Proposal for a Directive on cross-border activities of associations
Date: 2022-08-05
Institutions: Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs, European Commission
Subjects: single market



IMMC.Ares%282022%295606335.ENG.xhtml.PART-2022-585784V1.docx












CALL FOR EVIDENCE


FOR AN IMPACT ASSESSMENT







This document aims to inform the public and stakeholders on the Commission's future legislative work so they can provide feedback on the Commission's understanding of the problem and possible solutions, and give us any relevant information that they may have, including on possible impacts of the different options.







Title of the initiative




Proposal for a legislative initiative on cross-border activities of associations 






Lead DG (responsible unit) 




DG GROW G.2






Likely type of initiative




Legislative initiative 







Indicative timetable




Q2 2023






Additional information

















A. Political context, problem definition and subsidiarity check  






Political context  






On 17 February 2022, the European Parliament (EP) adopted a legislative initiative resolution (2020/2026(INL), (‘the EP resolution’), on the basis of Article 225 TFEU, with ‘recommendations to the Commission on a statute for European cross-border associations and non-profit organisations’. The EP resolution aims to facilitate the cross-border activities of European associations and other non-profit organisations (‘NPOs’). It consists in requests for two legislative proposals: (i) a regulation to create the legal form of ‘European association’, and (ii) a directive harmonising common minimum standards for NPOs. 


As set out in the Political Guidelines by President von der Leyen
1
 and in the Working Methods of the European Commission, the Commission replied to the Parliament in May 2022 and committed to respond to the EP resolution with a legislative act, fully upholding the principles of proportionality, subsidiarity and better law-making. 






Problem the initiative aims to tackle






Based on the EP resolution, the proposed initiative will focus on associations and complement: (i) actions announced in the action plan on social economy (COM(2021) 778 final) such as the forthcoming Council Recommendations developing social economy framework conditions; and (ii) other actions recognising the key role played by civil-society actors
2
.


There are currently 27 different sets of national rules for associations across the EU. These rules cover issues such as establishment; the constitutive elements of associations; governance; and administrative costs. These disparities in rules lead to restrictions on – and barriers to – establishment, free movement of capital (including freedom to receive capital), free movement of goods, and free movement of services. These barriers hamper associations’ activities across borders in the single market, including in border regions. Ultimately, these barriers may also impact on fundamental rights in the EU (in particular freedom of association). This situation: (i) creates disruptions to the work of these entities that operate on a non-profit basis; (ii) prevents these entities from fully benefiting from the single market; and (iii) undermines the potential of fundamental rights to protect and promote the EU’s values (such as fundamental rights, rule of law and democracy).


Associations may or may not be engaged in economic activities, and are active in many areas of civil society, from business development and innovation support to culture and fundamental rights. In 2020, there were approximately 11 000 associations in Belgium
3
, 34 340 in Hungary
4
, and115 000 charities in Ireland
5
. There were 308,085 associations in Italy
6
 in 2019. There were 1.3 million active associations in France in 2018
7
 and Germany had 604 000 active associations in 2017
8
. 


There are clearly many associations across Europe and they are engaged in a diverse range of activities. These associations also have considerable economic impact. For example, associations in France employed 2.2 million people in 2018 and accounted for 4.7% of GDP
9
. Given the significance of associations, the current fragmentation of rules governing them entails an economic cost for the single market, and ultimately compromises the good functioning of the single market for the non-profit sector. Moreover, associations are crucial for spreading fundamental rights and a culture of upholding the rule of law. The obstacles associations face when operating across borders may have a negative impact on their ability to carry out their work. As a result, those obstacles restrict the space for civil society across the EU.






Basis for EU action (legal basis and subsidiarity check) 











Legal basis






The legal basis for EU action could be Article 114 TFEU and/or Article 50 TFEU. Article 114 TFEU is the appropriate legal basis for measures aimed at achieving the objectives set out in Article 26 TFEU (approximation of laws in the internal market). Article 50 TFEU provides for the freedom of establishment. Other possible legal bases could be Article 53 TFEU (coordination of the provisions on the taking-up and pursuit of activities as self-employed persons) in conjunction with Article 62 TFEU (services).






Practical need for EU action






EU action is needed to remove existing barriers to – and restrictions on – associations’ cross-border activities in the single market. The fragmentation of rules across the EU cannot be addressed at national level, and its cross-border character requires a European intervention to remove barriers and foster associations’ contribution to the single market and to the EU’s democratic space. Based on the EP resolution, the objectives of the proposed legislative initiative to ensure clear and coherent rules for activities of associations between EU Member States could be better achieved at EU level. Without intervention at EU level, it is very likely that existing unjustified barriers and restrictions leading to disparities in rules will remain.






B. Objectives and policy options 






General objective: To enable associations and the public to fully benefit from the freedoms of the single market and from their fundamental rights under the Charter of Fundamental Rights of the EU (in particular, freedom of expression and information, freedom of assembly, and freedom of association). By making it easier to engage in cross-border activities in the single market, associations will be able to better: (i) carry out their activities; (ii) participate in the democratic space across the EU; and (iii) further contribute to the protection and promotion of the EU’s values (fundamental rights, rule of law and democracy).


Specific objectives: 1. To help associations access the freedoms of the single market (freedom of establishment, and the freedom to provide goods, services and capital) and to improve the capacity of associations to expand across Member States; 2. To unleash the potential of associations to address shared societal challenges in the EU and contribute to economic development; 3. To promote and protect the fundamental rights enshrined in the Charter of Fundamental Rights of the EU; 4. To promote the development of an EU non-profit sector.


Taking into account the experience of past legislative proposals in this area, the Commission will, in accordance with better regulation rules, analyse the EP resolution and assess how to best address the identified problems for associations, based on the input received from this call for evidence and from the public consultation. The analysis will draw on the two legislative proposals by the European Parliament and will also explore: (i) the option of mutual recognition among Member States; and (ii) ways to improve cooperation among associations operating across borders.







C.  Likely impacts 






The initiative aims to promote and support the cross-border activities of associations in the single market. This is likely to have a significant societal and economic impact, as reducing administrative and financial burden will allow these entities to expand across borders and fully contribute to the completion of the single market and more of these entities will be able to provide their goods and services and invest in more Member States. 



Moreover, the promotion and recognition of the work of these entities at EU level, coupled with the protection and promotion of the fundamental rights they intrinsically implement, is likely to both promote EU values and fundamental rights and foster a pan-European democratic space. 







D. Better-regulation instruments 






Impact assessment 






The Commission will conduct an impact assessment to assess the expected impact of the policy options. This will help the Commission to prepare the future legislative proposal.






Consultation strategy 






A public consultation (in all EU languages) is being launched together with this call for evidence. It will be open for 12 weeks. The aim of this consultation will be to get direct feedback and evidence from relevant stakeholders, in particular: associations; other NPOs; EU citizens engaging in associations and other NPO activities; Member States and public authorities; businesses; experts; and researchers in non-profit law.


In addition, a study underpinning the preparation of the impact assessment will be launched in summer 2022.


Additionally, expert workshops may be organised to provide targeted input on a series of questions linked to the preparation of the Commission’s future legislative initiative. 












Why we are consulting?






The Commission is gathering stakeholders’ views to give stakeholders an opportunity to: (i) comment on the need for EU action; (ii) comment on the planned options to solve the identified problems; (iii) their expected impact and (iv) provide input on any further issues to consider in developing this policy field.







Target audience






All individuals and organisations operating in the non-profit sector are welcome to contribute to this consultation. The Commission would like to receive input from an inclusive and broad range of stakeholders and relevant actors (including economic ones), such as public authorities; associations; NPOs in general; EU citizens engaged in associations and other NPO activities; associations of associations; civil-society organisations; and non-governmental organisations.











(1)
 
                        
https://ec.europa.eu/info/candidate-president_fr
.
 



(2)
 
                        This includes the strategy to strengthen the application of the Charter of Fundamental Rights in the EU (COM/2020/711 final) and the European rule-of-law mechanism.



(3)
 Baromètre des associations, 2020, Fondation Roi Baudoin.



(4)
 Hungary statistics Agency: 
https://www.ksh.hu/stadat_files/gsz/hu/gsz0014.html
 



(5)
 Charities regulator: 
https://www.charitiesregulator.ie/media/2211/final_charities-regulator-annual-report-2020.pdf
 . In Ireland, associations are part of the broader concept of ‘charities’ and can take different legal forms (unincorporated associations, trusts, and companies limited by guarantee). 



(6)
 Italy statistics Agency (ISTAT): 
https://www.istat.it/it/archivio/262507
 



(7)
 France statistics Agency (INSEE): 
https://www.insee.fr/fr/statistiques/5365639
 



(8)
 BertelsmannStiftung, ZiviZ-Survey 2017 : 
https://www.bertelsmann-stiftung.de/de/unsere-projekte/zivilgesellschaft-in-zahlen/projektnachrichten/ziviz-survey-2017
 



(9)
 France statistics Agency (INSEE): https://www.insee.fr/fr/statistiques/5365639