Donations and Contributions
Forms of donations and contributions
- Non-EU payments: The General Court of the European Union clarified that parties established outside the EU cannot be regarded as political parties within the meaning of Regulation (EU, Euratom) No 1141/2014 because they are not composed of Union citizens (Judgment of 25 November 2020, ACRE v Parliament, case T-107/19), and hence they cannot make contributions. A prohibition of donations received from public authorities, private entities or from individuals from a third country is laid down in Article 20 of Regulation (EU, Euratom) No 1141/2014.
- Payments received by European political parties therefore must be repaid immediately in accordance with Article 20(6) of Regulation (EU, Euratom) No 1141/2014, failing which the sanction provided by Article 27(2)(i) of the Regulation would have to be considered by the Authority.
- Pursuant to Article 2(7) of Regulation (EU, Euratom) No 1141/2014, the definition of 'donation' includes not only direct payments in cash but also indirect payments via "any other transaction which constitutes an economic advantage for the European political party, with the exception of contributions by members". This may include transactions between third parties relieving a European political party or foundation of payments that would have otherwise been provided by the European political party or foundation.
Donations – attribution
- Donations reported to the Authority pursuant to Article 20(4) of Regulation (EU, Euratom) No 1141/2014 and received by European political parties and European political foundations in year N+1, may only in very specific circumstances be attributed by the latter to year N.
- In order for such attribution to year N to be accepted by the Authority, the European political parties and European political foundations must provide documentation demonstrating that the commitment for the payment of the donation in question had already been entered into by the donor before year N+1, and that there was an enforceable agreement that the donation would be paid in year N.
- Such documentation must be sent to the Authority already in year N, even if payment from the donor has not yet been received, e.g. a donation agreement or any underlying contractual arrangement, a unilateral commitment, a payment order, communication in this respect for example by letter and/or email, an invoice etc.
- Pursuant to Article 20(4) of Regulation (EU, Euratom) No 1141/2014, European political parties and European political foundations shall immediately report to the Authority "single donations" exceeding EUR 12 000.
- The Authority will assess on a case-by-case basis whether also several payments from one donor qualify as a "single donation".
- This may be the case, in particular, where there is a pre-agreement with the donor aimed at one single donation, but the payment occurred in several tranches.
- In case of separate spontaneous payments from the same donor, the Authority would not usually regard these payments as a "single donation" that requires immediate notification where the cumulated amounts exceed 12 000 EUR (without prejudice to the regular reporting requirements in the course of the annual accounts process).
- When assessing the legality of donations under Article 20 of Regulation (EU, Euratom) No 1141/2014, the Authority needs to verify and determine the exact identity of the donor in case more than one person or entity is involved in the grant of such a donation.
- This could be the case, for example, in a situation where one legal entity within a group of companies is in direct contact with the European Political party or European political foundation concerning the donation, while another entity within the same group of companies ultimately carries out the relevant payment.
- In such a situation, the Authority will rely on the "effective donor" concept, i.e. it will assess from where the payment effectively originates within the group of companies concerned. In this context, the Authority will take into account inter alia the factors below:
- Which entity was directly involved in the creation of the legal basis for the payment (e.g. negotiated the sponsorship agreement)?
- Was this entity entitled to exercise its own discretion concerning the content of the agreement and the payment modalities?
- What was the role and responsibility of the other entity involved? Did it act merely was a payment services provider or did it have a responsible role in the underlying agreement?
- In any event, none of the persons or entities involved in a donation process (whether initiator or payer) may be in a situation prohibited by Article 20(5) of Regulation (EU, Euratom) No 1141/2014.
Origin of donations - “Know your donor”
- To prevent inadvertent acceptance of payments in particular from
- public authorities and entities over which such a public authority may exercise a dominant influence (prohibited by Article 20(5)(c) of the Regulation and subject to sanction in case of infringement), or
- third country sources (prohibited by Article 20(5)(d) of the Regulation and subject to sanction in case of infringement)
- European political parties and European political foundations are encouraged, before accepting a donation, to obtain reliable and precise information on their donor, including in particular
- on country of residence or seat, and
- in case of legal entities, also by whom such entities are controlled (e.g. by means of incorporation documents, statutes, etc.).
- Such information should be mirrored in the corresponding reporting template of the Authority and, in case of donations exceeding 12 000 EUR, in the immediate reporting.
- In accordance with Article 2(7) and (8) of the Regulation, the provision of a goods, services (including loans) or works at a price below market value constitutes a donation or, if provided by a member recognised by the Regulation as such a contribution. If and to the extent this is the case, the notification and limitation rules relating to donations and contributions, as laid down in particular in Article 20 of the Regulation, apply.
- However, not all discounts constitute donations or contributions within the meaning of the Regulation: in this respect, the extent and scope of the discount need to be assessed. More specifically, in order to determine whether the provision of goods, services and works at a discounted price would have to be qualified as a donation or a contribution, it should be considered :
- whether the discount benefits the European political party or European political foundation specifically, or more than others (which would be indicative of a donation or contribution), as opposed to benefiting in the same way a group of potential customers defined upfront on the basis of objective criteria (e.g. discount given to all "NGOs") and, in any event,
- whether the discount is at odds with generally recognised market principles (e.g. provision of a good or service below cost) (which would be indicative of a donation or contribution).