Definition and legal basis:

The European Economic Interest Grouping (EEIG) is a supranational legal form of the European Union, which was introduced by EEC Regulation No. 2137/85 of July 25, 1985. It aims to facilitate and promote cross-border cooperation between companies within the EU. The EEIG is the first company form based on European law and enables companies from different EU member states to carry out certain economic activities together without giving up their legal and economic independence.

In Germany, the EEIG is additionally regulated by the EEIG Implementation Act (EWIVAG). The EEIG has legal personality and can acquire rights, incur liabilities, sue and be sued in its own name.

Foundation and formal requirements:

At least two members from different EU member states are required to form an EEIG. Members can be natural persons, companies or other legal entities that have their registered office in the EU and pursue an economic activity.

The foundation process comprises the following steps:

1. conclusion of a founding agreement, which must contain at least the following information:
– name of the EEIG
– registered office of the EEIG
– purpose of the association
– name, company name and legal form of the members
– duration of the EEIG, if limited in time

2. entry in the competent register of the country of domicile (in Germany the commercial register)

3. publication of the formation in the Official Journal of the European Union

No minimum capital is required for the formation of an EEIG, which facilitates the formation, but also means that the members have unlimited and joint and several liability for the liabilities of the EEIG.

Structure and management:

The EEIG has a flexible organizational structure, which is defined in the foundation agreement. The mandatory bodies are

1. the members as a whole: they take the fundamental decisions of the EEIG.

2. managing directors: They represent the EEIG externally and manage the day-to-day business.

The members can set up additional bodies, such as a Supervisory Board or an Advisory Board. Management may be assigned to one or more members or external persons. Each member has one vote, unless otherwise stipulated in the founding agreement.

Scope of activities and restrictions:

The purpose of an EEIG is to facilitate or develop the economic activity of its members and to improve or increase the results of this activity. However, the EEIG may not:

– Exercise management or control over the activities of its members or third parties
– Employ more than 500 employees
– Grant loans to directors or members
– Take a stake in another EEIG

These restrictions are intended to ensure that the EEIG serves as an auxiliary instrument for its members and does not become a substitute for them.

Tax treatment:

The tax treatment of EEIGs follows the principle of transparency. This means that it is not the EEIG itself but its members who are liable to pay tax on their share of the EEIG’s profit or loss. Taxation is carried out in accordance with the tax laws of the respective member state in which the members are domiciled.

In Germany, the income of the EEIG is attributed to the members and, depending on the legal form of the member, is subject to income tax or corporation tax. The EEIG itself is not subject to trade tax, but its activities may result in its members being subject to trade tax.

Advantages and disadvantages of the EEIG:

Advantages:
– Facilitating cross-border cooperation within the EU
– Flexible organizational structure
– No minimum capital requirements
– Tax transparency
– Maintaining the legal and economic independence of the members

Disadvantages:
– Unlimited and joint and several liability of members
– Restrictions on the scope of activities
– Complexity due to the application of different national legal systems
– Possible tax complications in cross-border activities

Practical significance and areas of application:

The EEIG is particularly suitable for project-related cooperation and joint ventures between companies from different EU countries. Typical areas of application are

– Research and development projects
– Joint sales activities
– Purchasing cooperations
– Sharing resources and expertise
– Participation in public tenders

Although the EEIG is less common in practice than originally expected, it offers an interesting option for companies looking for a flexible and legally structured form of cross-border cooperation.

Summary:

The European Economic Interest Grouping is a unique legal form specifically designed for cross-border cooperation within the EU. It offers companies the opportunity to cooperate in certain areas without giving up their independence. Despite some limitations and the unlimited liability of its members, the EEIG can be a valuable tool for promoting European economic integration in specific situations. Companies considering an EEIG should carefully examine the legal and tax implications and consider whether this legal form is suitable for their specific cooperation objectives.