Find out what is necessary to set up a social promotion association (APS). Let’s see what the articles of association and the articles of association must provide to open an APS and what is the applicable tax regime in this case.
What is a social promotion association?
The association for social promotion or APS is a non-profit organization that carries out activities of social utility with the aim of raising the well-being and quality of life of its members or their families. These activities include, for example, the redevelopment of an urban context or the promotion of tourism activities of social, cultural or religious interest. To achieve its goals, the organization must make use of the free services of its members (volunteers).
What has just been said allows us to better illustrate the essential difference between APS and a voluntary organization (ODV): APS carries out activities mainly for its members or their families. While the ODV carries out its activity mainly in favor of subjects unrelated to the association and belonging to disadvantaged categories (eg homeless, elderly, disabled).
Each type of association, and therefore also that of social promotion, has as its main requirement the absence of profit-making purposes. Any profits made cannot be distributed among the members. This does not prevent APS from also carrying out a commercial activity (eg managing a canteen). However, this activity is allowed only when it is auxiliary and not prevalent with respect to the main purposes.
The recent reform of the third sector has reorganized the entities that pursue solidarity and social utility goals under a single large group. Even an ODA can therefore become a Third Sector Entity (ETS). Currently, this new legislation is not yet fully in force, however, some rules must already be applied. The most important is the increase in the minimum number of founders to set up a social promotion body that goes from 3 to 7 members.
Statute and deed of incorporation of an APS
For the constitution of a social promotion association, the statute and deed of incorporation of the association are required. These documents represent the composition and regulate the functioning of the institution. In the statute, the associates establish the purpose, the functioning of the bodies of the body and specify the activity that must be carried out.
Basically, the statute of a social promotion body has the same content as that of a cultural association or any other type of non-profit organization. Among the indispensable elements are:
- absence of profit
- a provision that the proceeds of the activities cannot be distributed among the members
- obligation to reinvest any profits in favor of institutional activities
- the internal organization inspired by the principles of democracy and equal rights of all members
- obligation to devolve the residual assets for purposes of social utility in the event of dissolution or termination
To access the numerous tax concessions established for this type of association, the statute and the deed of incorporation of an APS must be registered with the Revenue Agency and in the appropriate regional register for APS (for more information, consult the website of the region where the association is based).
Registration should not be confused with the recognition of the entity which, on the other hand, allows for the acquisition of patrimonial autonomy. This means that the creditors of the institution will be able to retaliate only on the assets of the association, without being able to attack that of its administrators. Currently, to establish a recognized APS it is necessary to have the statute drawn up by a notary. Generally, the cost of the operation is high.
The tax regime of social promotion bodies
As a non-profit organization, the social promotion association enjoys non-taxation on all institutional revenues. These include, for example, the membership fees and financial contributions paid by the members for the activities carried out with the organization. To collect these amounts, simply issue a simple non-fiscal receipt.
For commercial activities, such as the sale of assets or the proceeds received from advertising and sponsorship, APS must comply with the normal tax and accounting obligations of a company. However, the APS recognized by the Ministry of the Interior is not subject to taxation on the proceeds deriving from the administration of food and drinks or from the organization of travel and tourist stays. This is provided that these activities are carried out for the associates only.
To take advantage of the tax benefits, these associations must submit the EAS form to the Revenue Agency within 60 days of their establishment.
Until the reform of the third sector fully enters into force, the subsidized tax regime provided for by law 398/1991 applies to ODA. Introduced only for amateur sports associations, this regime has been extended over time to other non-profit organizations. Among the advantages, there is the exemption from both the application of VAT on income and the obligation to invoice. These concessions are available only for associations that do not exceed € 400,000 in annual income for commercial activity.
This regime will be replaced by a new system of concessions envisaged by the ETS legislation which provides, among the many concessions, flat rate taxation with a reduced rate on revenues not exceeding € 130,000.