The European Commission has adopted a proposal to streamline the activities of non-profit organizations (NPOs) across the borders of EU member states.
This move aims to enhance the performance of the internal market by removing legal and administrative barriers faced by NPOs operating in or wishing to enter multiple member states. Consequently, it will bolster their role in promoting economic and societal values within member states and ensuring equal opportunities for all.
In a press release available on its official website, the Commission pointed out that currently, when NPOs participate in activities in a member state other than the one they were established in, they often face the challenge of inconsistent recognition of their legal identity. This discrepancy often compels them to re-register or even establish a new legal entity within that member state.
Approximately 310,000 non-profit associations are impacted by these hurdles when operating in another country. The new rules are expected to reduce administrative costs by up to €770 million annually and could reach savings of €8.5 billion over a predetermined timeframe.
Additionally, by addressing specific barriers highlighted in the proposal, around 185,000 more non-profit organizations might engage in cross-border activities, generating an added value of up to €4.2 billion over 15 years.
The Commission’s proposal introduces an additional legal form, the European Cross-Border Association (ECBA), into the national legal systems of member states. This new structure is tailored specifically for cross-border purposes, significantly reducing legal and administrative burdens associated with recognition and establishment of NPOs operating in another member state.
Once established in a member state, the ECBA will be automatically recognized and can operate in all member states, encompassing economic activities. This will enable NPOs to fully leverage their socio-economic potential within the European Union.
The statement further elucidated that the new rules would include the introduction of a distinct legal framework in each member state for NPOs explicitly designed for cross-border objectives (ECBA).
This will be alongside the current national legal forms, allowing for the automatic recognition of this new legal entity across the union once the ECBA is registered in a member state. The coordinated rules regarding the transfer of registered offices will also enable these associations to benefit fully from the freedom of establishment, the provision of services, goods, and capital within the union.
The European Commission, headquartered in Brussels, Belgium, is the executive branch of the European Union responsible for proposing legislation, enforcing EU laws, and managing the EU’s day-to-day business.
The move to facilitate cross-border operations for non-profit organizations resonates with the Commission’s larger goals of ensuring a unified and integrated European Union, where businesses and organizations can operate seamlessly across member states. The introduction of the ECBA is a significant step towards achieving this objective, offering NPOs an efficient way to maximize their reach and impact across the continent.
