Set up a non-profit association or foundation in Spain

A non-profit entity pursues a general interest goal and does not distribute profits among its members: the surplus is reinvested in its activities. The 2 main forms in Spain are the association and the foundation.

An association is a group of people (minimum 3) who join together for a common purpose and is governed democratically through the General Assembly. It is regulated by Ley Orgánica 1/2002 (the Spanish Right of Association Act) and does not require capital or a mandatory notario (Spanish notary public).

A foundation is an asset (the endowment) that its founder permanently allocates to a general interest purpose. It is regulated by Ley 50/2002 (the Spanish Foundations Act), requires an endowment whose sufficiency is presumed from €30,000, a public deed before a notario and the report of the Protectorate before registering.

In both cases, Managora studies which one best fits your project, drafts the minutes or the deed and the statutes, and submits the registration for you.

Association: it can be set up by 3 or more individuals or legal entities acting as promoters or founders. No minimum assets are required. The association acquires legal personality the moment the founding minutes are signed; subsequent registration is mandatory for publicity purposes and to limit the personal liability of the promoters.

Foundation: it can be set up by 1 or more individuals or legal entities (including public entities) that provide the endowment. The purposes must be of general interest and benefit generic groups of people, not the founders themselves. The foundation acquires legal personality only upon registration of the deed in the Registry of Foundations.

The purposes cannot be illicit or contrary to the law, and neither of the 2 forms can have the distribution of profits among its members as an objective.

Association: founding minutes (identification of the promoters, will to incorporate, name, approval of the statutes, place and date, signatures and designation of the provisional governing body) and statutes (name, registered office and scope, purposes and activities, requirements for admission and withdrawal of members, rights and duties, bodies, economic regime and causes of dissolution with the destination of the assets).

The governing bodies of the association are the General Assembly, the supreme body made up of all members, and a representation body (usually the Board of Directors) that manages the day-to-day running.

Foundation: public deed including the identification of the founder, the will to incorporate, the endowment and its valuation, the statutes and the identification and acceptance of the trustees. You also need the negative certificate of name from the Registry of Foundations (with a maximum age of 3 months).

The governing body of the foundation is the Board of Trustees, with a minimum of 3 members (president and secretary included). The position of trustee is unpaid. The Protectorate ensures legality and issues a mandatory and binding report on the suitability of the purposes and the sufficiency of the endowment.

If you later need to change your statutes, Managora processes the modification (see the file for the association statutes modification procedure).

Every entity must obtain its NIF (tax identification number) from the Agencia Tributaria (the Spanish tax agency, also known as Hacienda) using form 036 and keep accounting records. By default, an association pays Corporate Income Tax on its non-exempt income.

Ley 49/2002 (the Spanish Tax Regime for Non-Profit Entities Act) establishes a special tax regime reserved for foundations and associations declared of public utility that meet 10 requirements: general interest purposes, allocating at least 70% of their income to those purposes, unpaid positions, founders or trustees not being the main recipients, accountability and economic report, among others.

Opting for this regime (via form 036) allows you to pay Corporate Income Tax at 10% on non-exempt income and enjoy exemption from IBI, IAE and plusvalía municipal (local tax on the increase in urban land value) on assets allocated to the purposes.

Furthermore, entities under Ley 49/2002 allow their donors to deduct a part of the donation in their tax return, which makes it easier to attract funding. Managora manages the census registration and guides you on accounting and annual accounts.

The declaration of public utility is a recognition granted by the Ministry of the Interior to associations whose purposes promote the general interest (civic, educational, scientific, health, social, environmental, cooperation, etc.).

To apply for it, the association must have been incorporated and registered for at least the 2 years immediately preceding the application, have adequate personal and material resources, keep accounting records and be up to date with its obligations. The application is submitted to the registry where the association is registered and is granted by the Ministry of the Interior, being published in the BOE (Official State Gazette).

Public utility opens the door to the tax regime of Ley 49/2002 (foundations have it by their very nature) and allows the use of the mention 'declared of public utility'.

Association: the official cost is low. Registration in the National Registry of Associations involves a state tasa (official fee) using form 790, code 017; many regional registries are free or very cheap. The registry must resolve within 3 months and, if it does not reply, the registration is understood to be approved by positive administrative silence.

Foundation: the main cost is the endowment (presumed sufficiency from €30,000) plus the notario expenses for the public deed. Registration depends on the Protectorate's report. The deed must be submitted for registration within 6 months following its execution.

Managora's fees for preparing and submitting each procedure are shown in the corresponding file: you can see the updated amount in the association incorporation, foundation incorporation and statutes modification files. Managora takes care of the drafting, submission and follow-up until registration.