Associations are part of the legal entities present in Europe's social economy, as recognised in the Action Plan for the Social Economy of December 2021. 3.8 million associations exist in EU countries, representing close to 90% of the legal forms present among non-profit organisations.
Non-profit associations provide services and goods in sectors with a societal impact (healthcare and social services, social inclusion, culture, sports, research and development, education and training, etc.).
Main characteristics of associations
- legal entities voluntarily established by 2 or more natural persons and/or legal entities
- member-based organisations based on the participatory model
- non-profit purpose
- governed by a structure that comprises at least a compulsory general assembly of members and board of directors
Associations in the single market
Associations are regulated through national laws in 24 EU countries. The existing regulatory framework enables associations to prosper at national level, but does not adequately take into account their cross-border dimension.
When operating across borders in the single market, associations are faced with legal uncertainty and additional administrative burden and costs. This is because national laws – except for a few cases - do not generally include rules on cross-border aspects, or addressed them in a different way.
For this reason, the European Commission adopted a proposal for a Directive COM(2023) 516/4 on 5 September 2023. This aims to remove legal and administrative barriers for non-profit associations that operate or wish to operate in more than 1 EU country. It also intends to facilitate the recognition of their legal status across the EU. This is by introducing the additional legal form of a European cross-border association (ECBA) in national legal systems, which is specifically designed for cross-border purposes.
Removing these legal and administrative barriers for cross-border non-profits will make it easier for them to engage in activities across EU countries. It will enable them to unleash their full potential to generate economic and societal value in the EU as a whole.
Acknowledging the need to create an enabling environment for the non-profit sector, this proposal stems from the European Parliament resolution on a statute for European cross-border associations and non-profit organisations. Written with recommendations to the Commission, it was adopted on 17 February 2022.
The proposal is embedded in the broader political objectives of the European Green Deal and the Digital Decade 2030. It also embraces the political priority for an economy that works for people. This proposed directive contributes to the objectives of the Action Plan for the Social Economy and is linked to some of its objectives, such as the Council Recommendation on developing social economy framework conditions.
It also takes into account these 2 Commission staff working documents on
- 'Relevant taxation frameworks for Social Economy Entities'
- 'Non-discriminatory taxation of charitable organisations and their donors: principles drawn from EU case-law'
Alongside this proposed directive, the Commission also adopted Regulation COM(2023) 515 to amend the Internal Market Information System (IMI) and the Single Digital Gateway (SDG) regulations. By making information about ECBAs available on these systems, cooperation and information exchange is facilitated among competent authorities through the IMI, and when conducting digital operations via the SDG.
To prepare the adoption of Directive COM (2023) 516/4, the European Commission commissioned 2 studies
- 'Comparative legal analysis of association laws and regimes in the EU'
- 'Comparative legal analysis of merger rules concerning the associations in the EU'
A public consultation was also conducted during the second half of 2022.