Stellungnahme Stiftungen

18.05.2009

Response to the

Consultation on a possible Statute for a European Foundation

2. THE QUESTIONNAIRE, PART I

Information about the respondent

A. Name of the foundation/company/organisation/person and your function

The Evangelische Kirche in Deutschland (EKD – Protestant Church in Germany) is the federal body of 22 regional member churches of the Reformation. 25 Mio Protestants are registered members of these churches.

B. Address and register ID number of registered organisations ¹

The Brussels office is the political and diplomatic representation of the EKD vis-à-vis the European institutions. It is located at 166, rue Joseph II, 1000 Bruxelles. It is a dialogue partner of the Commission according to the foreseen Art. 17 of the Treaty on the Functioning of the European Union.

C. The legal form, field of activity and country of origin of your organisation

The EKD and its member churches are Corporations under Public Law according to the German Basic Law (Art. 140 Grundgesetz). Foundations are a traditional legal form for churches, to organise their activities in fields such as education, welfare-work, heritage and culture. Such foundations can exist in a variety of legal forms: foundations of civil law, foundations of public law, foundations vested with legal capacity or independent funds legally part of an ecclesial body.
As foundation law is the responsibility of the German federal states, there are also varying concepts depending on where the foundation has its seat. However, a common legal feature of foundations set up and run by churches lies in their relative autonomy. This can also be expressed in supervision by the responsible church authority, not through state supervision.

D. If you are answering for a foundation

Neither EKD nor its member churches are foundations, but they have set up or supervise a significant amount of historic or newly founded foundations (cf. answer to C). Indeed, the current form of foundations has its root in medieval law, when sponsors set up mostly social funds to be administered by ecclesial bodies.

Church Foundations today cover a wide range of activities, from the conservation of local churches to the operation of schools or hospitals, the provision of scholarships or the advancement of cultural life. A number of examples can be found at: http://www.stiftungsdatenbank.de/register-kirchliche-stiftungen/

1. Does your foundation conduct cross-border activities in the EU/EEA area?

No.

2. Does your foundation plan to expand its activities to other Member State(s) in the
foreseeable future?

Not in the immediate future, but it may be possible in medium term planning.

4. Please indicate whether the purpose of your foundation is (1) public benefit only, (2)
mixed public benefit and private or (3) private only.

Public benefit.

Question 1: Barriers to the cross-border activities/establishment of foundations

Q 1.1 The study identifies four categories of civil law barriers/difficulties for the crossborder
activities of foundations in Europe (pp. 105-111):
1) Recognition of foreign foundations (pp. 105-107),
2) Recognition of trusts (p. 107),
3) Cross-border transfer of the Real Seat (pp. 107-110),
4) Cross-border transfer of the Registered Seat (pp. 110-111).
Do you agree with these findings?

Yes.

Q 1.3 Please rank the civil law barriers in order, starting with the one you find the most
important.

1) Cross-border transfer of the Registered Seat (pp. 110-111).
2) Cross-border transfer of the Real Seat (pp. 107-110),
3) Recognition of foreign foundations (pp. 105-107),
4) Recognition of trusts (p. 107),

Q 1.6 The study identifies eight categories of tax law barriers/difficulties for the crossborder
activities of foundations in Europe (pp. 111-122):
1) Income taxation of foreign foundations (pp. 112-114),
2) Income taxation of domestic foundations operating abroad (pp. 114-115),
3) Income taxation of domestic donors of foreign foundations (p. 116),
4) Income taxation of foreign donors of domestic foundations (p. 117),
5) Income taxation of foreign donors of foreign foundations (pp. 117-118),
6) Income taxation of affiliated beneficiaries (p. 118),
7) Inheritance taxation (pp. 118-120),
8) Further taxes (pp. 120-121).
Do you agree with these findings? If not, please explain why.

Yes.

Q 1.11 Why do foundations set up additional organisations/structures in other Member
States in your view?

Churches have always been fostering close ecumenical ties across nations and political borders. Cooperation in many areas of work in, with and for the societies they serve has  increasingly cross-border implications. In an integrated Europe, many projects of public benefit are becoming more international in outlook, while legal forms are still very much bound up with the state in which any actor has its main seat. More adaptability to local needs requires either additional structures or more flexible legal instruments.

Q 1.12 The study seems to identify tax barriers as the main reason for foundations
setting up additional organisations/structures in other Member States (p. 122).
Do you agree with this finding? If not, what do you think is the main reason for
foundations setting up additional structures/organisations in other Member States?

See answer to Q 1.11

Question 2 – What solutions would be most appropriate

Q 2.1 The study assesses five different options to deal with the barriers/difficulties
identified. The options assessed are (p. 178-194):
1) Status quo combined with soft law instruments
2) Harmonization
3) Bilateral or multilateral treaties
4) A European Foundation Statute without tax elements, and
5) A European Foundation Statute with tax elements
What other options for solving the problems do you see if any?

Q 2.2 The study suggests that of the above options, the European Foundation Statute
seems to be the preferable policy option (p. 1). Do you agree? Why/why not?

Yes. This would enable legal experts from any member state to work on the same basis within a foundation that is conducting its work in an inter-European context: one foundation, one Statute – anywhere in the EU. However, from a church perspective, this would only be an option, if the flexibility of the Statute were such as to take account of historic national specificities, such as relating to supervisory rights.

Q 2.4 Would you consider a European Foundation Statute which does not include tax
elements (for instance a tax-exempt status in all EU Member States, p.191) as a
useful/attractive instrument? Why/why not?

Yes. This might be a useful tool that still respects national priorities and decisions in taxation.

Q 2.5 Do you believe that an accreditation system (pp. 179-180) could be a proportionate
solution to the problems for cross-border activities that foundations face today?
Why/why not?

This option would introduce additional bureaucratic burden.

Q 2.6 What added value do you think a "European label" (obtained for instance through a
European legal form like the European Foundation) would bring for the foundations?

A European Foundation could be a quality label for non-profit, public interest work, that is recognizable in all the Union.

Q 2.7 In your view, the benefits attached to a "European label" for foundations:
• can only be achieved through a specific European legal form (European
Foundation Statute)
• can be achieved through an accreditation system
• can already be achieved through national foundations (e.g. through their names,
statutes, marketing)
• can be achieved through other means, which ones?

The legal form would be the easiest option, followed as only a second option by an accreditation system (cf. answer to Q 2.5). The other third option does not seem to have any genuine “European” quality.

Question 3: Content and form of a possible statute for a European Foundation

Q 3.1 According to the study the European Foundation should have the following five
main characteristics (p.194):
1) Legal personality
2) Promotion of a public benefit purpose
3) No membership
4) State supervision, and
5) Establishment by registration
Do you agree that a European Foundation should have these five characteristics? If not,
please explain why.

In Germany, many church based foundations are not under state supervision, but are set up and supervised by the respective church authority. This is an important aspect of German state-church law and a guarantor of religious freedom in its corporative aspects (church autonomy as foreseen in the Grundgesetz). A European Foundation should allow for this option, when it is possible to chose in the country of the legal seat of a foundation.

Q 3.2 How detailed should the European Foundation Statute be? Should it be as
comprehensive as possible (as is the case for the Commission proposal for a European
Private Company Statute) or should it only contain basic rules and refer to national laws
on other issues (as is the case for the European Company Statute) (pp. 195-196)?

It should only contain basic rules and refer to national laws on other issues (cf. answer to Q 3.1.)

Q 3.3 Should an initial endowment be required (p. 199)? If yes, how large an endowment
should be required?

No minimum amount should be fixed, provided the initial amount does plausibly cover the expenses necessary to fulfil the intention of the foundation.

Q 3.5 How should the supervision of a European Foundation be arranged (pp. 200-203)?

The supervisory system of the state in which the legal seat is should be applied.

Q 3.6 On what conditions should an existing foundation be able to transform itself into a
European Foundation (p 184)?

If its internal requirements are met, it would only have to fulfil the general requirements laid down for any new Foundation.

Question 4: Potential transformation of existing foundations into a European
Foundation

If a European Foundation Statute were introduced, the possibility of transforming
existing foundations into a European Foundation would seem to depend on several
factors e.g. the statutes of the foundation ("will of the founder"), the agreement of the
board of the foundation, the approval of the supervisory authority, the scope of crossborder
activities and existing barriers, as well as on the content of a possible European
Foundation Statute (p.184).

Q 4.1 If you are answering for a foundation, would you consider transforming your
foundation into a European Foundation if possible?

Not for the time being. It is more likely that new foundations would be considered to be set up under a European Statute. However, the transformation of one or the other foundation can certainly not be ruled out entirely.

Contact

Patrick Roger Schnabel, M.Theol.
Legal Advisor / Deputy Head of Office
Protestant Church in Germany (EKD)
Brussels Office
166, Rue Joseph II
B-1000 Bruxelles

Tel +32 (0)2 - 2821032
Fax +32 (0)2 – 2800108
patrick.schnabel@ekd.be
www.ekd.eu