2.3 Legal entities not established for the purpose of business enterprise

Legal entities not established for the purpose of business enterprise – non-profit-making organizations (NPO) can be generally characterized as organizations that are not primarily Page 19 of 74 established for the purpose of achieving profit for private people. Their earnings may exceed the costs but financial redundancy cannot be used for private benefit of the founders, the members or the NPO employees. In general, NPO can create profit but it must be reinvested into the main activity connected with the gaining of the “non-profit-making status”.

In SR, the primary criterion for the purposes of defining whether an organization is or is not a non-profit-making organization is the form of organization, not the content of the organization’s activities (unlike e.g. in the USA). NPOs have to be registered in SR.

The Slovak legislation does not know the term “non-profit-making organization”, the Income tax law (no. 595/2003 of the Code in a later version) uses the term “tax-payer who is not established for business enterprise” and § 12, article (3) defines which legal entities are considered to be such tax-payers.

According to the Income tax law, the object of the income tax of these organizations are the earnings of the activities whereby these organizations achieve profit or whereby it is possible to achieve profit including the incomes of the property selling, the incomes of the rent, the incomes of the advertising, the incomes of the membership fees and the incomes by which a tax is collected in the form of deduction according to § 43 of the Income tax law.

In SR, the overall precept of law which would regulate the activity of NPO does not exist, their legal regulation is defined either in general laws (Civil Code, Commercial Code, tax laws) or in a set of autonomous acts regulating the separate legal forms of NPO.

It is possible to divide NPOs according to various criteria; it is possible to define the following NPOs according to the legal form defined by the Slovak legislation (the acts regulating the legal forms are in the brackets) :

Associations of legal persons‘ interests (Act no. 40/1964 of the Code in a later version, Civil Code, § 20, letter (f) )

Civil associations, societies, communities, unions, movements, clubs, company unions (Act no. 83/1990 of the Code in a later version about the gathering of citizens)

Foundations (Act no. 34/2002 of the Code about foundations)

Political parties and political movements (Act no. 424/1991 of the Code in a later version about the gathering in political parties and political movements)

Religious societies (Act no. 308/1991 of the Code in a later version about the freedom of religious belief and the status of church and religious societies))

Non-profit-making organizations providing generally helpful services (Act no. 213/1997 of the Code in a later version about organizations providing generally helpful services)

In Slovakia, the legal forms of NPO used the most are the civil associations (civil associations, societies, communities, unions, movements, international NPOs) which are 95 % of the NPO amount. In the following text, this legal form is characterized in more details.

Civil association

(Civil association, society, community, union, movements, club and other civil associations)

Legal regulations	Act no. 83/1990 of the Code in a later version about the gathering of citizens
Membership	Members of association can be physical or even legal persons
Limitations	Associations that cannot be civil associations are those : Whose aim is to deny or limit personal, political or other rights of the citizens because of their nationality, gender, race, origin, political or other opinions, religion, social status, to spread hate and intolerance from these reasons, to support violence or to break the constitution and the law in another way ; Which follow achieving their goals in the ways which are in conflict with the constitution and the law ; Which are armed or with armed components; as these are not considered associations whose members hold or use guns on sport purposes or on purpose of the conduct of the hunting right ; Organizations whose activity is regulated by another act (e.g. political parties, churches, etc.)
Establishing	Association is created by the registration at the Ministry of Interior Affairs of SR. The registration proposal is presented by the Preparation Committee that have to consist of at least 3 citizens, out of which at least one must be older than 18
Fee	Registration fee is SKK 1000
Registration	Part of the registration proposal are the regulations that have to contain : Name of association , Residence , Aim of its activity , Bodies of association, the way of their appointing, setting the bodies and officers entitled to act on behalf of the association , Regulations about organization units if they are established and if they act on their behalf , Principles of operation.
Dissolution	Voluntary dissolution or Merging with another association or Legal decision of the Ministry about the dissolution under the terms stated in § 12 of the Code (generally, if the association conducts an activity in conflict with the law )
Obligation to accounting service	Civil association as a legal person is obliged to accounting service ; In case it does not run any business activity and its incomes in the last accounting period did not exceed 3 million SKK, it can use the single entry bookkeeping system