EEIG

Luxembourg is the only country where it is possible to set up an EIG with non-European companies.

The EEIG was established by Council Regulation (EEC) No. 2137/85 of the European Economic Community on 25/07/1985.

The EEIG is a legal entity that allows its members (natural or legal persons, public or private legal entities) to:

• Pool certain activities together.
• Create a joint venture in other European countries.

It is an intermediate structure between an association and a company, requiring at least two businesses operating in at least two different European countries.

Thanks to flexible legal and organizational rules, the EEIG:

• Can be established without share capital and can pursue civil or commercial objectives, regardless of the nature of its members.
• Can engage in commercial, industrial, agricultural, artisanal, and professional activities.
• Is not necessarily required to generate profit, but may do so incidentally. Additionally, its activities must be linked to the economic activities of its members and remain ancillary to them.

• Luxembourg law does not set a minimum number of members and does not restrict participation by certain natural or legal persons. Members must always remain legally independent
• Founding members can include companies such as capital or partnership-based firms, sole proprietorships, independent professionals, associations, public bodies, or institutions like universities, chambers of commerce, airport management companies, etc
• A member may transfer its participation in the EEIG to a third party or another member, subject to the approval of the other EEIG members
• The relocation of an EEIG’s registered office within the European Union is unrestricted and does not create a new legal entity
• The EEIG agreement is governed by the law of the country where its registered office is located. Dissolution follows EU regulations, while liquidation is subject to the law of the country where the EEIG is headquartered
• The EEIG’s registered office must be within the European Union, located either at its main place of business or at the principal place of business of one of its members, depending on whether the member is a legal or natural person

• • Since the EEIG is fiscally transparent, its results are only taxable at the level of its members.
  • In the case of an EEIG established in Luxembourg:

• • • Luxembourg-based companies that are members of the EEIG will be subject to corporate income tax on their share of profits
    • Foreign member companies will only be taxable in Luxembourg if they have a permanent establishment there, meaning the EEIG must qualify as a permanent establishment under applicable tax treaties. If the EEIG does not qualify as a permanent establishment, foreign members will be taxed according to the tax rules in their country of residence. This rule also applies to losses incurred by EEIG members
    • If the EEIG’s activities qualify as a permanent establishment in Luxembourg, it will be liable for municipal business tax and non-resident income tax
    • Under the same conditions, non-resident legal entities that are members of the EEIG will be subject to a 0.5% wealth tax on their share of the EEIG’s business capital value. However, this is rare in practice, as an EEIG can only conduct auxiliary activities relative to its members, and most double taxation treaties do not consider preparatory or auxiliary activities as constituting a permanent establishment
    • Contributions of assets to an EEIG are exempt from fixed duties
    • The EEIG is subject to Luxembourg VAT if it carries out taxable activities for which it issues invoices.

The EEIG is intended for individuals or legal entities that:

• Wish to extend their activities transnationally
• Want to create a joint venture in other European countries
• Have their statutory or legal headquarters within the European Community
• Have been conducting economic activities within the Community before establishing the EEIG

An EEIG must:

• Include at least:
  • Two companies or other legal entities (as defined by Regulation No. 2137/85) with their central administration in different Member States
  • Two individuals (as defined by Regulation No. 2137/85) whose primary business activities are conducted in different Member States
• Be limited to merely extending the economic activities of its members

• The EEIG shares the same characteristics as an Economic Interest Grouping (EIG), except for its international nature.
• Due to its transnational nature, certain specificities apply:
• • The law of the EEIG’s registered office governs the grouping agreement and defines the legal capacity of both individuals and legal entities
  • EU law sets the conditions for dissolution, while the national law of the EEIG’s registered office governs the liquidation process
  • The EEIG’s registered office must be located within the European Union, either at its principal place of business or at the principal place of business of one of its members (for legal entities) or its primary place of activity (for individuals)
  • The registered office can be transferred freely within the EU without creating a new legal entity
  • Any member of the EEIG may transfer all or part of their participation, either to another member or a third party, with the unanimous agreement of the other members
  • Taxation of the EEIG: see “Tax Aspects of the EEIG” above

The founding agreement must include at least the following elements and be filed with the relevant register:

• The name of the grouping, preceded or followed by the words “Groupement Européen d’Intérêt Économique” or the acronym “GEIE”
• The registered office of the grouping
• The purpose for which the grouping is formed
• The names, corporate name or business name, legal form, domicile or registered office, and, where applicable, registration number and location of each member of the grouping
• The duration of the grouping, unless it is indefinite

Advantages

• The EEIG’s purpose is broad and flexible
• Simple formalities: written agreement and registration with the national registry
• Can be established for a limited or unlimited duration
• Internal organization and management are flexible
• No minimum capital requirement
• All types of contributions are allowed (financial flexibility)
• Unanimity rule in most decisions serves as a safeguard against managerial abuses (see “Remarks on the General Assembly of Members”)
• The EEIG’s registered office can be transferred across EU Member States while maintaining its legal personality
• Each member retains their autonomy, distinct business, and identity

Disadvantages

• Members share liability and risks

Number of Members:

• EEIG (European Economic Interest Grouping): Minimum of 2
• GIE (Economic Interest Grouping): No minimum requirement

Member Qualifications:

• EEIG: Companies, individuals
• GIE: No specific requirements

Relationship with the EU:

• EEIG: At least 2 companies or other legal entities (as defined by Regulation No. 2137/85) with their central administration in different EU member states, or 2 individuals (as defined by Regulation No. 2137/85) conducting their main activity in different EU member states.
• GIE: No requirements

Purpose:

• To develop economic activity and improve results (both)

Contract Duration:

• EEIG: Fixed-term or indefinite
• GIE: Fixed-term

Registered Office:

• EEIG: Either where the grouping has its central administration or where one of its members has its central administration
• GIE: No specific provisions

Member Liability:

• EEIG: Unlimited and joint liability for debts (including for new members)
• GIE: Members are personally liable for the grouping’s debts with their own assets

Prohibited Activities:

• EEIG: Cannot employ more than 500 workers; cannot exercise authority or control over activities; cannot participate in another EEIG; cannot hold shares in a member company
• GIE: No prohibitions