What changed between the plenary report and the adopted text

Removed:DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

Added:P9_TA(2024)0147

Removed:on the proposal for a directive of the European Parliament and of the Council on European cross-border associations

Added:European cross-border associations

Removed:(COM(2023)0516 – C90326/2023 – 2023/0315(COD))

Added:Committee on Legal Affairs

Added:PE756.270

Added:European Parliament legislative resolution of 13 March 2024 on the proposal for a directive of the European Parliament and of the Council on European cross-border associations (COM(2023)0516 – C9-0326/2023 – 2023/0315(COD))

12 unchanged paragraphs

(Ordinary legislative procedure: first reading)

The European Parliament,

– having regard to the Commission proposal to Parliament and the Council (COM(2023)0516),

– having regard to Article 294(2) and Articles 50 and 114 of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C90326/2023),

– having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

– having regard to the opinion of the European Economic and Social Committee of 17 January 2024,

– having regard to Rule 59 of its Rules of Procedure,

– having regard to the letter from the Committee on the Internal Market and Consumer Protection,

– having regard to the report of the Committee on Legal Affairs (A9-0062/2024),

1. Adopts its position at first reading hereinafter set out;

2. Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Change 1

Removed:Recital 2: (2) The elimination of barriers to the development of activities of non-profit associations across Member States is essential in order to attain their freedom of establishment, as well as other fundamental freedoms such as the freedom to provide and receive capital and the freedom to provide and receive services within the internal market. By approximating the provisions of national law which affect the exercise of these freedoms, this Directive serves the objective of improving the functioning of the internal market. In so doing, this Directive will further serve the objectives of strengthening European integration, ensuring equal treatment, by promoting social fairness and prosperity for EU citizens and facilitating the effective exercise of the freedom of assembly and of association throughout the Union.

Added:P9_TC1-COD(2023)0315

Removed:Recital 6: (6) Among the legal forms available in the non-profit sector and the social economy, the legal form of the non-profit association is the choice for the large majority. In addition to contributing to the Union's objectives and to achieving goals that are in the public interest, non-profit associations make an important contribution to the internal market by engaging on a regular basis in a wide range of non-economic and economic activities, for example by offering services in sectors such as social services and health, communication and information, advocacy, culture, the protection of the environment, education, recreation, sports, and in the promotion of scientific and technological advances. This is true when the pursuit of economic activities is the principal activity or objective of the non-profit association, and in other cases.

Added:Position of the European Parliament adopted at first reading on 13 March 2024 with a view to the adoption of Directive (EU) 2024/… of the European Parliament and of the Council on European cross-border associations

Removed:Recital 6 a (new): (6a) Although the majority of the activities of non-profit organisations are currently carried out at national level, an increasing number of them are operating across borders, thereby strengthening the social cohesion between Member States and deepening the internal market. In order to ensure that the socio-economic potential of non-profit associations and related entities and their contribution to the European integration is fully exploited, all barriers, hindering the cross-border operation of their activities should be removed.

Added:(Text with EEA relevance)

Removed:Recital 7: (7) A fully functioning internal market for the activities of non-profit associations is essential in order to promote economic and social growth across Member States. At present, barriers within the internal market and the lack of harmonisation prevent non-profit associations from extending their operations beyond their national borders, as they often encounter unjustifiable restrictions, thereby hindering the effective operation of the internal market. Working towards a fully effective and functioning internal market requires full freedom of establishment for all activities which contribute to the objectives of the Union thereby bolstering cohesion and cooperation throughout the Union.

Added:THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Removed:Recital 8: (8) In order to establish a genuine internal market for the economic activities of non-profit associations, it is necessary to abolish any unjustified restrictions and barriers on the freedom of establishment, the free movement of services, the free movement of goods and the free movement of capital that still apply in the laws of certain Member States. These restrictions create legal uncertainty, discourage and hinder non-profit associations from operating cross-border, not least because they impose on them a specific need to allocate resources to unnecessary administrative or compliance activities, which has a particularly deterrent effect in view of their non-profit nature. Therefore, Member States should not apply restrictive or disruptive measures which can amount to excessive or costly burden on non-profit organisations. The freedom of association does not only include the ability to create or dissolve an association but also the ability for that association to operate without unjustified interference by a Member State. It also includes the ability to seek, secure and use resources, which is essential to the operation of any association. In particular, Article 63 and 65 TFEU together with Articles 7, 8 and 12 of the Charter of Fundamental Rights of the European Union (the 'Charter') enshrine the freedom of association at all levels and protect non-profit organisations against discriminatory, unnecessary and unjustified restrictions regarding the free movement of capital…

Added:Having regard to the Treaty on the Functioning of the European Union, and in particular Article 50 and Article 114 thereof,

Removed:Recital 9: (9) These barriers arise due to inconsistencies in the national legal frameworks of Member States. The legal framework in which non-profit associations carry out their activities in the Union is based on national law, without harmonisation at Union level. Presently, non-profit associations do not receive uniform recognition of their legal personality and capacity throughout the Union and often need to follow different administrative procedures in multiple Member States, for example, to register for a second time in another Member State or even form a new legal entity in order to engage in activities in a Member State other than the one in which they are established. The fundamental elements concerning the mobility of non-profit associations within the Union remain inadequately regulated, resulting in legal ambiguity for all non-profit associations with cross-border activities. For instance, when non-profit associations intend to relocate their registered office to a new Member State, uncertainties persist regarding relocation. In particular, the lack of a possibility of transferring the registered office without going through a liquidation hinders non-profit associations from acting, moving, and restructuring across borders within the Union. National rules diverge and often fail to provide clear solutions and procedures for the exercise of cross-border mobility and economic activities of non-profit associations.

Added:Having regard to the proposal from the European Commission,

Removed:Recital 9 a (new): (9a) The heterogeneity of national laws and the lack of approximation of practices also leads to an uneven playing field due to the different market conditions and the diverse obstacles that non-profit organisations face in different Member States, for example when opening bank accounts, raising and accounting funds, including foreign funds, benefitting from public support measures and schemes and verifying and complying with requirements with regard to transparency duties.

Added:After transmission of the draft legislative act to the national parliaments,

Removed:Recital 10: (10) The ability to access and channel funds and capital efficiently across borders is necessary in order to facilitate non-profit associations’ activities in the internal market. Cooperation and the exchange of best practices between non-profit associations from different States can help to increase the efficiency and impact of their actions at European level. By promoting common standards and a cohesive approach, red tape can be reduced and cross-border financial support encouraged in a more fluid and efficient way. This includes remuneration for economic activities, but also donations, inheritance, or other forms of funding. Different regulatory frameworks and existing restrictions in the Member States regarding receiving, soliciting donations, and similar contributions in whatever form result in fragmentation in the internal market and constitute a barrier to the functioning of the internal market.

Added:Having regard to the opinion of the European Economic and Social Committee,

Removed:Recital 11: (11) Moreover, laws of certain Member States impose requirements regarding nationality or legal residence on members of non-profit associations or on members of the executive body of such non-profit associations. Such requirements should be eliminated in order to protect the exercise of freedom of establishment and freedom of association of EU citizens, which would encourage the active participation of Union citizens in various non-profit organisations, irrespective of their country of nationality or residence.

Added:Acting in accordance with the ordinary legislative procedure,

Removed:Recital 11 a (new): (11a) Taking into account their particular nature and their non-profit purpose, a large part of the activities of non-profit associations may be organised in a non-commercial way and thus be non-economic in nature.

Added:Whereas:

Removed:Recital 12: (12) The freedom of association is crucial for the functioning of democracy, as it constitutes an essential condition for the exercise of other fundamental rights by individuals, including the right to freedom of expression and information. As recognised in the Charter of Fundamental Rights of the European Union and in the Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR), freedom of association is a fundamental right. Furthermore, the essential role of civil society and representative organisations in contributing to democracy at all levels is considered a fundamental value of the Union, as recognised, in particular by Article 11 of the Treaty on European Union (TEU), and requires the existence of an open, transparent and regular dialogue. This implies therefore also that frameworks for such dialogue should be used for the implementation and application of this Directive.

Added:(1) In accordance with Article 26(2) of the Treaty on the Functioning of the European Union (TFEU), the internal market comprises an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured. To achieve this objective, Article 50 TFEU provides for the European Parliament and the Council to act by means of directives in order to attain freedom of establishment as regards a particular activity. In addition, Article 114 TFEU provides for the European Parliament and the Council to adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States, which have as their object the establishment and functioning of the internal market.

Removed:Recital 13: (13) It is important to ensure convergence at Union level and avoid any unnecessary fragmentation. Thus, it is necessary to put in place harmonised rules facilitating the pursuit of non-profit associations’ cross-border activities. Existing national rules on cross-border associations should be harmonised so that they allow those non-profit associations to take a legal form specifically designed to facilitate operations on a cross border basis. That legal form should be provided in Member State’s domestic legal orders through the adaptation of their respective rules on non-profit associations. This legal form, which is to be designated as the ‘European cross-border association’, (‘ECBA’), should be automatically recognised by all Member States and will allow non-profit associations to overcome the obstacles they face in the internal market, while respecting Member States’ traditions regarding non-profit associations. These are important steps towards the deepening and ultimately the completion of the internal market.

Added:(2) The elimination of barriers to the development of activities of non-profit associations across Member States is essential in order to attain their freedom of establishment, as well as other fundamental freedoms such as the freedom to provide and receive capital and the freedom to provide and receive services within the internal market. By approximating the provisions of national law which affect the exercise of these freedoms, this Directive serves the objective of improving the functioning of the internal market. In so doing, this Directive will further serve the objectives of strengthening European integration, ensuring equal treatment, by promoting social fairness and prosperity for EU citizens and facilitating the effective exercise of the freedom of assembly and of association throughout the Union. [Am. 1]

Removed:Recital 13 a (new): (13a) Non-profit associations are currently not automatically recognised when they operate in a country other than the one in which they are established, and often have to set up a new entity, concerning around 310,000 associations in the EU, with 185,000 more entities likely to engage in cross-border activities within a simplified framework. The ECBA statute should facilitate the cross-border activities of non-profit associations and their mobility. The accompanying certificate should provide them with this automatic recognition and enable them to develop their activities in other Member States, thus fully enjoy the benefits of the internal market.

Added:(3) The European Parliament adopted a resolution on 17 February 2022 with recommendations to the Commission on a statute for European cross-border associations and non-profit organisations.

Removed:Recital 15: (15) Trade unions and associations of trade unions should not be allowed to establish ECBAs, since they have a particular status in national law. It should however be possible for such organisations to become a non-founding member of an ECBA, if they choose to do so.

Added:(4) On 9 December 2021, the European Commission adopted an action plan for the social economy. In the action plan, the Commission put forward specific measures to create opportunities for social economy entities to start up and scale up, and to ensure that the social economy and its potential are more visible. The European Parliament welcomed the action plan in its resolution issued on 6 July 2022.

Removed:Recital 16: (16) Nor political parties and associations of political parties should be allowed to establish ECBAs, as they enjoy a particular status within national law and Union law as laid down in Regulation (EU, Euratom) 1141/2014 of the European Parliament and of the Council 39 .

Added:(5) Following up on the action plan for the social economy, the Commission recommended concrete measures to support the social economy, which prioritises people, social and environmental causes over profit. The proposal for a Council Recommendation on developing social economy framework conditions of 13 June 2023 includes recommendations for Member States to design and implement social economy strategies. On the same day, the Commission also published two Staff Working Documents to improve the understanding of relevant tax rules for social economy entities and cross-border public-benefit donations.

Removed:Recital 17: (17) Churches and other religious organisations and philosophical or non-confessional organisations, within the meaning of Article 17 TFEU, as well as associations of these entities, have a particular status in national law, which should not be adversely affected by this Directive. Therefore, these entities should also be allowed to establish or become a member of an ECBA, if they choose to do so.

Added:(6) Among the legal forms available in the non-profit sector and the social economy, the legal form of the non-profit association is the choice for the large majority. In addition to contributing to the Union's objectives and to achieving goals that are in the public interest, non-profit associations make an important contribution to the internal market by engaging on a regular basis in a wide range of non-economic and economic activities, for example by offering services in sectors such as social services and health, communication and information, advocacy, culture, the protection of the environment, education, recreation, sports, and in the promotion of scientific and technological advances. This is true when the pursuit of economic activities is the principal activity or objective of the non-profit association, and in other cases. [Am. 2]

Removed:Recital 18: (18) The establishment of an ECBA should be the result of an agreement between natural persons that are Union citizens or legally resident third-country nationals, or legal entities established in the Union, except persons that have been convicted of offences concerning money laundering, associated predicate offences 40 , or terrorist financing or are subject to measures that prohibit their operations in a Member State on the same grounds. In this regards a proportionate level of accountability, public reporting and the transparency of financing and governance structure should be ensured. In view of the non-profit purpose of the ECBA, where an ECBA is constituted by legal entities, they should also have a non-profit purpose.

Added:(6a) Although the majority of the activities of non-profit organisations are currently carried out at national level, an increasing number of them are operating across borders, thereby strengthening the social cohesion between Member States and deepening the internal market. In order to ensure that the socio-economic potential of non-profit associations and related entities and their contribution to the European integration is fully exploited, all barriers, hindering the cross-border operation of their activities should be removed. [Am. 3]

Removed:Recital 19 – paragraph 1: The non-profit purpose of an ECBA should mean that, when a profit is generated by means of economic activities, it should be used only in pursuit of the objectives of the ECBA, as defined in its statutes, and may not be redistributed directly nor indirectly among its members, including members of its governing bodies, nor among its founders or any other private parties. The direct beneficiaries of organisations aimed at providing care services for individuals with specific social needs or health conditions, should not be considered to be private parties in this regard. Therefore, there should be an asset lock requiring that no distribution of assets to members is to take place, even in the event of dissolution. In the latter case, residual assets should be transferred in a disinterested manner, such as to other non-profit associations or a local authority to be used for a similar purpose.

Added:(7) A fully functioning internal market for the activities of non-profit associations is essential in order to promote economic and social growth across Member States. At present, barriers within the internal market and the lack of harmonisation prevent non-profit associations from extending their operations beyond their national borders, as they often encounter unjustifiable restrictions, thereby hindering the effective operation of the internal market. Working towards a fully effective and functioning internal market requires full freedom of establishment for all activities which contribute to the objectives of the Union thereby bolstering cohesion and cooperation throughout the Union. [Am. 4]

Removed:Recital 20 a (new): (20a) The values of the European Union enshrined in Article 2 of the Treaty on European Union should be respected both in the purpose and in the exercise of the activity of an ECBA, everywhere and at all times. To that end, the statutes of the ECBA should include a declaration that it will respect these values in its objectives and in the pursuit of its activities.

Added:(8) In order to establish a genuine internal market for the economic activities of non-profit associations, it is necessary to abolish any unjustified restrictions and barriers on the freedom of establishment, the free movement of services, the free movement of goods and the free movement of capital that still apply in the laws of certain Member States. These restrictions create legal uncertainty, discourage and hinder non-profit associations from operating cross-border, not least because they impose on them a specific need to allocate resources to unnecessary administrative or compliance activities, which has a particularly deterrent effect in view of their non-profit nature. Therefore, Member States should not apply restrictive or disruptive measures which can amount to excessive or costly burden on non-profit organisations. The freedom of association does not only include the ability to create or dissolve an association but also the ability for that association to operate without unjustified interference by a Member State. It also includes the ability to seek, secure and use resources, which is essential to the operation of any association. In particular, Article 63 and 65 TFEU together with Articles 7, 8 and 12 of the Charter of Fundamental Rights of the European Union (the 'Charter') enshrine the freedom of association at all levels and protect non-profit organisations against discriminatory, unnecessary and unjustified restrictions regarding the free movement of capital. This principle has been further developed by the Court of Justice in its case law, including in its judgement of 10 June 2020 in Case C-78/18, Commission vs Hungary. [Am. 5]

Removed:Recital 21: (21) The cross-border element of an ECBA is central. Therefore, an ECBA should carry out or have in its statutes the objective to carry out at least part of its activities across borders in the Union, in at least two Member States, and have founding members with links to at least two Member States, either based on citizenship or residence in the case of natural persons, or based on the location of their registered office in the case of legal entities. The notion of “cross-border” under the present Directive is without prejudice to this notion in other Union legislation.

Added:(9) These barriers arise due to inconsistencies in the national legal frameworks of Member States. The legal framework in which non-profit associations carry out their activities in the Union is based on national law, without harmonisation at Union level. Presently, non-profit associations do not receive uniform recognition of their legal personality and capacity throughout the Union and often need to follow different administrative procedures in multiple Member States, for example, to register for a second time in another Member State or even form a new legal entity in order to engage in activities in a Member State other than the one in which they are established. The fundamental elements concerning the mobility of non-profit associations within the Union remain inadequately regulated, resulting in legal ambiguity for all non-profit associations with cross-border activities. For instance, when non-profit associations intend to relocate their registered office to a new Member State, uncertainties persist regarding relocation. In particular, the lack of a possibility of transferring the registered office without going through a liquidation hinders non-profit associations from acting, moving, and restructuring across borders within the Union. National rules diverge and often fail to provide clear solutions and procedures for the exercise of cross-border mobility and economic activities of non-profit associations. [Am. 6]