of barriers to the development of activities of non-profit associations across Member States is essential in order to attain their freedom of establishment, as well as other fundamental freedoms such as the freedom to provide and receive capital and the freedom to provide and receive services within the internal market. By approximating the provisions of national law which affect the exercise of these freedoms, this Directive serves the objective of improving the functioning of the internal market. In so doing, this Directive will further serve the objectives of strengthening European integration, promoting social fairness and prosperity for EU citizens and facilitating the effective exercise of the freedom of assembly and of association throughout the Union.
(3) The European Parliament adopted a resolution on 17 February 2022 with recommendations to the Commission on a statute for European cross-border associations and non-profit organisations33.
(4) On 9 December 2021, the European Commission adopted an action plan for the social economy.34 In the action plan, the Commission put forward specific measures to create opportunities for social economy entities to start up and scale up, and to ensure that the social economy and its potential are more visible. The European Parliament welcomed the action plan in its resolution issued on 6 July 2022.35
(5) Following up on the action plan for the social economy, the Commission recommended concrete measures to support the social economy, which prioritises people, social and environmental causes over profit. The proposal for a Council Recommendation on developing social economy framework conditions of 13 June 202336 includes recommendations for Member States to design and implement social economy strategies. On the same day, the Commission also published two Staff Working Documents to improve the understanding of relevant tax rules for social economy entities37 and cross-border public-benefit donations.38
(6) Among the legal forms available in the non-profit sector and the social economy, the legal form of the non-profit association is the choice for the large majority. In addition to contributing to the Union's objectives and to achieving goals that are in the public interest, non-profit associations make an important contribution to the internal market by engaging on a regular basis in a wide range of economic activities, for example by offering services in sectors such as social services and health, communication and information, advocacy, culture, the protection of the environment, education, recreation, sports, and in the promotion of scientific and technological advances. This is true when the pursuit of economic activities is the principal activity or objective of the non-profit association, and in other cases.
(7) A fully functioning internal market for the activities of non-profit associations is essential in order to promote economic and social growth across Member States. At present, barriers within the internal market prevent non-profit associations from extending their operations beyond their national borders, thereby hindering the effective operation of the internal market. Working towards a fully effective internal market requires full freedom of establishment for all activities which contribute to the objectives of the Union.
(8) In order to establish a genuine internal market for the economic activities of non-profit associations, it is necessary to abolish any unjustified restrictions on the freedom of establishment, the free movement of services, the free movement of goods and the free movement of capital that still apply in the laws of certain Member States. These restrictions hinder non-profit associations from operating cross-border, not least because they impose on them a specific need to allocate resources to unnecessary administrative or compliance activities, which has a particularly deterrent effect in view of their non-profit nature.
(9) These barriers arise due to inconsistencies in the national legal frameworks of Member States. The legal framework in which non-profit associations carry out their activities in the Union is based on national law, without harmonisation at Union level. Presently, non-profit associations do not receive uniform recognition of their legal personality and capacity throughout the Union and often need to register for a second time or even form a new legal entity in order to engage in activities in a Member State other than the one in which they are established. The fundamental elements concerning the mobility of non-profit associations within the Union remain inadequately regulated, resulting in legal ambiguity for all non-profit associations with cross-border activities. For instance, when non-profit associations intend to relocate their registered office to a new Member State, uncertainties persist regarding relocation. In particular, the lack of a possibility of transferring the registered office without going through a liquidation hinders non-profit associations from acting, moving, and restructuring across borders within the Union. National rules diverge and often fail to provide clear solutions and procedures for the exercise of cross-border mobility and economic activities of non-profit associations.
(10) The ability to access and channel funds and capital efficiently across borders is necessary in order to facilitate non-profit associations’ activities in the internal market. This includes remuneration for economic activities, but also donations, inheritance, or other forms of funding. Different regulatory frameworks and existing restrictions in the Member States regarding receiving, soliciting donations, and similar contributions in whatever form result in fragmentation in the internal market and constitute a barrier to the functioning of the internal market.
(11) Moreover, laws of certain Member States impose requirements regarding nationality or legal residence on members of non-profit associations or on members of the executive body of such non-profit associations. Such requirements should be eliminated in order to protect the exercise of freedom of establishment and freedom of association of EU citizens.
(12) The freedom of association is crucial for the functioning of democracy, as it constitutes an essential condition for the exercise of other fundamental rights by individuals, including the right to freedom of expression and information. As recognised in the Charter of Fundamental Rights of the European Union (CFR) and in the Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR), freedom of association is a fundamental right.
(13) It is therefore necessary to put in place harmonised rules facilitating the pursuit of non-profit associations’ cross-border activities. Existing national rules on cross-border associations should be harmonised so that they allow those non-profit associations to take a legal form specifically designed to facilitate operations on a cross border basis. That legal form should be provided in Member State’s domestic legal orders through the adaptation of their respective rules on non-profit associations. This legal form, which is to be designated as the ‘European cross-border association’, ( ‘ECBA’), should be automatically recognised by all Member States and will allow non-profit associations to overcome the obstacles they face in the internal market, while respecting Member States’ traditions regarding non-profit associations.
(14) Furthermore, allowing non-profit associations to fully enjoy the freedom of establishment in the Union via a single registration that would be valid throughout the Union and automatic recognition of their legal personality is directly related to, and necessary for, the functioning of the internal market and the possibility to effectively benefit from the rights derived from that freedom.
(15) Trade unions and associations of trade unions should not be allowed to establish ECBAs, since they have a particular status in national law.
(16) Nor political parties and associations of political parties be allowed to establish ECBAs, as they enjoy a particular status within national law and Union law as laid down in Regulation (EU, Euratom) 1141/2014 of the European Parliament and of the Council39.
(17) Churches and other religious organisations and philosophical or non-confessional organisations, within the meaning of Article 17 TFEU, as well as associations of these entities, should also not be allowed to establish an ECBA, due to the lack of Union competence to regulate their status, and due to them having a particular status in national law.
(18) The establishment of an ECBA should be the result of an agreement between natural persons that are Union citizens or legally resident third-country nationals, or legal entities established in the Union, except persons that have been convicted of offences concerning money laundering, associated predicate offences40, or terrorist financing or are subject to measures that prohibit their operations in a Member State on the same grounds. In view of the non-profit purpose of the ECBA, where an ECBA is constituted by legal entities, they should also have a non-profit purpose.
(19) The non-profit purpose of an ECBA should mean that, when a profit is generated by means of economic activities, it should be used only in pursuit of the objectives of the ECBA, as defined in its statutes, and may not be redistributed. Therefore, there should be an asset lock requiring that no distribution of assets to members is to take place, even in the event of dissolution. In the latter case, residual assets should be transferred in a disinterested manner, such as to other non-profit associations having the same purpose.
(20) In a society in which pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men prevail, ECBAs should pursue objectives that are compatible with the values enshrined in Article 2 of the Treaty on European Union (‘TEU’) such as the respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. In addition, it should not be possible to use ECBAs for terrorist financing, tax evasion, tax avoidance, money laundering or any criminal offences or illegal purposes.
(21) The cross-border element of an ECBA is central. Therefore, an ECBA should carry out or have in its statutes the objective to carry out at least part of its activities across borders in the Union, in at least two Member States, and have founding members with links to at least two Member States, either based on citizenship or residence in the case of natural persons, or based on the location of their registered office in the case of legal entities.
(22) In order to ensure that ECBAs fulfil the objectives underlying their creation, the degree of harmonisation of the features and rights of an ECBA should be proportionate to the scale and scope of the identified problems non-profit associations face when engaging in cross-border activities.
(23) Harmonisation throughout the Union of the key features of ECBAs’ legal personality and capacity and their automatic recognition across Member States and the registration procedure, without Member States laying down diverging rules on these issues, is an essential condition for ensuring a level-playing field for all ECBAs. The aspects of ECBAs’ activities that are not harmonised by this Directive should be governed by the national rules that apply to the most similar type of non-profit association in national law. Such entities, independently of their name in the domestic legal order, should in all cases be membership-based, have a non-profit purpose, and have legal personality. To ensure transparency and legal certainty, Member States should notify the Commission of those rules.
(24) To ensure that Member States have the appropriate tools to combat terrorism financing and ensure transparency of certain capital movements, the rules applicable to ECBAs under this Directive should be without prejudice to measures adopted by Member States to prevent the misuse of non-profit associations for public policy and public security reasons and to ensure transparency of certain capital movements when required by Union law, or national law in compliance with Union law.
(25) In order to remove legal and administrative barriers for non-profit associations operating in more than one Member State and ensure the functioning of the internal market, all Member States should automatically recognise an ECBA’s legal personality and legal capacity. This legal personality and the legal capacity should be granted upon the ECBA’s registration in a Member State.
(26) ECBAs should be able to decide freely on their rules of operation. Any limitation on this freedom imposed by a Member State should be applied in a general and non-discriminatory way, prescribed by law, justified by an overriding reason in the public interest, and be appropriate for ensuring the attainment of the objective pursued and not going beyond what is necessary for it to be attained.
(27) Articles 52, 62 and 65 TFEU and relevant case law also apply to ECBAs. These TFEU Articles provide for the justification of measures restricting the freedom of establishment, freedom to provide services and free movement of capital on grounds including public policy, public security and public health. Furthermore, the concept of ‘overriding reasons in the public interest’ to which reference is made in certain provisions of this Directive has been developed by the Court of Justice in its case law. Measures by Member States that are liable to hinder or make less attractive the exercise of those Treaty freedoms should be permitted only where they can be justified by objectives listed in the Treaty or by overriding reasons in the public interest recognised by Union law. While no exhaustive definition exists, the Court of Justice has recognised that justifications are possible on various grounds such as public policy, public security and public health, the maintenance of order in society, social policy objectives, the protection of the recipients of services, consumer protection, the protection of workers, provided that the other conditions are met. Such measures need, in any event, to be appropriate for ensuring the attainment of the objective in question and not go beyond what is necessary to attain that objective.
(28) In order to ensure a common and appropriate approach to governance across the Union, ECBAs should comprise a decision-making body meaning the body which gathers all members, which is in some Member States traditionally referred to as the general meeting or general assembly. ECBAs should also comprise an executive body, which is in some Member States traditionally referred to as an executive committee or board of directors; the executive body should be in charge of the administration, management and conduct of the ECBA. It should also ensure compliance with the statutes of an ECBA and legal obligations, as well as represent an ECBA in dealings with third parties and in legal proceedings. The executive body of an ECBA should be composed of a minimum of three persons, be it natural persons or legal entities through their representatives.
(29) In order to ensure that ECBAs are able to effectively perform their activities and ensure equal treatment vis-à-vis non-profit associations in national law, ECBAs should not be treated less favourably than the most similar non-profit association in the domestic legal order of the home Member State where it operates.
(30) In accordance with the principle of non-discrimination and to ensure the freedom of association, in the implementation and application of this Directive there should be no discrimination against any group or individual on any grounds, such as birth, age, colour, sex and gender, sexual orientation, gender identity, health conditions, immigration or residency status, genetic features, language, national, ethnic or social origin, political or any other opinion, membership of a national minority, physical or mental disability, property, race, religion or belief, or other status.
(31) To facilitate the cooperation among Member States and between Member States and the Commission, Member States should designate a competent authority responsible for the application of the rule transposing this Directive (‘competent authority’). The Commission should publish the list of competent authorities. To have a comprehensive overview of the legal treatment of ECBAs in Member States, Member States should notify the Commission of the names and tasks of relevant authorities, other than the competent authorities, established or designated for the purposes of the national rules applicable to the most similar non-profit association in national law, if applicable.
(32) In accordance with the right to an effective remedy and to a fair trial as laid down in Article 47 CFR and Article 13 ECHR, decisions made by competent authorities in applying national provisions implementing this Directive should be subject to judicial review. Such judicial review should be available to ECBAs, as well as any other natural persons or legal persons, in respect of decisions made by competent authorities regarding ECBAs, including in cases of failure to act. The right to judicial review includes the right to a fair and public hearing within a reasonable time by an independent and impartial tribunal previously established by law according to the national law of the relevant Member State in compliance with Article 47 Charter of Fundamental Rights of the Union.
(33) In view of their non-profit purpose, ECBAs should be able to apply for funding from a public or private source in the Member State(s) in which they operate on a non-discriminatory basis. There should be no restriction on the ECBA’s right to receive and provide funding, except where a restriction is prescribed by law, justified by an overriding reason in the public interest, is appropriate for ensuring the attainment of the objective pursued and does not go beyond what is necessary for it to be attained and is compliant with Union law.
(34) To ensure that ECBAs fully benefit from the internal market, ECBAs should be able to provide and receive services, as well as to engage in trade in goods without interference from Member States. Restrictions should be permitted only if they are prescribed by law, justified by overriding reasons in the public interest, and are appropriate for ensuring the attainment of the objective pursued and do not go beyond what is necessary in order for it to be attained. This should not affect provisions of other Union acts. This should include the provisions of Union acts that reinforce the fundamental freedoms, such as those laid down in Directive 2006/123/EC of the European Parliament and of the Council41 which guarantee the freedom of establishment and the freedom to provide services as well as the provisions of other Union acts which regulate specific economic activities ECBAs engage in.
(35) In order to establish a genuine internal market for non-profit associations, it is necessary to abolish certain restrictions on the freedom of establishment, the free movement of services and the free movement of capital that still apply in the laws of certain Member States. Therefore, Member States should not impose any discriminatory requirements based on the nationality of members of an ECBA or its executive body, except as provided for by this Directive. Nor should Member States provide for any requirement on physical presence of members for the validity of a meeting. To enable ECBAs to enjoy the full benefits of the internal market, Member States should not require the registered office of an ECBA to be in the same Member State as its central administration or the principal place of operations. Member States should also not impose general prohibitions on ECBAs carrying out economic activities, nor only allow them to engage in economic activities if they are linked to an objective set out in an ECBA’s statutes.
(36) The registration of an ECBA should be constitutive of the ECBA. In order to register, an ECBA should have a minimum of three founding members. Both legal entities with a non-profit purpose established in the Union and natural persons who are Union citizens or legally residing in the territory of the Union should be able to be founding members of an ECBA. It should also be possible for non-profit associations to convert into an ECBA within the same Member State.
(37) To ensure that ECBAs are able to operate across borders and in compliance with the principle of proportionality, they should be required to register only once, in the home Member State, in order to acquire their legal personality and legal capacity. To ensure automatic recognition of this registration throughout the Union, it is necessary to harmonise the registration procedure. This concerns in particular the documents and information required for an application to register an ECBA, as well as the checks to be carried out.
(38) Member States should be entitled to require a registered ECBA to make a declaration, provide information, request or obtain authorisations for engaging in particular activities only where such requirements are (i) applied in a general and non-discriminatory way, (ii) prescribed by law, (iii) justified by overriding reasons in the public interest, (iv) appropriate for ensuring the attainment of the objective pursued and do not go beyond what is necessary in order for it to be attained. Such requirements may be connected, for example, to the specificities of certain sectors, like healthcare. Where Member States provide for such additional procedures, this information should be made publicly available in order to ensure that an ECBA is able to comply with these requirements.
(39) To prevent fraud, it is important that Member States verify the identity of the founding members and the legal representatives of the ECBA. The verification of identity is particularly important if the application for registration is conducted electronically. Due to the variety of different practices in Member States, the specific methods of verifying identity should remain in the prerogative of the Member State concerned.
(40) While respecting the freedom of establishment and association, the registration of an ECBA should be denied in cases of failure to comply with the formal requirements for the registration, as laid down in this Directive, where the application is not complete or if the objectives described in the statutes contravene Union law or national law compliant with Union law. Furthermore, the registration must be rejected, if the application fails to comply with the basic requirements set out in this Directive to constitute an ECBA, namely the non-profit purpose, the minimum number of founding members and the cross-border element in terms of activities in at least two Member States and founding members with links with at least two Member States. Any refusal to register an ECBA should be made in writing and duly reasoned by the competent authority.
(41) Member States should be required to establish a register for the purposes of the registration and for maintaining and publishing information on ECBAs. This register should contain information about ECBAs and the submitted documents. As the information kept in the register may become outdated, Member States should ensure that the ECBA notifies any changes concerning the information on ECBAs to the competent authority and that the information held in the register is updated. Member States should be allowed to make use of their existing national registers for the purpose of this Directive. In order to ensure transparency especially for members of an ECBA and its creditors, if applicable, the ECBA certificate, the liquidation and the dissolution of an ECBA are pieces of information that should be made publicly available for a maximum of 6 months after the dissolution of an ECBA. The interoperability solutions developed as part of the implementation of the Proposal for a Regulation of the European Parliament and of the Council laying down measures for a high level of public sector interoperability across the Union42 can further support Member States to move towards cross-border interoperability of their registers. To ensure that information about the existence of an ECBA is still available even after its dissolution, all data retained and stored in the register should be kept for 2 years after dissolution.
(42) Regulations (EU) 2016/67943 and (EU) 2018/172544 of the European Parliament and of the Council apply to the processing of personal data carried out in the context of this Directive, including the processing of personal data to maintain the national register or registers on ECBAs and their legal representatives, to access personal data in such registers and to exchange personal data in the context of administrative cooperation and mutual assistance between Member States under this Directive, where applicable via the Internal Market Information System (IMI) established by Regulation (EU) No 1024/2012 of the European Parliament and of the Council45, and the keeping of records in accordance with this Directive..
(43) In order to enable ECBAs to reap the full benefits of the internal market and given that mobility rights are directly related and necessary to the functioning of the internal market, ECBAs should be able to transfer their registered office from one Member State to another. Such a transfer of registered office should not result in the dissolution of an ECBA in the home Member State or the creation of a new legal entity in the new home Member State, or affect any of the assets or liabilities, including any terms contained in contracts, or credits, rights or obligations of an ECBA existing before the transfer. In the case of mobility, Member States should ensure the protection of the interests of the ECBA’s creditors if any. To ensure protection of employees of ECBAs, ECBAs should be required to inform them of any proposed transfer in good time and allow them to examine the draft terms of such transfer. Other provisions of Union and national law concerning the protection of employees, such as Directive 2002/14/EC of the European Parliament and of the Council46, may also be applicable.
(44) To harmonise the procedure of transfer of registered office of an ECBA, Member States should ensure that a transfer of registered office is decided by the decision-making body of the ECBA concerned. The ECBA should submit the request with the relevant documents to the competent authority of the Member State to which the transfer is to be made and inform in parallel the competent authority of its home Member State when submitting the request for transfer. Where applicable, the proposed statutes of the ECBA should be amended according to the requirements of the national law of the Member State to which the ECBA requests the transfer. Upon transfer of the registered office, the ECBA becomes an ECBA under the national law of the new home Member State. This change of applicable law ensuing from the transfer of the registered office should not lead, in order to avoid duplications, the competent authority of the new home Member State to verify any element already verified during the registration in the previous Member State and harmonised by this Directive. The competent authority of the Member State to which the ECBA intends to transfer the registered office should reject the request of transfer only where the requirements laid down in national law transposing this Directive are not met and should not refuse it on other grounds. In particular, the competent authority should not reject the request on the ground of non-compliance with requirements under its national law that could not have been a ground to reject the registration in accordance with Article 19. In order to facilitate the transfer of registered office of an ECBA in the internal market, the competent authority of the new home Member State should issue an updated certificate in accordance with paragraph 2 of Article 21, adapting the unique registration number and the two-letter country code of the Member State where the ECBA’s office is transferred and the postal address of the registered office, as well as any other elements, if applicable..
(45) In compliance with the freedom of assembly and of association, an ECBA should be dissolved only by decision of its members or by a decision of the competent authority of the home Member State. Where the dissolution of an ECBA is the result of a decision of its members, it should be taken by two-thirds of the votes representing at least half of the total of the members during an extraordinary meeting. The dissolution of an ECBA may be involuntary by decision of the competent authority of the home Member State of the ECBA, as a last resort, only where an ECBA does not respect its non-profit purpose, where its activities constitute a threat to public order, or where the members of the executive body of an ECBA have been convicted of a particularly serious criminal offence or the ECBA itself has been convicted of a criminal offence, if national law allows for this possibility. In this case, the competent authority should communicate to the ECBA a formal notice of its concerns and hear the ECBA in order to give the ECBA the opportunity to reply.
(46) The dissolution of the ECBA should lead to its liquidation. The liquidation of ECBAs should be compliant with Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (EIR 2105)47 which requires that the law applicable to insolvency proceedings and their effects shall be that of the Member State within the territory of which such proceedings are opened. In line with the non-profit purpose of ECBAs, any assets of a dissolved ECBA should be transferred to a non-profit entity carrying out a similar activity as the one carried out by the dissolved ECBA or transferred to a local authority which should utilise them for an activity like that pursued by the dissolved ECBA.
(47) To enable an ECBA to prove that it has registered within a Member State and to further facilitate cross-border procedures and simplify and reduce formalities, the competent authorities should, as the final step of the registration process, issue a certificate (’ECBA certificate’) which contains the essential registration information, including the name of an ECBA, the address of its registered office, and the names of the legal representatives. To facilitate the use of this certificate in various Member States without additional adaptations or compliance costs, the Commission should establish a standardised template available in all languages of the Union. Therefore, in order to ensure uniform conditions for the implementation of this act, implementing powers should be conferred on the Commission to produce a standardised template including in relation to the technical specifications of the template. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council48. Those implementing acts should be adopted in accordance with the examination procedure referred to in Article 5 of Regulation (EU) No 182/2011 of the European Parliament and of the Council.
(48) The notion of ‘particularly serious crime’ should be defined by Member States and may include terrorism, trafficking in human beings and sexual exploitation of women and children, illicit drug trafficking, illicit arms trafficking, money laundering, corruption, counterfeiting of means of payment, computer crime and organised crime.
(49) In order to allow Member States to efficiently implement legal provisions of this Directive on administrative cooperation and facilitate cooperation, Member States should use the Internal Market Information System (IMI). In particular, the competent authorities should use IMI to notify the competent authorities of the other Member States when a new ECBA is constituted, including when a non-profit association converts into an ECBA. Where a competent authority receives an application for registration, it should communicate through IMI with the competent authorities of the Member State(s) in which these documents have been issued to verify, for instance, their lawfulness. In the case of a transfer of the registered office of an ECBA, the competent authority of the new home Member State should notify the competent authorities of the other Member States of this transfer and update IMI with the relevant information. In the case of a dissolution, both voluntary or involuntary, the competent authority should also notify the competent authorities of the other Member States to inform them about the dissolution and to update IMI with the relevant information.
(50) Since the objectives of this Directive, namely improving the functioning of the internal market by removing legal and administrative barriers for non-profit associations operating in more than one Member State, cannot be sufficiently achieved by the Member States alone and can rather be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 TEU. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives.
(51) The European Data Protection Supervisor was consulted in accordance with Article 42(1) of Regulation (EU) 2018/1725 and delivered an opinion on 27 June 2023.