Feasibility Study on a European Foundation Statute
16.03.2009
The aim of the study was to examine what obstacles exist for cross-border foundation activities and whether a European statute could provide a solution. The feasibility study is one element of the comprehensive reform of corporate governance and European company law being undertaken by the Commission and resulted from a series of preceding discussions. The European Commission is now making public the feasibility study on a European Foundation Statute and is simultaneously launching a public consultation regarding the difficulties foundations face when operating cross-border, the content of a possible European Foundation Statute and how a Statute might affect donors' and founders' attitudes. In accord with the objectives set out in the Commission’s request, the study begins with an overview which contrasts the main types of foundations found in EU Member States; it identifies the barriers facing foundations within the single European market and quantifies their costs. The study's subsequent sections consider which instrumentalities might overcome the identified obstacles and analyse against this backdrop the introduction of a European Foundation statute as well as alternative solutions. The study reaches the following conclusions (inter alia):- The European foundation sector is a major economic force in Europe and makes significant contributions to the public good in Europe. The public benefit foundation is the only type of foundation which is accepted in every Member State and in practice public benefit foundations are the most important foundation type.
- In the 27 Member States considerable regulatory differences can be found. However, as regards the public benefit foundations there are also important similarities which overall are more substantial than the remaining differences.
- There are legal barriers to cross-border activities of foundations of the Member States both in civil law and in tax law. As in company law, most of the barriers can be overcome, but this leads to compliance costs which will often be higher than they would be in company law given that the legal and personal environments vary (foundation and tax laws of the Member States seem to have more legal uncertainties, inter alia, because of much less case law and fewer specialised lawyers, and because board members of foundations may be less experienced in legal issues).
- The calculable cost of barriers against cross-border activities of European foundations ranges from an estimated € 90,000,000 to € 101,700,000 per year. Additionally, there are incalculable costs (costs of foundation seat transfer, costs of reduplication, psychological costs, costs of failure, etc.) which are certainly higher.
- The introduction of a European Foundation as an additional and optional instrument alongside the national foundation forms offers a path for overcoming the obstacles which appears considerably more promising in comparison to the other alternatives (harmonisation, multilateral or bilateral treaties, improvement of the status quo through non-binding recommendations and information campaigns). Depending on just how such a European Foundation were configured, the costs of cross-border foundation activities can be reduced. Apart from the reduction of the costs, a European Foundation would have further positive effects on the general governance of foundations and trusts and on the behaviour of donors and founders, especially in the field of research and development.