Let’s see how the constitution of an ONLUS works and what this definition means. We illustrate the creation of this body, what the articles of association and statute must provide, costs, obligations and tax breaks.
Meaning of ONLUS and legislation
The acronym ONLUS means Non-Profit Organization of Social Utility. To be considered an ONLUS, a body must pursue purposes of social solidarity, that is, it must bring benefits to disadvantaged people. The legislation of the ONLUS (Legislative Decree 4 December 1997, n.460) requires these entities to carry out only one or more of the following activities:
- social and socio-health assistance
- health care
- amateur sport
- protection, promotion and enhancement of things of artistic and historical interest (Law 1089/1939, including libraries and assets of Presidential Decree 1409/1963)
- protection and enhancement of nature and the environment, with the exclusion of the activity, normally exercised, of collection and recycling of urban, special and hazardous waste
- scientific research of particular social interest.
In addition to the activities indicated as exclusive towards disadvantaged people, the ONLUS can carry out ancillary activities to the exclusive ones or activities towards non-disadvantaged people. These activities must be carried out in a non-prevalent way and for the sole purpose of supporting the institutional activity of the association. For example, a non-profit organization that carries out health services will be able to sell T-shirts or organize events to raise funds in order to support its main activity.
It is important to know that the proceeds from these activities cannot exceed 66% of the total expenses of the ONLUS. This limit was set to prevent the expenses of the ONLUS from being largely financed by ancillary activities and thus becoming the main activity of the ONLUS.
The new Code of the Third Sector (Legislative Decree 3 July 2017, n.117), which reformed all entities that pursue solidarity and social utility purposes, canceled the status of ONLUS. In order to survive, these entities will have to register, when established, in the Single National Register of the Third Sector (RUNTS), identifying the specific reference section in which to place themselves. It should be noted that this legislation, even if it is already in force, is unfortunately not yet fully applicable, as its full implementation depends on the establishment of the RUNTS, on the authorization of the European Commission and on the issue of numerous ministerial decrees that will have to clarify some important aspects relating to the application of the reform.
How to set up an ONLUS
To create an ONLUS association, the founding members is to create the statute and the charter of the ONLUS. These documents regulate the organization and its functioning. The founding members will then have to sign the deed of incorporation and the statute and the ONLUS will be established.
To found an ONLUS, the presence of a notary is not required, which is required only for recognized associations. It will be enough for the members to sign all the documents of incorporation together. However, further subsequent obligations are envisaged if you intend to benefit from the tax concessions to which this body is entitled and if you intend to make the association fully operational.
Requirements after opening
To carry out all the basic operations (eg purchase goods, stipulate contracts, open a current account) the ONLUS must request the tax code. If a commercial activity is also habitually carried out, it will also be necessary to open the VAT number by association. Furthermore, to obtain the expected tax benefits, the articles of association and the deed of incorporation must be registered with the Revenue Agency within 20 days of the constitution. Subsequently, always at the same Agency, within 30 days of registration, the registration in the register of the ONLUS must be made.
Some types of associations are considered ONLUS by law: voluntary organizations (ODV), recognized non-governmental organizations (NGOs), social cooperatives. These entities automatically become ONLUS, without being required to register in the single registry of the ONLUS.
The costs to open an ONLUS
To complete all the steps seen above and create an ONLUS, the costs are limited. The founders can prepare the statute without going to a notary and for the opening of the tax code and the registration in the ONLUS registry there is an exemption from all taxes. However, it is the Revenue Agency of your territory that determines if this facility is confirmed for the registration of the association. In the event of a negative opinion, a registration tax of € 200 must be paid.
During the whole opening process, it is important to have the support of a professional. In this way, errors in the drafting of the constitutive documents and problems in the preparation of the models for each fulfillment will be avoided.
The cost of assisting a professional to complete the constitution and registration is on average € 300 + VAT.
With our association constitution service, you can save money and create your association with only € 99 + VAT. The service includes everything you need to set up your own ONLUS with the full assistance of experienced professionals. After the establishment, you will also have access to 1 year of 100% online legal support to create tailor-made contracts for your non-profit (e.g. contracts for suppliers and collaborators, sponsorship, leasing and use of spaces and services, privacy) and request consultancy with professionals for any need of the new business.
Once the association has started, you will also have to consider the cost of managing the annual accounting of your non-profit. It is in fact necessary to contact a professional who takes care of the correct keeping of the accounts and of any fulfillment. The cost is generally around € 1,000 + VAT per year.
If you set up your non-profit with us you can choose our online accounting service starting from € 166 + VAT per quarter for an annual saving of approximately € 600. This price includes everything you need to properly maintain your nonprofit’s accounting.
Tax concessions for non-profit organizations
There are numerous tax breaks from NGOs, let’s see the main ones:
- IRES (Corporate Income Tax) is not applied to income from institutional activities (the exclusive ones seen above) and related activities
- natural and legal persons (companies) have the possibility to make donations and take advantage of a tax deduction equal to 30% of the payments made for a maximum amount of € 30,000
- donations made to non-profit organizations are deductible from total net income within the limit of 10% of the total declared income
- can benefit from the 5 per thousand of IRPEF paid by taxpayers.
Furthermore, non-profit organizations enjoy a series of exemptions:
- VAT for hospital, care, educational and training services and social and health services in general
- stamp duty
- the obligation to issue a tax receipt (only for institutional activities of social utility)
- the government grant tax;
- inheritance and gift tax;
- of local taxes;
- tax on shows and entertainment;
- concessions for the organization of lotteries, bingo, peaches and charity benches.