A non-profit association (mittetulundusühing, MTÜ)is a voluntary association of persons, whose objective or main activity is not the earning of income from economic activity. A non-profit association may engage in economic activity and earn income, but this must be used to achieve the objectives specified in its articles of association. The activities of non-profit associations are regulated by the Non-profit Associations Act.
The highest management body of a non-profit association is the general meeting of its members. On a daily basis, a non-profit organisation is represented and managed by the management board elected at a general meeting.
Members of the management board must perform their legal obligations with the diligence normally expected from a member of the management board.
The founders of a non-profit association may be either natural persons or legal persons. A non-profit association must comprise at least two members.
The founders and members may also be foreign nationals. As Estonian law does not permit a branch of an international organisation to be registered as a non-profit association, a new legal entity must be founded in such cases. Additionally, a foreign legal entity may carry out its activities in Estonia directly on a cross-border basis without registering a separate branch or founding a new legal entity.
Before founding a non-profit association
The following must occur in order to found a non-profit association:
- a founding meeting with the members must be held;
- a memorandum of association must be entered into and the non-profit association’s articles of association must be drawn up.
NB: You may have the documents reviewed by your County Development Centre consultant before signing. The consultation is free of charge.
Documents required for founding a non-profit association
In order to found a non-profit association, you must enter into a memorandum of association and approve the articles of association.
The memorandum of association must include the following:
- the name of a non-profit association, which must contain an suffix referring to the fact that it is an association of persons, e.g. union, society, association, club, etc. If no such suffix is found or none are suitable, add the word mittetulundusühing to the name;
- the non-profit association’s contact address;
- the objective;
- the founders’ names, addresses (or registered offices), and personal identification codes or registry codes;
- the members’ obligations with regard to the non-profit association;
- the names, personal identification codes and places of residence of the members of the management board.
The articles of association are a document that must contain agreements important to the members with regard to the future activities of the organisation. As a minimum, the articles of association must include:
- the name and registered office of the non-profit association (at local government level);
- the objective;
- the conditions and procedure for membership in, and for leaving and exclusion from, the non-profit association;
- the rights and obligations of members or the procedure for establishment thereof;
- where applicable, the existence of departments, and their rights and obligations;
- the conditions and procedure for calling a general meeting and the procedure for adopting resolutions;
- the number of members on the management board or the maximum and minimum number of members;
- the distribution of assets in the event of the dissolution of the non-profit association. In order to make use of the income tax incentive, the distribution of assets to another association or legal entity under public law must be specified in a list of incentive beneficiaries to be included in the articles of association.
If you wish to add an association to the list of associations benefiting from income tax incentives, you must clearly indicate in the objective and activities of the association that the association operates in the public interest and for charitable purposes. Further information can be found on the Estonian Tax and Customs Board website.
The petition for entry in the register must be supplemented by the memorandum of association and the articles of association, contact details (telephone, email and website), and the main planned activity.
Registering a non-profit association in the Business Register
Once the articles of association and the memorandum of association have been approved at the foundation meeting, the non-profit association must be registered in the Business Register. There are two options for submitting the documents:
- electronically in the e-Business Register;
- via a notary.
The petition for entry in the register can be submitted to the Business Register electronically if all of the founders and members of the management board are able to provide a digital signature. In this case:
- fill in the petition for entry of a non-profit association in register directly in the e-Business Register;
- add the articles of association and the memorandum of association to the petition by uploading them as files;
- then, have the co-founders and members of the management board sign the documents in the e-Business Register;
- pay the state fee for founding a non-profit association (this can be done via bank transfer in the e-Business Register);
- submit the petition for registration to the Business Register.
Registration documents must be submitted via a notary if not all of the founders or members of the management board are able to sign the documents digitally. The authenticity of signatures is verified by a notary. In such a case, a notary that attested the petition must submit the notarised petition must through the electronic information system for notaries.
The cost of founding a non-profit association
The state fee for registering a non-profit association in the e-Business Register is EUR 30. The state fee can be paid by bank transfer as part of the process of preparing a petition for registration.
Founding a non-profit association via a notary entails a state fee of EUR 30 for registry acts, plus any notarial fees.
Registration deadline for non-profit associations
A non-profit association must be registered within 5 business days. If any deficiencies are found, the registrar must report them to the founders and set a deadline for rectifying the deficiencies.