European economic interest grouping

A European Economic Interest Grouping (EEIG) is a type of legal entity created on 25th July 1985 under EU Council Regulation 2137/85. It is designed to make it easier for companies in different countries to do business together, or to form consortia to take part in EU programmes. Its activities must be ancillary to those of its members, and, as with a partnership, any profit or loss it makes is attributed to its members. Thus, although it is liable for VAT and employees’ social insurance, it is not liable to corporation tax. It has unlimited liability. It was based on the pre-existing French groupement d´intérêt économique (G.i.e.).

Several thousand EEIGs now exist, active in fields as varied as agricultural marketing, research and development, osteopathy, motorcycle preservation and cat-breeding. One of the more famous EEIGs is the Franco-German television channel ARTE.

The following is taken from the EU website:

• The purpose of the grouping is to facilitate or develop the economic activities of its members by a pooling of resources, activities or skills. This will produce better results than the members acting alone. It is not intended that the grouping should make profits for itself. If it does make any profits, they will be apportioned among the members and taxed accordingly. Its activities must be related to the economic activities of its members, but cannot replace them. An EEIG cannot employ more than 500 persons.
• An EEIG can be formed by companies, firms and other legal entities governed by public or private law which have been formed in accordance with the law of a Member State and which have their registered office in the Community. It can also be formed by individuals carrying on an industrial, commercial, craft or agricultural activity or providing professional or other services in the Community.
• An EEIG must have at least two members from different Member States.
• The contract for the formation of an EEIG must include its name, its official address and objects, the name, registration number and place of registration, if any, of each member of the grouping and the duration of the grouping, except where this is indefinite. The contract must be filed at the registry designated by each Member State. Registration in this manner confers full legal capacity on the EEIG throughout the Community.
• When a grouping is formed or dissolved, a notice must be published in the Official Journal of the European Communities (C and S series).
• A grouping's official address must be within the Community. It may be transferred from one Member State to another subject to certain conditions.
• Each member of an EEIG has one vote, although the contract for its formation may give certain members more than one vote provided that no one member holds a majority of the votes. The Regulation lists those decisions for which unanimity is required.
• The EEIG must have at least two organs: the members acting collectively and the manager or managers. The managers represent and bind the EEIG in its dealings with third parties even where their acts do not fall within the objects of the grouping.
• An EEIG may not invite investment by the public.
• An EEIG does not necessarily have to be formed with capital. Members are free to use alternative means of financing.
• The profits of an EEIG will be deemed to be the profits of its members and will be apportioned either according to the relevant clause in the contract or, failing such a clause, in equal shares.
• The profits or losses of an EEIG will be taxable only in the hands of its members. As a counterweight to the contractual freedom which is at the basis of the EEIG and the fact that members are not required to provide a minimum amount of capital, each member of the EEIG has unlimited joint and several liability for its debts.