EUROPE – The European Parliament's draft report on the European Foundation Statute (EFS) has been promised by June 2013 at the latest.

Evelyn Regner, rapporteur to the European Parliament Legal Affairs (JURI) Committee on the EFS proposal, announced the deadline at a public hearing on 26 November.

The committee is reviewing a proposal to enact an EFS that was published by the European Commission last February.

The hearing included presentations by Francis Charhon, chair of the advocacy committee of the European Foundation Centre (EFC), and Rosa Gallego, chair of Donors and Foundations Networks in Europe (DAFNE).

Gallego underlined the strong support of the foundation sector for the EFS.

"There is a sense of urgency, especially at a time of unprecedented socio-economic and political turmoil, when every cent counts and when all actors, including foundations, should have adequate and suitable tools at their disposal to maximise their impact," she said.

An EFS would provide a single set of rules for European foundations, helping to reduce costs and uncertainty for public benefit foundations working across borders.

This would help them pool and scale up their resources, and stimulate cross-border donations, allowing more funding to become available.

The EFS could also provide a level of transparency and accountability to individual foundations set up under its framework.

It would not, however, replace existing national laws, but would be optional and complementary.

The hearing highlighted a significant convergence of views on the need for swift progress with legislation.

John Riches, partner at Withers Bergmann, who represented the Society of Trust and Estate Practitioners, said: "There was clearly a strong degree of buy-in from most of the parties that cross-border foundations are an effective way to allow civil society entities to operate and co-operate.

"But the devil is in the detail, and there are some areas of difficulty."

One potential sticking point is the definition of public benefit.

"This would involve a big amalgamation of core objectives, and it creates complications," said Riches. "For example, one of the suggested objectives under the EFS is consumer protection, which is not formally within the definition of charitable objectives in, say, the UK. But religion, which is included in the UK definition of public benefit, is not on the EFS list.

"It is not appropriate to compel each member state to abandon its own history and culture in defining what is a public benefit. So a pan-European definition would have to reflect the lowest common denominator among the purposes recognised across the EU."

Another potential obstacle could be the tax regime – the proposal says there should be tax equivalency between European foundations and domestic organisations.

"We are concerned this could mean European foundations enjoying tax relief but carrying out activities that would not attract relief if performed by domestic organisations," said Riches.

"Instead, it would be better for the EFS to be silent on tax matters, leaving European foundations and their donors to obtain equal treatment under non-discrimination principles established by European Court of Justice case law."

The European Commission was represented at the hearing by Martin Frohn, deputy head of unit, corporate governance, social responsibility, DG internal market.

The legislative proposal is also currently being reviewed by the Council's working party on company law, and Frohn said discussions among member states in the working party had been very constructive.

Member states had given a mixed response depending on the specific issue under consideration, such as activities allowed or internal governance. But there were reservations about the tax elements.

Both the final report and a complementary opinion from the education and culture committee will act as the basis for the European Parliament's final resolution.

The proposal will be adopted if supported by a simple majority of MEPs. 

Meanwhile, the Committee of the Regions of the EU has adopted a favourable opinion on the proposed EFS regulation, proposing some modifications for clarifying specific points.