Expert View: What does the European Commission’s work programme mean for non-profits in Europe?

As the European Commission lays its annual work programme on the table, what lies in store for non-profits? Patrick Gibbels, director of Gibbels Public Affairs, highlights the coming ePrivacy Regulation and VAT rates reform, among other initiatives that could impact the fundraising community.

In Brussels, we are used to waiting. Whether it is for a new Belgian government or on the continuously delayed trains. However, the European Commission invariably presents its Annual Work Program at the end of October. This time, we waited until the end of January to receive the yearly legislative forecast.

The content of the Commission’s work programme is clearly divided into topics, with the European Green Deal led by Timmermans at the top. Other topics are A Europe Fit for the Digital Age; An Economy that Works for People; A Stronger Europe in the World; Promoting our European Way of Life; A New Push for European Democracy. Within these pillars, we can identify a number of initiatives that could affect the fundraising community.

The European Commission has identified a number of pending policy files as priority for this year. Two of these are of direct relevance to the sector. 

The ePrivacy Regulation

This Regulation will replace existing Privacy and Electronic Communications Regulations which are based on the EU ePrivacy Directive (2002). These rules give rights to individuals regarding electronic marketing methods such as direct marketing and the use of cookies, which also apply to fundraising, marketing, and campaigning. Since the new ePrivacy proposal is a Regulation under EU law, rather than a Directive, it means that it will apply across the EU, without much room for adjustments at national level.

The main purpose of the Regulation is to bring the rules relating to electronic communications in line with GDPR. The combination of GDPR and the new ePrivacy rules means a move away from opting out and towards a regime of explicit consent, which potentially means considerable changes in the way fundraisers can approach potential donors. In my opinion, this creates an even more uneven playing field between (smaller) fundraisers and the well-known tech platform behemoths, who will always find ways to obtain explicit consent.

State of play

The Finnish Presidency of the EU, which ended its term at the end of December 2019, presented its last compromise proposal on the e-Privacy regulation in November. There was no agreement on the compromise at the Council Working party on telecom held on 22 November 2019. The (current) Croatian Presidency also managed expectations, saying that there still remain open issues in the text, one of which is the relationship between ePrivacy and GDPR as well as the scope of the ePrivacy Regulation. So, for now at least, it remains a waiting game.

EU VAT rates reform

VAT is a big issue for fundraising charities, with European non-profits paying over €6 billion in irrecoverable VAT annually . The EU has been searching for solutions to this problem for many years and previous European Commissioners have suggested the introduction of VAT refund schemes as a means of compensating the irrecoverable VAT. Some Member States have such or similar schemes in place, but so far, the European Council (collection of all EU Member States) has been unable to achieve agreement on an EU wide solution. Add to that the fact that the Commission differentiates between fundraising organisations that offer services free of charge; grant making trusts; charities providing paid services and; hybrids of these.

State of Play

Whilst the European Parliament’s resolution was adopted in October 2018, assessment in the Council is still ongoing at working party level, meaning that amendments and negotiations are ongoing. Taxes and VAT have historically been a competence of the EU Member States. It is therefore one of the most difficult policy areas to achieve agreement in the European Council, requiring unanimity.

EFA is working with ECCVAT and other European partners to ensure the sector’s concerns costs are heard, and to lobby for fairer VAT treatment for charities.

New Initiatives

Besides these, the European Commission has also tabled a number of new initiatives, some of which may affect fundraising as well, which include:

• Review of the Non-Financial Reporting Directive (Q4 2020)
• European Strategy for Data (Q1 2020)
• Digital Services Act (Q4 2020)
• Action Plan on Anti-Money Laundering (Q1 2020)
• Action Plan to fight tax evasion and to make taxation simple and easy (Q2 2020)
• Report on the application of the General Data Protection Regulation (GDPR) (Q2 2020)
• Alignment of relevant Union law enforcement rules with regards to data protection (Q2 2020)
• Communication on Better Regulation (Q2 2020)

For now, we will keep monitoring these issues, sharing updates through Fundraising Europe on relevant legislative files as they progress through parliament. But one thing is certain, 2020 is likely to continue to be a period of change.

Patrick Gibbels, Gibbels Public Affairs

About Patrick Gibbels

Patrick has a background in Law and European Studies at the University of Maastricht (NL). After having worked briefly at a lobbying firm, which mainly catered for Dutch clients, Patrick moved to the European Small Business Alliance (ESBA) – a Pan European organisation for Small and Medium- sized Enterprises, representing the interest of European enterprises and lobbying on their behalf. In 2009, he became ESBA secretary general, a position which he held for ten years.

In April 2011 Patrick launched Gibbels Public Affairs (GPA) and he has set up a number of European Associations. Patrick has won several European Public Affairs Awards, including in-house professional of the year (2016) and consultant of the year (2017).