19.1.2011   

EN

Official Journal of the European Union

C 18/30

2.1.1

The purpose of this own-initiative opinion is to examine the potential development of a European Foundation Statute (EFS) that should help foundations and funders that are increasingly working across borders face both civil and tax law barriers and give a European scale from the outset to the creation of new foundations.

2.1.2

In November 2009, the European Commission Directorate-General Internal Market and Services released the results of a public consultation (4) on a European Foundation Statute (EFS) which generated a large number of responses especially from the non-profit sector and showed a strong support for a EFS from this sector.

2.1.3

In February 2009, the European Commission published a Feasibility Study on the European Foundation Statute (5). The Study set out the potential benefits of an EFS in terms of reducing or eliminating unnecessary financial costs and administrative burdens, thereby making it easier for foundations that wish to pursue their activities across different countries within the EU.

2.1.4

Two field recommendations also exist with regard to a European Foundation Statute:

2.1.5

On 4 July 2006 the European Parliament adopted a resolution on prospects in relation to company law (8) which calls on the Commission to continue its preparation of Community legislation for other legal forms, such as the European foundation.

2.1.6

In a 2009 opinion on diverse forms of enterprise (9), the EESC has welcomed the start of work on a European Foundation Statute and called on the Commission to conclude the impact assessment in early 2010 by presenting a proposal for a regulation that will enable foundations of European scope to operate on a level playing field in the internal market.

2.1.7

In 2006 the European Court of Justice has ruled (10) that the different tax treatment of resident and non-resident public benefit foundations constitutes an unjustified breach on the free movement of capital but only where the Member State recognises the public-benefit status of the foundation according to the Member State law.

2.1.8

In a case on cross-border donations (11) the Court ruled that tax laws which discriminate against donations to public-benefit organisations based in other EU Member States are against the EC Treaty, as long as the recipient organisations based in other Member States are to be considered ‘equivalent’ to resident public benefit organisations.

2.2.1

The European foundation sector is an important economic force (12) with assets between EUR 350bn and close to approx. EUR 1 000bn and annual expenditures of between EUR 83bn and EUR 150bn. Also a substantial number of European countries are on track for sustained foundation growth.

2.2.2

Foundations play an important role in the labour market. The 110 000 foundations identified by the Feasibility survey on the EFS provide direct full-time employment to between 750 000 to 1 million people in the EU (13). By giving grants or capital support to organisations and individuals they also support employment and voluntary engagement.

2.2.3

The vast majority of foundations in the EU are asset-based and public benefit purpose-driven. As a general rule, they have no members or shareholders and are separately-constituted non-profit distributing bodies. They have an established and reliable income source which is irrevocably dedicated to public benefit purposes. They can derive their income from an endowment, a capital sum provided by an individual, family, company or another organisation. It can take the form of ‘movable’ property: cash, shares, bonds, works of art, authorial rights, research licences or ‘immovable’ property: land and real estate such as museums, and care centres. They also acquire their income from other sources e.g. bequests and gifts, appeals to public generosity, self-generated income, contracts, lottery proceeds.

2.2.4

Foundations in the EU work on issues and projects which directly benefit people and are key to developing a citizens’ Europe in areas ranging from knowledge, research and innovation, social services and healthcare, medical research, the environment, regional development, employment and vocational training, the conservation of natural and cultural heritage, to the promotion of the arts and culture, international cooperation and development.

2.2.5

An increasing number of foundations and funders are working across borders. However they face administrative, civil and tax law barriers, which are identified in the Feasibility Study including:

2.3.1

It would be unrealistic to hope for any harmonisation of the vast number of laws governing foundations in the Member States (14), particularly in view of the differences between them as regards the purpose, requirements for establishment, governance and accountability (15).

2.3.2

None of the existing European legal tools (16) set up to support the growth of activities of - or cooperation between - private companies and public bodies across borders in the EU are suited to foundations needs and special features as private non profit distributing bodies which pursue a public interest objective and do not have shareholders or controlling members.

2.3.3

It has become necessary to consider the development of a European Foundation Statute that is accessible and tailored to foundations’ needs, with a view to facilitating their operations and collaborative ventures within the single market, enabling them to pool resources from different countries and giving a European scale from the outset to the creation of European foundations to support public benefit activities.

3.1.1

The European Foundation Statute (EFS) is a good policy option in order to foster the work of public benefit foundations across the EU because it would:

3.1.2

The advantages of an EFS would be multifold as follows:

3.2.1

An effective EFS should fulfil a series of key principles and features. It would be an additional and optional public benefit tool governed mainly by European law and complementing national and regional laws.

3.2.2

An EFS could be devised along the following lines, which will have to be detailed in cooperation with the parties concerned. An EFS should:

4.1.1

The proposal for an EFS would set out the various sources of law applicable: the EU Regulation on the EFS, the EF bylaws and other EU laws or national laws.

4.1.2

While the legislation on an EFS would need to be comprehensive, it should also be clear and simple. The grounds for this are obvious: clarity will help European Foundations to comply with the law, and those charged with supervision to enforce it.

4.1.3

The proposal on a EFS should establish the framework in which European Foundations are established, operate, and are accountable. In the areas that it would regulate (e.g. formation, registration, purpose, capital, registered office, legal personality, legal capacity, directors’ responsibility, transparency and accountability requirements) the legislation should be comprehensive and not refer to national laws. This will ensure the unity, clarity and the security that the Statute should provide for third parties, partners and donors.

4.1.4

With regard to supervision, the oversight over EFs could be delegated to designated competent authorities in the Member States on the basis of the commonly agreed EFS standards regarding registration, reporting and supervision requirements set forth in the EFS Regulation.

4.1.5

On matters not covered by the EFS legislation, provisions of other Community law or law of the Member States would be applicable.

4.1.6

In respect of taxes, the competence to determine the tax treatment of the EF rests on the tax authority of the Member State where the EF is tax-liable.

4.1.7

EU Member States provide for special tax treatment for public benefit purpose foundations (18). A difference of tax treatment between domestic and foreign public benefit/good bodies is considered as being potentially in conflict with the EC Treaty in particular as regards donations, inheritance or gift tax for legacies and gifts, and foreign-source income of foundations. Thus a EF should also be able to benefit from the tax benefit which domestic legislators have granted to resident foundations including tax exemption on income tax, gift and inheritance tax, tax on the value/transfers of their assets (19).

4.1.8

With respect to the tax treatment of EFs’ founders/donors: any founder/donor giving to an EF within or across borders shall receive the same tax deduction or tax credit as if the donation were given to a public benefit purpose organisation in the donor’s own Member State.

4.1.9

As regards indirect taxes, in an opinion on the Diverse forms of enterprise (20) the EESC had requested the Commission to encourage Member States to study the possibility of granting them compensatory measures on the basis of their confirmed public value or their proven contribution to regional development.