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Differences between Cooperative Society and Association

January 20, 2020

The Italian law system with her constitutional rules, provisions of civil code and special laws guarantees to the subjects the right to organize themselves in order to obtain a common purpose.

What is the an Association?
By association two or more subjects undertake, through a stable organization, to pursue a common non-economic purpose. The Italian Constitution in its art. 18 recognizes citizens the right to associate freely, without authorization, for purposes that are not prohibited to individual citizen by criminal law.

The association, first of all, is a non-profit organization with altruistic purposes that can have different purposes: religious, political, ideals, trade unions, sports or cultural.
The association is made up of its members, known as associates, which can be natural or legal persons.
The Italian legal system identifies two main categories of associations in the civil code: associations recognized as juridical persons and associations not recognized as juridical persons.
Article 14 and following of the Italian Civil Code impose to a recognized association the solemn formality to do the registration in the Register of legal persons established at the Prefecture while no public form is foreseen for the unrecognized association.
As far as the patrimony is concerned – each member can contribute with money, work or other services but this obligation refers only to the recognized association. The recognized association has perfect patrimonial autonomy – the assets of the members are separate. The assets of the organization are always and only liable for the obligations.
Imperfect patrimonial autonomy is attributed to unrecognized associations and provides for the liability (civil, administrative, financial) of some or of all of the participants for the association’s debts since the unrecognized association has no legal personality.

What are the costs for setting up an Association?

The costs for opening an Association are variable depending on the type (recognized or not) and the act of incorporation (private / public).
The total costs for the establishment of an UNRECOGNIZED association (registration fee, stamp duty, EAS model to be sent to CAF) is approximately € 345.00.
The total costs for the establishment of an RECOGNIZED association (registration fee, notary fees, stamp duty, EAS model to be sent to CAF) may vary, the average is approximately € 1,145.00.
Do not underestimate the possibility for tax breaks provided for by Law 383/2000 on social promotion after affiliation to a recognized body.

What is the Cooperative Society?
Art. 45 of the Constitution recognizes the social function of cooperation.
To cooperatives, regulated by art. 2511-2548 of the Italian Civil Code, certain rules on limited liability companies or joint-stock companies are applied depending on the number of shareholders and assets.
According to the civil code, a cooperative society is a society constituted of 3 or more people with mutualistic aim or with the intent to supply goods, services and job opportunities directly to the members of the organization at more advantageous conditions than they would get from the market “and without private speculation purposes.
Cooperative companies can be set up to operate in various sectors such as the employment sector, the banking sector, the production sector, the construction sector, the social or consumer sector, etc.
In cooperative societies for social obligations, only society with its assets is liable.
Pursuant to articles 2511 and 2512 of the Civil Code Cooperative societies are divided into prevalent mutuality cooperatives and non-prevalent mutuality cooperatives.
Non-prevalent mutual cooperatives cannot be transformed into profit-making companies, while any transition from a prevailing mutuality cooperative to a non-prevalent mutuality cooperative is governed by art. 2545 octies c.c.
Some tax breaks are provided for by tax laws only in favor of prevalent mutuality cooperatives.
Unlike unrecognized associations, cooperative companies can only be established by public deed and must be registered in the register of companies.

Civil Code also establishes a minimum value of the per capita quota: € 25.00.
For the achievement of the corporate purpose, the cooperative company can collect funding from its members.

What are the costs for setting up and managing a cooperative?
The total costs for the establishment (notary fees, opening of VAT number, registration of cooperative society) is approximately € 2,500.00.
The annual charges – CCI tax, two-year cost for the revision, budget deposit costs and any membership fees vary depending on the type of cooperative and amount from around € 500.00 to around € 2,300.00.

In summary, the main differences between Associations and Cooperative Societies are:
– the profit-making purpose;
– the nature of the legal form;
– the sector of activity differs between the two forms of organization;
– the minimum number of subjects for establishment;
– the mandatory entry in the business register;
– costs.