Definition of NGOs

The legislation gives a definition of a non-profit association which is a voluntary association of persons the objective or main activity of which shall not be the earning of income from economic activity. A nonprofit association shall not distribute profits among its members. (Article 1 of the Non-profit Associations Act) Associations of persons with non-profit characteristics and having no status of legal persons are not entered in the register and therefore the provisions for civil law partnerships apply to them.

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Definition of NGOs

The legislation gives a definition of a non-profit association which is a voluntary association of persons the objective or main activity of which shall not be the earning of income from economic activity. A nonprofit association shall not distribute profits among its members. (Article 1 of the Non-profit Associations Act) Associations of persons with non-profit characteristics and having no status of legal persons are not entered in the register and therefore the provisions for civil law partnerships apply to them.

Founding of NGOs

A non-profit association may be founded by at least two persons. The founders may be natural persons or legal persons (Article 5 of the Non-profit Associations Act). In order to found a non-profit association, the founders shall enter into a memorandum of association. (Article 6 Section 1 of the Act) Upon conclusion of a memorandum of association, the founders shall also approve the articles of association of the non-profit association as an annex to the memorandum of association. (Article 6 Section 3 of the Act) The memorandum of association and articles of association approved thereby shall be signed by all founders. The articles of association of a non-profit association shall be in writing (Article 7 Section 1 of the Act).

Aims that may be pursued by NGOs, and rules applicable to members

The objective or main activity of a nonprofit association shall not be the earning of income from economic activity nor distribution of profits among its members. (Article 1 of the Act)

Every person or legal entity who complies with the requirements of the articles of association of a nonprofit association may be a member of the nonprofit association. A nonprofit association shall comprise at least two members unless the law or the articles of association prescribe a greater number of members. (Article 12 Section 1 of the Act)

The articles of association determine the proprietary and other obligations of members with regard to a nonprofit association. Obligations may be imposed on members only pursuant to the procedure prescribed by the articles of association (Article 12 Section 4 of the Act ).

Functioning of NGOs without state registration

The state registration is required only for associations that need the status of a legal entity. The provisions of the civil law partnerships are applied to non-registered associations of persons.

Registration requirements for NGOs

A nonprofit association is a legal person in private law. (Article 2 of the Act) In order to enter a nonprofit association in the register of its location, the management board of the nonprofit association shall submit a petition which sets out the information specified by the Act (Article 10 of the Act) and is signed by all members of the management board. (Article 8 Section 1 of the Act) The articles of association and other documents shall be in writing (Article 7 Section 1 of the Act) and be complying with the requirements of law and be submitted with the petition. Registration fee for entry of nonprofit association or foundation in register is 300 Estonian kroons (State Fees Act Article 44 Section 1). The time limit to review the application is ten days.

Authorized state bodies and NGO registry

The maintenance of registers is regulated in the Nonprofit Associations Act. The registration departments (registrars) of the county and city courts shall maintain a register of nonprofit associations and foundations located in their jurisdiction. (Article 75 Section 2 of the Act) Entries in the register are public. Everyone has the right to examine the card register and the public files of nonprofit associations and to obtain copies of registry cards and of documents in the public files of nonprofit associations (Article 77 Section 1of the Act).

Control over the payment of state taxes is exercised by the Estonian Tax and Customs Board.

Denial of registration to NGOs

The Constitution set out the general restrictions that organisations, unions, and political parties whose aims or activities are directed at changing the constitutional order of Estonia by force, or are otherwise in conflict with the law providing for criminal responsibility, are prohibited. (Article 48 para.3 of the Constitution)  A registration department (registrar) shall not enter a non-profit association in the register if its articles of association or other documents do not comply with the requirements of law. Upon rejection of a petition, the registrar shall indicate the reason for rejection (Article 9 of the Act).

Refusal can be challenged through judicial review. If an application is rejected due to deficiencies in it and they can be eliminated, the court shall demand the elimination of deficiencies by a specified due date. The court shall refuse, by a ruling, to accept the application and shall return it to an applicant if the person fails to comply with the demand of the court by the due date. If an application is refused due to some other reason, the court shall make a negative judgment. The applicant can make a protest.

Branch offices of NGOs

A non-profit association may have departments if this is prescribed by the articles of association. (Article 33 Section 1 of the Act) If this is not prescribed by the articles of associations, an application for registration is needed.

Operational requirements for international NGOs

An international NGO must register itself as a non-profit association in Estonia.

Re-registration requirements for NGOs

The legislation does not contain circumstances that require re-registration of NGOs.

Right of appeal of NGOs

Denial in registration of a non-profit association due to deficiencies in its registration documents allows an NGO to eliminate these deficiencies and re-submit the petition to re-registration. Refusal of an application due to some other reasons shall cause a negative judgment of the court. The applicant can make a protest.

Authorized state bodies granting financial and other benefits to NGOs

The Ministry of Culture, the Bureau of the Minister of Population and Ethnic Affairs, the Integration Foundation and others allocate resources for grants and non-profit organisations may apply for government grants. Also local governments grant financial support to projects undertaken by non-profit organizations.

The Legal Aid Act governs support for non-profit associations that provide legal services. Support from the state budget also goes to associations which provide legal aid to persons free of charge. A non-profit association or a foundation shall submit to the Ministry of Justice an application for support. The list of non-profit associations to be supported by the state is available on the web site of the Ministry of Justice.

Foreign funding of NGOs

Non-profit associations are allowed to receive foreign funding. Receipt of such funds is regulated by general tax legislation.

Tax exemptions for NGOs

The value added tax (VAT) shall not be imposed on services provided by a non-profit association to its members free of charge or for a membership fee, and services provided by a non-profit association to natural persons relating to the use of sports facilities or sports equipment. (Article 16 Section 1 Clause 3 of the Value Added Tax Act) The Government shall, by an order, approve a list of non-profit associations and foundations benefiting from income tax incentives. (Article 11 of the Income Tax Act) The state shall pay social tax for employees of a company, non-profit association or foundation, whose loss of the capacity for work is 40 per cent or more and who are included in the list established by the Minister of Social Affairs. (Article 6 Section 1 Clause 5 of the Social Tax Act)

Reporting requirements for NGOs

A non-profit association, foundation or legal person in public law is required to submit a signed original copy of its annual report to the regional tax centre of the Tax and Customs Board within six months following the end of the financial year.(Article 55 Section 1 of the Income Tax Act)

Termination, dissolution, and liquidation procedure for NGOs

The Ministry of Internal Affairs or another interested person may request the court judgment to dissolute a non-profit association if: the objectives or activities of the non-profit association are contrary to law, the constitutional order or good morals; the association’s activities do not comply with the objectives in the article of association; economic activity becomes the main activity of the non-profit association; the management board does not submit a petition for dissolution provided by law; or in other cases provided by law.

Participation in law-drafting that affects the status of NGOs

There are no specific regulations over NGOs’ participation in the legislative process. Non-profit organizations in practice are engaged in the dialogue with the various government agencies in Estonia. Particularly, non-profit organizations representing national minorities in Estonia can influence legislative process through their participation at the Chamber of National Minorities of the Presidential Roundtable on Minorities. (The Roundtable was convened in 1993 and is a permanent body with advisory capacity whose aim is to discuss issues of state and society, including ethnic, economic and socio-political issues)

Analysis provided by Dmitry Kabak, OSCE/ODIHR consultant.

Posted: March 2007

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