Non-profit organizations (Public Associations, Foundations and Religious Organizations).
A non-profit organization (NPO) is a legal entity whose purpose is other than the generation of income, and which does not distribute its profits among the founders and members of the organization. NPOs may also engage in entrepreneurial activities, provided they comply with the provisions of the organization’s statute, applicable laws, norms and regulations, and do not contradict existing legislation. Activities of a social or economic nature that are subject to compulsory licensing require the relevant licenses. State registration as a Public Association or Foundation is mandatory.
An NPO may conduct economic activities, including social entrepreneurship, on the general basis applicable to non-profit organizations. There is no mandatory requirement to obtain Social Enterprise (SE) or Integration Social Enterprise (ISE) status. However, to obtain such status, a non-profit organization must establish and register a Limited Liability Company (LLC) in which the NPO serves as the founder. The LLC may then apply for SE or ISE status. Most experts argue that this approach ensures that the accounting and resources of the NPO related to projects and grants remain separate from economic activities and are not subject to general tax provisions.
The legal basis for this organizational form is provided by Law No. LP86/2020 of June 11, 2020 on Non-Profit Organizations (Public Associations and Foundations), Law No. 125-XVI of May 11, 2007 on Freedom of Conscience, Thought and Religion (Religious Organizations), the Tax Code of the Republic of Moldova — Article 52 on Non-Profit Organizations and Article 283 on exemption from property tax. Activities subject to licensing or certification may only be carried out after obtaining the relevant license or certificate.
Financial Support
Financial support from the state is provided mainly through grant financing, contracting of works and services, and targeted financing, including social contracting, in which only NPOs participate and for which no guarantee of contract performance is required. Material support from the state or local authorities is provided primarily by granting the right to use public property free of charge or on preferential terms.
The state ensures the right of taxpayers to direct a percentage contribution of 2% of their income tax to non-profit organizations carrying out socially useful activities. At the moment, no direct state programs exist to support social entrepreneurship specifically. NGOs largely develop their economic activities through grants and projects from foreign donors. In some cases, local authorities provide support through social contracts or by allocating premises on favorable conditions.
Moldovan taxpayers may redirect 2% of their income tax at the time of submitting their Annual Tax Return to a selected NGO from the special list of Socially Useful Organizations registered at the Tax Inspectorate. These funds may also be used for the development of joint ventures.
Tax Relief
Under Article 52 of the Tax Code of the Republic of Moldova, non-profit organizations are exempt from paying income tax and real estate tax, provided they meet the relevant legal and Tax Code requirements. Key conditions include: the NPO must be registered under the law and operate in accordance with the purposes set forth in its charter; the charter must provide for economic activities; and the distribution of special purpose funds, other funds, and income from statutory activities or property among founders, members, or employees is prohibited, except for the payment of wages or other payments regulated by labor law. NPOs must not support political parties or candidates in elections or use their funds for such purposes. Non-compliance with these requirements results in taxation according to the general procedure.
Non-profit organizations that misuse special purpose funds or use property, other funds, and income from statutory activities for purposes not stipulated in their founding documents must calculate and pay income tax on the amount used for non-compliant purposes. Non-profit public benefit organizations and religious organizations that misappropriate funds received as a 2% percentage contribution must reimburse the misappropriated amount to the budget. The public benefit status must be obtained in order to benefit from these provisions.
Under Article 103 of the Tax Code, goods and services imported or purchased in the territory of the Republic of Moldova by qualifying non-profit organizations for the purpose of establishing social assistance institutions are exempt from VAT without right of deduction.
Social Security Contributions
General regulations apply to social security contributions, with no specific additional provisions for NPOs.
Public Procurement
NPOs may participate in state procurements on general terms or in public procurements on preferential terms. Under Law No. LP86/2020, financial support from the state is provided partly through the contracting of works and services via public procurement. Under Law No. LP105/2018, the National Employment Agency may contract social enterprises, integration social enterprises, non-profit organizations, or other specialized entities for the implementation of employment measures financed from the state budget. In order to participate in such procurement, legal entities must obtain mandatory certification for the provision of the relevant services.
Educational and Informational Support
NPOs may receive informational support from government bodies or other institutions, such as the Small and Medium Entrepreneurship Development Organization, through seminars, training sessions, and experience exchange trips organized by NGOs and their sponsors. Most NPOs operate primarily on grants and projects funded by foreign sponsors.
