A cooperative is a business owned and controlled by people (natural persons or legal entities), that come together voluntarily to meet their common needs and economic, social and cultural aspirations through a jointly-owned and democratically-controlled enterprise. It is formed by a minimum of two partners, who will undertake their activity according to the corresponding type of cooperative business. Exceptions to this rule are consumer cooperatives and second degree cooperatives, which must be made up of no fewer than ten natural person partners.
Within five years of the date of constitution, cooperatives initially established with two partners must incorporate a third, in accordance with that provided in the Law of Cooperatives and excepting temporary partners. As from the fifth year, these cooperatives must notify the Cooperatives Registry, providing reliable evidence, of their incorporation of a third partner; any cooperative that fails to do so must be dissolved.
Second degree cooperatives must be composed of no fewer than two legal entities, at least one of which must be an active cooperative.
Article 109 of Law 12/2015, of 9 July, on cooperatives, classifies cooperatives into the following categories:
- Agricultural cooperatives
- Maritime, river and lake cooperatives
- Insurance cooperatives
- Consumer cooperatives
- Credit cooperatives
- Teaching cooperatives
- Housing cooperatives
- Health cooperatives
- Service cooperatives
- Worker cooperatives
- Integral cooperatives
Furthermore, the third Additional Provision of Law 12/2015 provides for what are known as business development cooperatives, whose primary corporate purpose is to support the creation and growth of economic and social activities developed by new entrepreneurs. However, this type of cooperative must also be governed by regulations and thus, until such regulations are established, cannot be registered in the Cooperatives Registry.
Principles and values of the cooperative movement
- Voluntary and open membership: cooperatives are voluntary organisations, open to all persons able to use their services and willing to accept the responsibilities of membership, without any kind of discrimination.
- Democratic member control: cooperatives are democratic organisations controlled by their members, who have equal rights (one member, one vote) and duties, and who actively participate in setting policies and taking decisions. Men and women chosen to represent and manage cooperatives are accountable to the membership.
- Member economic participation: members contribute equitably to the capital of their cooperative and control it democratically. A contribution to capital must be made in order to become a member.
Part of any surpluses obtained must be allocated to development of the cooperative to ensure its long-term viability. Another part must be dedicated to member training and to supporting other cooperatives. These capital reserves are the common property of the cooperative, in other words they may not be distributed among the members. Finally, some of the surpluses may be allocated to compensating members’ participation in cooperative activity.
- Autonomy and independence: cooperatives are autonomous, self-help organisations controlled by their members. If they enter into agreements with other organisations, including governments, or raise capital from external sources they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy.
- Education, training and information: cooperatives must allocate part of their surpluses to providing education and training for their members, to ensure they understand the complexity and richness of cooperatives and possess the skills necessary to carry out their responsibilities effectively. Cooperatives are responsible for informing the general public about the nature and benefits of the cooperative movement.
- Cooperation among cooperatives: cooperatives can attain their full potential by working together through local, national and international structures.
- Concern for the community: cooperatives work to achieve the sustainable economic, social, cultural and ecological development of their communities through policies approved by their members.
Companies receive specific tax advantages aimed at benefitting their activity.
Three fiscal situations may apply in the case of cooperatives:
Are those which fulfil the principles and provisions of Law 12/2015, of 9 July, on cooperatives in Catalonia, and Articles 2, 6 and 33 of Law 20/1990, of 19 December, on the tax arrangements applying to cooperatives.
Especially protected cooperatives
Are those which fulfil all the legal requirements for such classification. In addition to paying 20% tax on the cooperative’s results and the general rate for extra-cooperative profits, the rate of company tax is reduced by 50% (Articles 2, 7, 8 and 34 of Law 20/1990, of 19 December, on the tax arrangements applying to cooperatives).
Cooperatives without tax protection
Are those affected by one or more of the grounds for exclusion from the general system of tax protection. In its annual accounts approved by the general assembly the cooperative must provide information regarding fulfilment of all the conditions that entitle it to the protection being applied, or the reasons that have given rise to the loss of such protection (Article 13 of Law 20/1990, of 19 December, on the tax arrangements applying to cooperatives).
The tax benefits established by Law 20/1990 are the following:
Tax on capital transfers and documented legal acts
Full exemption in the following operations:
- a) incorporation, capital increases, mergers and divisions;
- b) taking out and cancelling loans;
- c) acquisition of goods and rights linked to the accomplishment of their corporate purpose. This benefit is specific to especially protected worker cooperatives.
The following rates and benefits are applied:
- a) 20% on the taxable amount, whether positive or negative, of the cooperative’s results;
- b) freedom to decide on the depreciation of new physical fixed assets acquired during the three years following the date of their registration in the Cooperatives Registry;
- c) reduction of 50% on the net tax liability. This benefit is specific to especially protected worker cooperatives.
Economic activities tax
Cooperatives have a permanent deduction of 95% of the economic activities tax (IAE) and its late fees. Registration with the IAE is compulsory for all natural persons or legal entities that engage in an economic activity, but those whose annual turnover is less than one million euros are exempt from paying the tax.