European Economic Interest Grouping
The European Economic Interest Grouping, provide an unbeatable flexible structure for trans-border cooperation between both private and enterprises. It is an indipendent legal entity but is not itself subject to tax.
To form an EEIG, according to Regulation CE 2137/1985, a contract is set up by different members exclusively from the european union. There is no requirement of initial capital but the official address must be in the European area. Its objects can be the exercise of any economic activity. For example, a construction company in UK could set up an EEIG together with an Italian masons group for tendering of projects to be carried out in Spain or in other different countries.
As previously told, the EEIG is not itself subject to taxation, as the members are liable to tax according to the law which applies to them depending on their domicile and place of establishment.
Unlike normal partnership, the EEIGs are totally exempt from capital duty on any fund introduced as capital.
Our international tax advisors well known how to establish an efficient, cross-border EEIG on specific client’s needs.
10 Tips to form an EEIG
- It has a flexible set up regarding its formation because a written contract suffices, its operation based on the Will of the parties, its financing because there is no capital requirement.
- Can be formed by partners of different legal bodies and different economic activities.
- The members have wide legal and economic autonomy: an EEIG can’t exercise any management control over its members, which maintain their legal independence for their activities and their entrepreneurial automy.
- It is a reliable instrument: the members have unlimited joint and several liability. Personal commitment doesn’t represent an internal problem because the members must take any decision collectively and the powers of managers can be limited.
- It isn't subject to taxation as a legal entity for its activities and the profits must be distributed to its members.
- It isn't subject to income tax and municipality tax on industry and trade. An EEIG must only pay the VAT and the tax on income of employees.
- The official address may be transferred within the European Union without being any need to wind up the grouping and reform it in the new State. This is not yet possible for companies.
- Legal neutrality: the EEIG is mainly governed by the Council Regulation No 2137/85.This means that partners are placed on an equal footing, avoiding thus that one partner will be in a more favorable position than the other because it is working in a more familiar legal environment .
- An EEIG has its own legal entity which differentiates it from purely contract forms of cooperation and provides it with greater means of action and guarantees the safety of joint action.
- An EEIG in real estate buying is subject to the registration tax and the land registry tax on a fixed basis.