Source: http://www.icnl.org/research/journal/vol4iss1/cr_2.htm
Timestamp: 2018-01-17 05:04:03
Document Index: 85726834

Matched Legal Cases: ['Art 4', 'Art. 15', 'Art. 2', 'Art. 6', 'art. 1', 'art. 2', 'Art. 4', 'art. 1', 'art. 2', 'art. 7']

ICNL’s Tax Survey for Central and Eastern Europe Now Available
ICNL has published its Tax Survey for Central and Eastern Europe in final form. This effort, which has taken about one and one-half years to complete, involved the commissioning of country surveys by local experts, a compilation of the results of those surveys into useful comparative discussions and charts, extensive research to update the materials as changes in the laws were made in various countries, and developing a set of recommendations for future reform of the tax laws in the region. The survey is expected to be updated annually, beginning in December 2002.
The current survey has already been translated into several local languages and into Russian, and it is expected that it will soon be available in others. For further information on the survey, please contact ICNL’s Program Director for CEE, Catherine Shea, who has had principal responsibility for the project cshea@icnl.org.
From this issues articles section:
ICNL's Educational Initiative for Central and Eastern Euopre: One Year Later
Summary of the New Albanian Laws on Not-for-Profit Organizations by Eralda Methasani*
This country report contains a summary of the most important issues affecting NGOS, which are regulated by the recently passed laws concerning the not-for-profit sector in Albania. The package of laws affecting not-for-profit organizations (NPOs) consists of Law No. 8781, dated 3.5.2001, "For some additions and amendments to Law No. 7580, dated 29.7.1994; 'The Civil Code of the Republic of Albania'; Law No. 8788, dated 7.5.2001 "For the Non-Profit Organizations;" and Law No.8789, dated 7.5.2001 "For the registration of nonprofit organizations." [1]
The package of the NPO laws and the Albanian Civil Code regulate issues related to NPOs, such as their establishment, registration, activities, transformation, merger, interruption of activity, or dissolution. According to these laws, NPOs are associations, foundations, and centers. Foundations and centers are NPOs without membership created by one or more persons or by testament, while associations are NPOs with membership, established by the free will of at least five physical persons or two juridical entities, i.e. persons created by law, such as NPOs or companies.
NPOs are independent from the state, although the law provides for the support and facilitation of NPO activities from the state. The laws provide for the establishment of both formal and informal unregistered NPOs, thus implementing the constitutional right of everyone to associate. The right to create an NPO, to be a member of an NPO, or to participate in the governing organs of an NPO belongs to every person, including juridical entities and foreigners. Both NPOs created as Albanian legal entities, and foreign NPOs are permitted to carry out their activities in Albania.
The Tirana District Court registers the NPOs in Albania. The permission of the competent state organ, which is the organ of the state acting in a similar field as the field of activity of the NPO, is required for the registration of foreign NPOs.
The laws stipulate special rules about the re-registration of existing NPOs. It is the duty of the district courts where these NPOs are registered to transfer all the registration documents for foundations and associations as well as accompanying documentation to the Tirana District Court. This transfer process lasts for three months starting from the date the law on registration and the law on NPOs entered into force, i.e. 22 June 2001. In addition, if the existing activities of existing NPOs are not in compliance with the new laws, they must deposit their amended governing documents with the Tirana District Court within one year from 22 June 2001. Foreign NPOs with branches in Albania not registered according to the Albanian law may continue their activity. However, within one year from 22 June 2001 they must register with the court, otherwise they lose their status and their activity will be considered illegal. Foreign NPOs with a temporary activity in Albania, which are NPOs operating in Albania for no less than 30 consecutive days and no more than 6 months, must present a request for approval with the competent state organ that exercises the activity in the same or approximate field as that of the NPO field activity. The request must be presented within six months from 22 June 2001; otherwise they have to interrupt their activity in Albania.
The Court of Tirana is the place where the NPOs, both Albanian and branches of foreign ones, are registered. A single judge is responsible for the registration. The decisions related to the registration of NPOs are appealable to the Appellate Court of Tirana. However, foreign NPOs with a temporary activity in Albania simply need to notify and obtain permission of the state organ acting in the same or similar field as that of the NPO, (for example Ministry of Education has this competence if the NPO will operate in the field of education).
Local NPOs, registered as Albanian legal persons must submit the following documents:
1. A request for registration that contains the following information:
form and aim of NPO
identity of founders and leaders
headquarters of the NPO
identity of its legal representatives;
The establishment act of the NPO, which is a decision of the members or of the testament in case of a foundation; and
The charter, which provides for a detailed regulation of the organization, functioning and activity of the NPO.
Foreign NPO's with temporary activity must submit the following documents:
A request to the competent governmental organ;
Documents that verify their existence as legal persons in their country of origin (translated into Albanian and notarized); and
Declaration from the foreign organization that its activity is in compliance with the aims of the organization and the legislation.
Branches of foreign NPOs must submit the following documents:
The request for registration (see above);
The establishment act;
The decision of the NPO’s competent organ to open a branch in Albania (all the acts must be in the Albanian language and notarized).
Permitted Purposes and Activities
NPOs are organizations that carry out purposes for the good and in the interest of the public. Nevertheless, in contrast to foundations which are only permitted to carry out activities that serve a public interest, associations may carry out activities in the interest of their members. The laws provide for a definition of activities for the public good and in the public interest, meaning, for example, activities that support and develop humanitarian values, protect human life or health, secure and realize public and social services, as well as any other activities for the public good and in the public interest.
NPOs have the right to exercise any kind of lawful activity to carry out their purposes and objects. However, there might be cases when the exercise of an activity is subject to the need to obtain a license or permission, for example when an NPO opens a social care center for children in need. In these cases the NPOs submit a request to the competent state organ, which provides the respective license or permission.
The highest decision-making organ of an NPO is respectively:
for NPOs without membership, board of directors which can also have a different designation;
for those with membership, the general assembly of the members.
The highest executive organ for an NPO might be either individual or collective and may be called executive director, president, executive council, and so forth. The highest decision-making organ of the NPO may create other decision-making, executive or advisory bodies when the Charter expressly permits or does not expressly prohibit it.
In general, NPOs have the right to carry out activities to collect funds to be used for meeting the purposes and objects for which they were organized. Funds may also be collected to support the activities and purposes of other NPOs.
The NPO may carry out economic activities for the realization of the purpose and objects for which they were organized. All the profits made through the exercise of such economic activities must be used to accomplish the purposes specified in the Charter and the Establishment Act. An economic activity must:
be in conformity with the purposes of the NPO;
have been declared as one of the sources of income; and
not be the primary purpose or activity of the organization.
Income or Profits Tax Exemption for NPOs
The following exemptions are provided to NPOs:
Exemptions from tax on revenues realized from donations and membership dues;
Donations are exempt from income tax law;
Relief and exemptions from tax and customs obligations.
Other laws specifically set out the exemptions provided in item b and c.
NPO-government partnerships
NPOs have the right to take part in government projects, tendering for and procuring grants, contracting and purchases and sales by state organs of public services, public properties and goods, as well as the transfer of public services and the related properties from the public sector to them.
Supervision of NPOs
The competent state organs have the right to supervise NPOs regarding the implementation of tax and customs legislation, social insurance legislation, licensing of economic activity, contracting for the exercise of public and social services, and for the fulfillment of their activities with funds from the State Budget. The supervising state organs are those organs that work in the above-mentioned fields.
Termination, Dissolution, and Liquidation of NPOs
NPOs are entitled to be transformed and merge, upon the decision of the competent organ and as provided in the basic act of the NPO. In addition, such a transformation or merger must be contemplated in its charter in the case of a non-membership NPO. Nevertheless, transformations and merger are not permitted in the following cases:
foundations and centers may not merge or transform into associations;
and associations may not merge or transform into foundations.
An NPO may be dissolved:
upon its own initiative;
by a court decision upon the request of the members of the NPO, decision-taking organs of the NPO, or the competent state organ permitted to decide upon the dissolution of the NPO.
The court can take the decision to dissolve the NPO only in cases such as:
the activity of the NPO was against the Constitution;
the NPO preformed an illegal activity;
the NPO was not created in compliance with the law; and
he NPO is bankrupt.
The liquidation of an NPO is done according to its Charter after the dissolution is determined and accomplished by the NPO. If the court requires the dissolution, it also requires the liquidation of the NPO.
This paper has described the new regulatory order facing NPOs in Albania. It is intended to provide a brief guide to those who are interested in registering such entities under Albanian law. The text of all the laws discussed in this article is available in ICNL’s Database and Online Library.
* Eralda Methasani is an Associate Attorney working with the OSCE in Tirana, Albania. She is also a lecturer at the Tirana Law Faculty. She can be reached at eralda@lco-osce.org.
[1] Law No. 8788 and Law No.8789 are published in the Official Journal no. 28, dated 7 June 2001 and entered into force on 22 June 2001. Law No. 8781 was published in the Official Journal no. 24, dated 20 May 2001 and entered into force on 4 June 2001.
New Law on Associations for Croatia
On September 27, the Croatian Parliament enacted the new Law on Associations, to replace a regressive law enacted in 1997. The Law contains a number of liberal provisions. Equally important, the process of preparing the draft, which lasted several months, was transparent and open. Along with local NGOs and Council of Europe experts, ICNL provided technical assistance to the Ministry of Justice in preparing the Law. We will provide additional information about the law as soon as the final version is available.
Amendments to the Croatian Law on Foundations and Funds [1]
By Ivan Šprajc*
On the 24th of July 2001, certain amendments to the Law on Foundations and Funds came into force. The amendments sought to address the gap in the Law, which did not provide for the registration of a branch office of a foreign foundation in the Republic of Croatia prior to the effective date of the new provisions. Prior law did not prevent foreign foundations from working in Croatia, however, because most of them used another legal form - the one provided by the Law on Associations - to legalize their activity in Croatia. The amendment serves to clarify the status of foreign foundations in Croatia for the future.
As a legally defined term a “foreign foundation (fund)” is a foundation that has a seat in a foreign country and is established and registered according to the law of the same country (Article 2a, Paragraph 1 of the Law). In order to operate in the Republic of Croatia a foreign foundation (fund) must establish and register its representation office in accordance with the new legal requirements. [2] Any activity of a foreign foundation (fund) that takes place in Croatia before the registration of the representation office is strictly prohibited (Article 3a, Paragraph 2 of the Law).
Under the terms of the new provisions in the law, the establishment and registration of the representation office take place in two steps. Yet, these steps could be easily unified by submitting the respective petitions together and at the same time.
The first step presupposes the submission of a petition accompanied by a document detailing the means of establishment of the representation office in the Republic of Croatia. The documentation must contain information prescribed by the Law:
the name and the seat of foreign foundation (fund) that proposes to establish a representation office in Croatia; the name and the seat of the representation office;
the purpose of the foundation (fund);
the beneficiaries of the foundation (fund);
the activities of the representation office; and
the name of the person authorized to represent the foundation (fund) in the Republic of Croatia.
This petition must be submitted by the person authorized to represent the representation office of the foreign foundation (fund) in Croatia.
As the next step -- or as a second phase of the first step -- the representation office must be entered in the appropriate register. The registration body is the Ministry of Justice, Administration, and Local Self-Government (hereinafter: the Ministry). The entry into the registry presupposes the submission of another petition accompanied by the appropriate documents, including the following:
documents regarding the establishment of a representation office in Croatia;
an excerpt from the corresponding register in the country of registration of the foundation (fund) in which the name of the person authorized to represent foreign foundation is included; and
the governing documents of the foundation (fund) in which the purposes and activities of the foundation are stated.
This petition must be submitted by the person authorized to represent foreign foundation (fund).
Once properly filled out documents are received, the Ministry is obliged to make a decision within a period of 2 months from the date of their submission. Upon entry in the register the representation office is permitted to commence operations in Croatia. The representation office does not become a legal entity, however. Instead, the rights and obligations created by the operations of the representation office belong to the foundation (fund) itself.
*Ivan Sprajc teaches Not-for- Profit Law at the School of Law, Zagreb, Croatia. He can be reached at schpreiz@yahoo.com.
[1] “Zakon o zakladama i fundacijama” (hereinafter: the Law) is published in the official gazette of the Republic of Croatia (“Narodne novine”) No. 36/95; the present modification is published in No. 64/01. The English translation of the law is available in ICNL’s Database and Online Library at
[2] In addition to that, if foreign foundation (fund) comes from a country that is not a member of WTO, then condition of reciprocity must be fulfilled.
Freedom of Association Violated in the Hungarian Law on Associations. In Art 4.1 of the Law on Associations in Hungary, it is stated that an association does not come into being until it is duly registered in accordance with the law. According to the law, organizations must be promptly registered (Art. 15.3). This requirement is further supported by the Civil Procedure Code, which requires that courts must proceed in a timely fashion (Art. 2.1)
Although the Constitutional Court, in Decision 6/2001 (III.14) AB, upheld the constitutionality of the registration requirement, it also decided that the law does not contain adequate guarantees against undue delays in the registration process. The Court therefore ordered the Parliament to adopt new legislation containing appropriate safeguards against delay by the end of this year.
Who’s Afraid of the Law on Volunteering?
by Mihai Lisetchi*
At present there are thousands of active organizations in Romania, and, of course, many of them are working with volunteers. How efficiently and correctly they do this is a question which we do not intend to answer now. But we do need to analyze the extent to which a new Law on Volunteering is needed and what effect it will have on these organizations
A first question to ask is why would a Law on Volunteering be necessary in Romania, taking into account that the best practice is regulating the volunteering activity, not in a mandatory manner, but in a manner that suggests good practice. In most European countries there is no such law, nor is there one in the USA, which has the longest and the most substantial tradition regarding the regulation of the volunteers activities. It might sound odd, but such a law was thought necessary in Romania, not for the non-governmental organizations, but for the tax authorities. And this did not happen because the tax authorities are very interested in the volunteering problem…
It seems that the tax authorities noticed that there is no legal structure for taxation when organizations must pay the expenses for volunteer activities (for example “per diem” or transportation expenses). But, instead of recommending that the organizations conclude contracts with the volunteers containing the obligations and rights of both parties, obviously without stipulating any remuneration for the work done by the volunteers, the authorities preferred the introduction of a law to set up the problem.
Comments on the new issues the law puts forward:
Art. 6 – (1) includes this definition: “Volunteering is developing on the basis of a written contract – under the sanction of absolute nullity – between the volunteer and the beneficiary of the volunteering, under the conditions of contractual freedom of parties and respecting the disposition of the present law”. There is a fear that volunteers might refuse to work if they are to assume intentional contractual obligations (imposed by the law) with juridical consequences.
Concerning the text of the law: from art. 1 – “ This law is regulating the promoting and facilitating of the participation of Romanian citizens at volunteer activities, in the spirit of civic solidarity…” – it must be mentioned that in Romania there are foreign volunteers, too. They may benefit from this law even if they are not especially mentioned in it, because all the foreign citizens who are activating on Romanian territory must submit to Romanian laws. However, the law should refer to foreign volunteers as well, in case that new tax benefits may be adopted, which would apply in circumstances in which volunteer activities are developed by foreign citizens.
Concerning the provision referring to the existence of a contract between the organization and the volunteer – according to the law only a person who concludes such a contract may benefit from the recognition of volunteer status: art. 2 – d) “ the volunteering contract is a free convention, concluded between a physical person, named “volunteer,” and a juridical person, named “beneficiary of the volunteering,…”. Art. 4 – “Isolated volunteer activities, performed sporadically, outside the relations with the juridical persons according to art. 1, out of family, friendship or good neighborhood reasons, are not made the object of this law…”.
On the other hand, in Romania, an organization may function under the law without having a juridical personality (so that it operates as an informal organization). In this circumstance, such an NGO, is not permitted to cannot conclude juridical acts, i.e. not even volunteer contracts – consequently, the person who is volunteering for such an organization cannot have a volunteer status (without being able to conclude the contract stipulated by the law).
A second observation is that best practice recommends the conclusion of a contract between the volunteer and the organization – but the possibility to conclude a contract has existed in Romania before this law came into practice. Of course, the recommendations of best practice were not followed by all existing non-governmental organizations in Romania, as the reality of sector operations shows. Thus, the law brings, through this mandatory contract, a new responsibility for organizations and volunteers to develop a written document clarifying their rights and obligations.
On the other hand, the mandatory character of the law does not allow adequate detail to prescribe rules for various situations that may come up (for example: the case of a volunteer for an activity that requires special training – is the training period to be considered part of the volunteer effort or not?).
In addition, one may wonder if the members of the organization (being themselves volunteers) should conclude a volunteering contract with the organization? The question refers especially to members of the board who, besides the voluntary nature of their commitment, imposed by the best practice, have clear responsibilities imposed by the law to represent the organization in its relations with a third person. The obligation of the existence of the contract, in their case, may lead to a situation in which they are present on both sides of the contractual arrangement.
Concerning art. 2, (b) – “ according to the law, the activity of public interest is one developed in such domains as social assistance and services, protection of human rights, medical-sanitary, cultural, artistic, educational, scientific, humanitarian, religious, philanthropic, sport, environmental protection, social and community matters” – one can suggest that this enumeration is limited and that the activities presented as being of public interest must be considered illustrative. Section (c) of this article, which limits beneficiaries of volunteering, to juridical persons, suggest that when such public benefit activities are performed by informal organizations, they may be unable to conclude volunteering contracts, making it impossible for them to carry out these activities.
Another question to ask is whether those working in an organization under a labor contract may also work as volunteers in the same organization? The answer is positive, but one must be reminded that the hours fulfilled by the volunteer can be considered extra hours that are not paid by the employer. This may be violate the labor laws, which may require compensation for overtime work. On the other hand, if the activity is developed on the basis of a civil agreement, it should possible for that person to have volunteer status, also. This must be very clearly explained in the appliance principles of the law.
Concerning the art. 7, referring to the rights of volunteers, these issues should be taken into account:
The development of the activity in concordance with professional training – in order to be given some tasks to accomplish, the volunteer must, first of all, be evaluated from the point of view of his/her abilities and competencies in the domain he/she wishes to pursue – not only in comparison with the expertise of the domain in which his/her special preparation is certified.
The responsibility of the non-governmental organization towards the volunteer who pursuing a risky activity and also the civil responsibility for the possible injuries caused by the volunteer while performing that activity. In fact, if one studies the notices of insurance companies’ offering policies, there are presently no companies in Romania that offer such coverages.
The release of the volunteer certificate – the law must stipulate in a detailed manner the conditions of granting this status – and gear the structure of the contract to the amount of activity performed and its quality.
The expression “the working time must not affect the physical health and the psycho-physical resources of the volunteer” is not the most adequate one to describe the concerns that need to be reflected in the contract (this is so broad that it could mean that the volunteer should not move or think).
Some of the concepts are well regulated by the new Law, but as a whole, the Law does not significantly encourage the volunteering. The Government and the Parliament must revise the law according to the realities practiced and the theoretical practices concerning volunteering.
The existence of the law does not necessarily mean a change in the practice of volunteer management. The law itself does not represent a guarantee for a change in the behavior of organizations and their volunteers. Clarity about what good rules would be can only be obtained through the input and training of all those involved in administering volunteers and volunteering activities.
*Mihai Lisetchi is Executive Director of AID-ONG, a Romanian NGO involved in civil society and policy development issues. He can be reached at aidong@xnet.ro.