Nonprofit Civil Partnerships and NSRF

As we have already concluded in previous articles, characterizing a legal person, for example a Nonprofit Civil Partnership, as nonprofit does not depend on the characterization already given to it by its founders but on its article of incorporation and most of all on practice and facts linked to its activity. The supervisor in charge of the Public Fiscal Service (in other words, the tax office of the legal person) is the one responsible for judging whether the legal person of nonprofit character uses, the way it should, a surplus (after all operational costs are removed), which means for the fulfillment of its goals and not for the distribution of profit to its members (attention: payment of salaries, as well as any wage given to members as reward for their work in the legal person are not considered as distribution of profit).

Moreover, it is obligatory that it functions under principles that promote services linked to the social and community purpose it embraces, that not only members but larger groups benefit from its activity and that in no case it identifies with an enterprise or engages in business activity. But what does it happen in case the person receiving a subsidy must engage in business activity, as a prerequisite for the use of investment tools, such as NSRF (entrepreneurship, competitiveness, innovation, etc.)? Are they being excluded or does the concept of entrepreneurship, defined as it is from these programs refer to nonprofit entities such as Nonprofit Civil Partnerships that engage in commercial activities in order to finance projects which will contribute to the pursuit of its social purpose? The answer lies in the definition of business activity, which is difficult to analyse and  its distinction from the concept of business – commercial activity. Putting it differently, they participate actively in the economic life of the country. Exclusion of Nonprofit Civil Partnerships and nonprofit entities from participating in the economic life of the country is not provided for by the legal system of the country. Quite the contrary. Aiming at profiting is not out of the question; distribution of profit to members is what is forbidden by law. That is because the latter is considered as an exclusive property of the merchandiser. A merchandiser is the person who engages in commercial activities because of his/her profession in order to make profit and a livelihood. Nonprofit entities do not engage in commercial activities in order for their members to make a livelihood, but in order to finance their projects, and this is what differentiates them from commercial ones. This does not mean they cannot be enterprises at the same time, in the sense of making profit, as mentioned above.

Opinions that favor the inclusion of Nonprofit Civil Partnerships and other nonprofit entities in business programs, as well as in NSRF programs addressing to enterprises, have already begun to emerge, while the ministry in charge is in the process of publishing a bulletin relevant to the matter. These are the issues to be discussed in our next article.

Costas Brilis


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