Non-profit association (VZW)

What is a non-profit association (VZW)?

In the non-profit association (VZW) – vereniging zonder winstuitkering, formerly zonder winstoogmerk – a number of natural persons or legal entities work together to achieve a non-profit purpose. Setting up a VZW requires at least two founders; the collaboration is defined in the articles of association in a private deed. A notary does not have to be involved, but the articles of association must be published in the Belgian Official Gazette. Virtually all existing VZWs will have to amend their articles of association and therefore publish them, including the small ones. There is no minimum starting capital that founders must provide.

What are the characteristics of a VZW?

As with commercial companies, the articles of association of a VZW govern the collaboration; they are law between the participants. The core of the articles of association is the description of the association's non-profit purpose. This may not be commercial, although the new law explicitly provides for commercial activities by the VZW, but then entirely in the service of achieving the non-profit purpose. The profit made may not be distributed to the founders, directors or members (hence the change of name from profit motive to profit distribution). The articles of association may make a limited exception to this if it fits in with achieving the purpose. The former technique of rather excessive expense allowances is regarded as profit distribution and is therefore not allowed.

The legal personality of a VZW is separate from that of its members, so it has its own rights, obligations and assets. The members do not tie their own assets to the fate of the VZW.

As with other forms of legally regulated collaboration, directors can be held responsible for mistakes.

Accounting obligations

Small VZWs can work with single-entry bookkeeping.

However, if the VZW meets two of the criteria below, it no longer falls under the scheme for small associations. In that case it is obliged to keep double-entry bookkeeping:

  • five employees;
  • 334.500 euro in receipts other than non-recurring receipts;
  • 1.337.000 euro in assets;
  • 1.337.000 euro in debts.

ALL VZWs must now also file annual accounts with the Central Balance Sheet Office of the National Bank.

In practice, this means a number of costs that very small VZWs may not want to bear. In that case they have no option but to switch to a de facto association, where the members, however, have unlimited liability. Do think it over before taking that step. A modest membership fee and/or a small commercial activity, perhaps some sponsorship, can easily cover those limited costs.