What Exactly is an EEIG?
On 25 July 1985, based on Regulation (EEC) no. 2137/85 of the European Council on the Establishment of the European Economic Interest Grouping (EEIG), the European Union laid the foundation for harmonised development of economic life in Europe, comparable to a na-tional internal market.
The EEIG is an independent legal form for a company subject to European law; it predomi-nantly differs from other types of companies in terms of its purpose which exclusively con-sists in simplifying or enhancing economic activities performed by EEIG members to enable them to increase their relevant profits.
Due to its assistance purpose, the grouping's activities must in each case be related to the economic activities performed by its members, but they may in no case replace them. For this reason, the interest grouping may not perform any independent professions. The term of "economic activities" must be interpreted in its broadest sense.
In addition to European Economic Interest Groupings, there are other types of companies under EU law:
- SE (Societas Europaea – joint-stock corporations): approx. 1,650 companies of which approx. 900 exist in the Czech Republic, 180 in Slovakia and 250 in Germany, not very common in other Member States;
- SCE (Societas Cooperativa Europaea – cooperative societies): until today, approx. 30 companies in total of which approx. exist 10 in Slovakia, 4 in Germany and 2 in Finland);
- EGTC (European Grouping of Territorial Cooperation): exclusively public-law mem-bers, approx. 35 groupings in existence until today
Information about EEIG
Taking a look on the current legal situation inside the European Union, it is more than obvious that remunerative possibilities for tax savings are available to a considerable number of large groups of companies which predominantly do business on international level. For these groups of companies to be able to make use of available opportunities, many employ their own legal departments and external tax consultancy firms. It seems that medium-sized companies in Europe are denied the same advantage. This is due to the fact that medium-sized companies, in many cases, do not dispose of sufficient financial means to employ a large number of legal and tax experts.
Another reason for the current situation consists in the way in which medium-sized compa-nies, still representing the backbone of German economy, are generally funded. Unlike in the Anglophone world, funding is predominantly provided the classic way, that is, by financial in-stitutions granting loans
Within the framework of the MaRisk [Mindestanforderungen an das Risikomanagement – German Minimum Requirements for Risk Management] enhancements and based on stricter regulatory laws (Basel III), requirements with respect to the loan granting procedures for fi-nancial institutions were considerably tightened. These stricter standards apply in particular to the borrowers' credit standing and to the documents which must be submitted within the framework of the loan granting process. This development is accompanied by ever more sophisticated credit rating systems applied by the individual financial institutions which effect both the granting of loans and loan terms and conditions. For systemic reasons, it is difficult for medium-sized companies in many cases to understand the criteria which financial institu-tions applied.
A research study performed by Commerzbank, a large German financial institution, showed that funding with capital borrowed from financial institutions is anything but popular with medi-um-sized companies in Germany. In fact, two thirds of those companies try and make in-vestments, if possible, without taking out loans from banks or Sparkassen, savings banks publicly supported by municipalities. The study results even diagnosed a so-called "aversion to loans": "In spite of, or maybe even due to, basically having no problems with respect to funding, medium-sized companies take a sceptical attitude towards funding with borrowed capital.
European Economic Interest Groupings (EEIG) have positive influence on both of these as-pects. Based on our company concept, you will be able to benefit from tax savings opportuni-ties on EU level which are largely unknown to the general public and, thus, enhance the po-tential of investments for your company.