COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT Accompanying the document Proposal for a Directive of the European Parliament and of the Council on European cross-border associations
Date: 2023-09-05
Institutions: Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs, European Commission
Subjects: European association, cross-border dimension, free movement of capital, free movement of goods, freedom to provide services, non-profit organisation, right of establishment, single market

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   EUROPEAN COMMISSION  Brussels, 5.9.2023  SWD(2023) 294 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT  Accompanying the document Proposal for a Directive of the European Parliament and of the Council on European cross-border associations {COM(2023) 516 final} - {SEC(2023) 306 final} - {SWD(2023) 292 final} - {SWD(2023) 293 final}  
 
 
Executive Summary Sheet 

Impact assessment on a legislative initiative on cross-border activities of associations in the single 
market 

A.  Need for action 

What is the problem and why it is being addressed?  

An estimated 3 870 million non-profit associations are active in EU Member States, generating 2.9% of 
EU  GDP  (i.e.  EUR  420  billion)  in  sectors  such  as  health,  care  and  social  services,  social  inclusion, 
culture,  sports  and  humanitarian  aid.  Associations  are  regulated  through  national  laws  in  24  Member 
States. When operating across borders in the single market, associations are faced with uncertainty about 
the  applicable  rules  and  additional  administrative  burden  and  costs,  as  national  laws  do  not  generally 
include rules on cross-border aspects (except for a few cases) or these aspects are addressed in different 
ways. 
The  impact  assessment  identified  barriers  in  the  single  market  in  four  areas:  cross-border  activities  of 
associations in relation to their right to establishment and provision of services and goods; the movement 
of capital;  cross-border  membership  and  participation  in  governance  bodies;  cross-border  mobility 
(conversions, mergers, divisions).  
The impact assessment estimates that the identified problem concerns around 8% of associations that are 
currently engaged in cross-border activities (some 310 000 associations), and, in addition, at maximum 
another 185 000 associations that would potentially engage in such activities, if the barriers tackled by 
the initiative were removed. Removing barriers could create additional GDP and jobs and further, unlock 
the socio-economic potential of the non-profit sector in Europe of which associations are the dominant 
legal entities (around 87%).  

What should be achieved? 

The  initiative  seeks  to  improve  the  functioning  of  the  single  market  by  removing  administrative  and 
regulatory barriers for associations operating in more than one Member State in order to unleash their full 
potential to generate economic and societal value in the EU. This includes enabling them to fully benefit 
from the single market freedoms, in particular, the freedom of establishment, the freedom to provide and 
receive goods and services, as well as the free movement of capital (cross-border donations, membership 
fees).  
In pursuit of this general objective, the initiative has the following specific objectives: 
- 

Improve  possibilities  for  an  association  to  have  its  legal  personality  recognised  in  other  Member 
States, thereby ensuring equal treatment in the single market.  

-  Reduce the regulatory formalities for associations operating in more than one Member State  

What is the value added of action at the EU level (subsidiarity)? 

Without  EU  action,  Member  States  will  keep  their  diverse  national  rules,  resulting  in  continued 
fragmentation of requirements and limitations, thereby creating unequal conditions for associations who 
want to operate in the single market.  As indicated in the  European Parliament’s resolution of February 
2022  and  as  emerged  from  the  Public  consultation  and  the  consultation  activities  conducted  under  an 
independent  study  supporting  the  impact  assessment,  cross-border  activity  of  associations  has  not 
reached  its  full  potential  in  the  EU.  Only  action  at  EU  level  would  enable  harmonised  or  coordinated 
rules that would tackle existing barriers for cross-border activities by associations. Indirectly, it may also 
help strengthen the non-profit sector and civil society at large.  

B.  Solutions 

What are the various options to achieve the objectives? Is there a preferred policy option or not? If 

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not, why? 

In addition to the baseline (no action), the impact assessment identified the following policy options:  
Option 1: Establish an EU-level legal form of association  
Sub-option  1a:  An  EU  level  legal  form:  ‘The  European  Association”.  A  European  legal  form  of 
association  would  be  introduced  and  would  regulate  all  aspects  relevant  to  the  functioning  of  an 
association  (formation,  registration,  constitution,  functioning,  financing,  dissolution,  liquidation  and 
insolvency).  Interested  natural  and  legal  persons  could  set  up  a  European  Association  and  existing 
associations  could  convert  to  being  one.  It  would  co-exist  with  other  legal  forms  of  associations  at 
national level, while not replacing them, and would enjoy automatic recognition of its legal personality 
across the Union. This option would suit those associations interested in being active in many Member 
States. 

Sub-option 1(b): An EU level legal form: “The European cross-border Association”. This would be an 
EU level legal form but, instead of a fully prescribed legal form such as under sub-option 1a, it would 
cover only cross-border aspects and, where needed for coherence, it would prescribe main features of a 
European cross-border association. This new legal form would co-exist with legal forms of associations 
at  national  level  and  would  not  replace  them.  The  European  cross-border  association  would  enjoy 
automatic recognition of its legal personality across the Union. Interested natural and legal persons could 
set up a European Association and existing associations could convert to being one. This policy option 
would suit those associations interested in being active in many Member States. 

Option  2: Harmonize common minimum standards  for  cross-border  activities of  associations.  It would 
harmonise  common  minimum  standards  for  the  cross-border  activities  and  mobility  of  associations 
across Member States. and would help reduce the differences between national laws. Associations would 
automatically  benefit  from  these  harmonization  measures  without  needing  to  set  up  or  to  convert  to  a 
new legal form. This option would imply removing or amending existing rules or introducing new rules 
in Member State law, thereby also affecting associations without cross-border purposes.  
Option  3:  Create  an  additional  legal  form  of  association  designed  for  cross-border  purposes  and 
recognised by Member States. It would require Member States to introduce in their national legal systems 
a  legal  form  of  association  for  cross-border  purposes.  It  would  encompass  only  requirements  and 
safeguards  necessary  for  facilitating  the  said  cross-border  purposes,  and  it  would  co-exist  alongside 
existing  legal  forms  for  associations  in  national  law.  Those  interested  would  be  able  to  form  a  ‘cross-
border association’ in several ways (e.g. by setting up a new one, by converting or merging). Under this 
option, ‘cross-border associations’ would not need to establish in each Member State separately, as their 
legal personality would be recognised either automatically or through a simplified procedure.  
The  main  differences  between  the  three  options  concern  their  level  of  compliance  with  the 
proportionality and subsidiarity principles in relation to the identified problem. The preferred is option 3, 
which  mostly  contributes  to  solve  the  identified  problem  and  addresses  the  specific  objectives.  It  is 
targeted and also complies best with the proportionality and subsidiarity principles, while being the most 
balanced approach in terms of costs and benefits. 

What are different stakeholders' views? Who supports which option 

The  Commission  consulted  stakeholders  through  a  variety  of  consultation  activities  such  as  a  Call  for 
Evidence, a Public Consultation, a targeted consultation (i.e. an online survey) and 64 interviews which 
were carried out to further enhance the evidence base and support the preparation of the policy options. 
Altogether  these  consultation  activities,  covered  a  total  of  3  026  associations  (including  individual 
associations and umbrella organisations) and 12 national authorities. 
In the context of the Public Consultation (64 replies), the majority of respondents (i.e. 73%; 47 out of 64) 
support  EU  action  to  facilitate  cross-border  activities  of  associations  in  the  single  market.  Responses 

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indicated that “a new legal form for associations” is favoured by 36% (22 out of 64) of respondents and 
by 42% (16 out of 38) of respondents under the legal form of associations (policy options 1 and 3). The 
‘harmonisation of common minimum standards’ (policy option 2) was the preferred option of  42% (26 
out of 64) of all respondents and 32% (12 out of 38) respondents under the legal form of association. 
In the context of the targeted survey (140 replies), responding associations supported an EU intervention, 
potentially favouring policy option 1 in terms of effectiveness in facilitating  associations’ operations in 
another Member State (on average 4 out of 5 respondents), while policy options 2 and 3 were also widely 
supported (respectively, 3.4 of 5 and 3.2 out of 5). 

C.  Impacts of the preferred option 

What are the benefits of the preferred option (if any, otherwise of main ones)? 

Compared to the baseline, policy option 3 is expected to lower both the launch costs and recurrent costs 
of associations operating across borders: 
•  The reduction of excess launch costs (e.g. information cost and direct charges) is estimated at EUR 2 
150  per  launch.  Within  the  assessed  15-year  time  frame,  excess  cost  reductions  could  potentially 
amount up to EUR 338 million – 378 EUR million in the best estimate scenario.  

•  The reduction of excess cost of operations (recurrent costs, e.g. administrative and compliance costs) 
is estimated at EUR 770 million / year. Within the assessed 15-year time frame, cost savings could 
potentially amount up to of EUR 8.5 billion 

The impact assessment makes a best estimate of potential indirect economic benefits generated over a 15-
year period: 185 000 additional associations operating cross border creating up to 75 000 jobs and EUR 
4.2 billion added value. The impact assessment includes several scenarios reflecting the potential uptake 
of  the  preferred  option  and  its  unlocking  potential,  ranging  from  a  best  estimate  scenario  to  a  more 
conservative scenario to mitigate potential overestimations.   
The impact assessment expects an indirect positive social impact, including on fundamental rights (non-
quantifiable). Where indirect effects on the environment and climate are expected, they are considered to 
be  positive  (but  non-quantifiable),  albeit  non-significant  in  magnitude.  In  general,  policy  option  3  is 
expected to have a positive impact on competent authorities in the long term without imposing significant 
adaptation costs on them.  
What are the costs of the preferred option (if any, otherwise of main ones)? 

The  costs  for  associations  that  take  this  new  legal  form  will  depend  on  the  extent  to  which  the 
harmonised rules differ from national rules, and for those who do not wish to take this legal form, there 
would be no adjustment or administrative costs. Compared to the baseline, policy option 3 is expected to 
generate lower costs in terms of compliance and administrative burden, as well as compared to the other 
options and comparatively higher savings through excess cost reductions (as indicated above).   
For competent authorities, option 3 is expected overall to have a positive impact in the long term and the 
magnitude of the (adaptation) cost should not is not constitute a significant cost. 
What are the impacts on SMEs and competitiveness? 

While the initiative does not specifically target nor imposes new administrative obligations on SMEs, its 
objectives  directly affect associations that qualify as such(bearing in  mind that associations  engaged in 
economic activities may fall within the definition of micro, small and medium-sized enterprises). As the 
initiative  aims  to  remove  barriers  to  associations’  activities  across  borders  and  small  associations 
typically  have  fewer  resources  and  capabilities  to  overcome  existing  barriers,  adjustments  to  entry  and 
operating requirements are expected to have a positive impact on the competitive position of  SME size 
associations.  See  also  the  benefits  of  the  preferred  option  in  terms  of  cost  reduction  for  associations, 
mentioned above.  

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Will there be significant impacts on national budgets and administrations? 

For the  national  competent  authorities,  the preferred  option  (as  well as options 1 and 2) would lead to 
some  adjustment  costs,  although  these  were  not  estimated  to  be  significant  in  the  impact  assessment. 
Also  when  it  comes  to  recurrent  costs  for  on-line  registers  (e.g.  maintenance,  publishing  and  IT), 
significant extra costs are not expected for competent authorities. 

Will there be other significant impacts? 

No other significant impacts have been identified. 
Proportionality? 

Compliance  with  the  proportionality  principle  would  be  ensured  through  the  establishment  of  an 
additional  legal  form  at  national  level  that  is  designed  for  cross-border  purposes.  Doing  so  would 
introduce the recognition of legal personality and uniform standards only to the necessary extent and only 
to create an option for associations operating across borders in the single market. 

D.  Follow-up 

The  initiative  will  be  evaluated  in  five  years  after  its  transposition  by  Member  states,  and  will  be 
periodically monitored. 

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