Terzo settore senza frontiere – 3. The need for an EU legal framework for social economy organizations and its possible forms (presentation at the meeting of the EESC – Group III – SE Category, on 27 October 2021)

First of all, I would like to thank our today’s President Mr. Giuseppe Guerini and the entire Committee for their kind and most welcome invitation. It allows me to present some thoughts developed during the extensive comparative legal research carried out over the last ten years, also thanks to the support of the EU. I’m mainly referring to a study on social enterprises in 2017 for the European Parliament1, which I updated in 2020 in a report written for CECOP (the European Confederation of industrial and service cooperatives)2, to another one about associations and non-profit organizations, published early this year, again for the European Parliament3, and to a study conducted with EURICSE (the research institute here represented by Gianluca Salvatori) for the European Commission a decade ago, on the state of implementation of the European Statute on cooperative societies of 20034.

In the short time available, I will limit myself to emphasizing the need for European legislation on the social economy and to discussing the possible forms that such legislation might assume.

Indeed, if it’s true that the social economy is a subjective category, which is to say, if it’s true that the concept of social economy is outlined with reference to a set of entities that, by virtue of certain characteristics, positively contribute to the socio-economic objectives of the European Union, then identifying with clarity the entities in question is necessary in order to define with precision the boundaries of the social economy and make every discourse and policy in this regard coherent and useful.

An EU statute which recognizes social economy entities is therefore not only appropriate but necessary to promote the social economy in Europe. I would say, an EU statute is the starting point for any other further measure in support of the social economy. Shortly, a law that recognizes the entities of the social economy is the first and foremost action in their support.

In addition, and among other things, an EU legal framework would enhance the visibility of the sector, and would favour the development and de facto approximation of the national legal frameworks concerning the social economy.

Therefore, in my opinion, we should no longer ask ourselves whether to recognize social economy entities at the European law level (because the answer is undoubtedly YES), but we must rather ask ourselves what form this European legislation should have and what contents.

Discussing this issue inevitably implies on the one hand dealing with the existing differences between national laws (end even with some jurisdictions that ignore the category under observation), and on the other hand inquiring into the possible features of this legislative initiative.

EU law could in principle follow two routes.

1) The first is to establish a specific EU legal form of incorporation for social economy organizations, which would be added to those already existing of the European Economic Interest Grouping, the European Company and the European Cooperative Society.

This solution, however, presents some drawbacks. Let me underline here only three points:

– first, this ad hoc EU regulation would be based on art. 352 TFEU which requires MS unanimity for its approval. A very difficult objective to achieve if one considers the variety of national approaches to the social economy (and the absence of approaches in some MSs). Indeed, we should not forget the failed attempts to introduce statutes on European associations, foundations and mutuals over the last thirty years;

– second, if it were the adopted strategy, the EU legislator should select a legal form among the possible ones (association, foundation, company or cooperative?), and this would conflict with the existing pluralism in national laws where social economy entities may have different legal forms, not only those of an association, a foundation and a cooperative, but also that of a (shareholder) company. If it’s so, then the EU legislator, to preserve and guarantee pluralism of legal forms, should introduce several EU statutes, on associations, foundations, mutuals and even non-profit companies, which would make things yet more complex for the aforementioned reasons;

– third, a supranational legal form might favour cross-border activities of social economy entities, but would not per se promote them (also because taxation would not be touched) and would not ensure their equal treatment regardless of the country of incorporation.

2) The second strategy, which is the one I recommended in the previously mentioned Studies for the EP, is about introducing, at the Union level, a “European Social Economy Status or Label” available to legal entities that, regardless of their legal form of incorporation, meet certain common requirements. This legal label or status would be valid in all MSs, allowing a foreign entity to receive in a MS the same treatment, also under tax law, as a national entity in possession of the same status.

Not only does this strategy seem more feasible (in terms of acceptability by MSs, because it is more respectful of national legal traditions and cultures), but it also appears more in line with the expectations surrounding a European statute in this field. There are at least four reasons for that:

–  first, MSs should only agree upon the common indicators for the European label (indicators that regard mainly the purpose and the activity of the organization, but also some aspects of governance), and not upon an extensive regulation covering all the aspects of the formation and functioning of a legal entity; moreover, the status would be introduced by a Directive based on article 50 TFEU, thus leaving freedom to MSs at enactment;

– second, an EU label or status is more in line with the existing national legislation, where, although with different denominations (social economy, social enterprise, third sector), these legal statuses or labels already exist;

– third, this legislative strategy would promote the plurality and diversity of legal forms of enterprise and organization, given that the status would be awarded to the legal entity in possession of the requirements regardless of it legal form of incorporation, which might therefore be that of an association, a foundation, a cooperative or even that of a company;

– last but not least, a European legal status open to several legal forms best serves the interests of the European Union in this field, if the main objective of the Union is to recognize and support the social economy and not so much to address the issue of its modes of organization.

This is, in very short terms, my recommendation, which moreover finds its roots in an opinion of the European Economic and Social Committee of October 2011, where this European label was first envisaged5.

As you know, this strategy originally met the favour of the EP, which following the results of my Study of 2017, adopted in 2018 a resolution requesting the EC to submit a proposal for a legislative act on the creation of a European Social Economy label for enterprises based on the social economy and solidarity6.

Apparently, the EP is now following a different route, which is that of introducing supranational legal forms, starting from that of the European association (a motion for a resolution is under discussion at the JURI committee). I hope that the EP will eventually succeed, but a Regulation on the European association would certainly favour the cross-border operations of (big) associations but alone would certainly not promote the social economy in Europe.

Finally, allow me to point out the new Italian legislation on the third sector (the Italian Code of the Third Sector of 2017) as a model that could be a reference for the European legislator interested in establishing a similar European status. In the international regulatory landscape it is today the only one of its kind and can be a source of great inspiration for all law-makers. Especially in identifying the requirements for qualifying a legal entity as a European Social Economy or Third Sector Organization. Indeed, once selected the appropriate strategy, or at least the strategy that I consider appropriate, the legislator has to identify the essential elements of the status. Well, the new Italian law may be very helpful in this last regard.

Thank you very much for your kind attention.

TUTTI I DIRITTI RISERVATI. È vietato qualsiasi utilizzo, totale o parziale, del presente documento per scopi commerciali, senza previa autorizzazione scritta di Terzjus.










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