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ECAS Highlight of the Week – ‘Walking the Walk’ in Upholding EU Rule of Law

This week, all eyes were on the United States, awaiting the results of the presidential elections that, depending on the outcome, would carve out a very different roadmap for their democracy.

But while it may have been lost in between headlines, the European institutions announced some decisions of their own that could have (positive) implications in moving forward. EU decision-makers have been ‘talking the talk’ for a while, with calls for strengthening and restarting democracy and plan to bring the European Union closer to its citizens. With a series of recent actions, it seems the EU is now also ‘walking the walk’, taking important steps towards upholding the rule of law throughout the Union. In this edition of ECAS’ Highlight of the Week, we take a closer look at

RULE OF LAW 

On November 5th, the European Parliament and the German Council presidency reached a ‘historic’ preliminary deal on establishing a mechanism that would allow the suspension of EU fund payments to a Member State violating the rule of law. A decision for such a suspension would have to be made by the Council acting by a qualified majority on the proposal of the European Commission.

The list of rule of law breaches that could trigger the process include:

  • endangering the independence of judiciary;
  • failing to prevent, correct and sanction arbitrary or unlawful decisions by public authorities;
  • limiting the availability and effectiveness of legal remedies, lack of implementation of judgments, or limiting the effective investigation, prosecution or sanctioning of breaches of law.

After a series of negotiations, Members of the European Parliament succeeded in expanding the scope of the mechanism from the previous proposal that applies only where rule of law problems already “affect in a sufficiently direct way the sound financial management of the EU budget” to include breaches that “seriously risk” affecting EU money. The compromise text now also mentions the EU’s new annual rule of law report as one of the references which the Commission should take into account when proposing financial sanctions.

Learn more here.

 

POLAND

Rule of Law: European Commission takes next step in infringement procedure to safeguard the independence of judges in the country

In February this year, Poland adopted a controversial judicial law which at its basis, restricts judicial independence in the country and is in contradiction with EU law. As detailed by Deutsche Welle, “Polish judges may be punished for questioning the government’s divisive judicial reforms. They could face fines, demotions or lose their jobs if they refuse to recognize the authority of other judges or courts (closely aligned with the ruling party). The new law also prohibits judges from being politically active, and requires them to make public their membership in associations and civil society organizations”.

The decision was met with wide spread protests and condemnation on both national and international level. Former European Council president, Donald Tusk, even constituted that the bill might be reason enough to force Poland out of the EU.

In response, the European Commission launched an infringement procedure against Poland, sending a formal notice letter in April 2020 to which the country had two months to respond to. In its reply, the Polish government contested the reasoning put forward by the EC and requested for the infringement procedure to be dismissed.

Last week, after assessing that the Polish reply did not adequately address the raised concerns in the letter of formal notice, the Commission moved forward with the procedure and send a reasoned opinion to the government. The Polish Government has two months to take the necessary measures to comply with the reasoned opinion, otherwise the Commission will refer the case to the European Court of Justice (CJEU). This would add on to other lawsuits against Poland at the CJEU for non-compliance with the rule of law.

Additional background:

Deutsche Welle: In early 2016, the EC began taking steps against Poland for its sweeping judicial reforms. It accuses the governing PiS party of curtailing the judiciary’s independence and undermining the separation of powers. As a result, the EU in 2017 launched Article 7 proceedings against Poland for breaching European values and rule of law. This could lead to the suspension of Poland’s voting rights. The EC has also filed legal complaints with the European Court of Justice.

Warsaw, however, is unimpressed by these possible consequences. The government has insisted repeatedly that organizing a country’s legal system is a national, rather than European, prerogative.

Read more here

 

NETHERLANDS 

Taxation: European Commission refers the Netherlands to the European Court of Justice for its rules on the cross-border transfer of pension capital and cross-border provision of pensions

In the latest development of an infringement procedure launched in November 2019 against the Netherlands, the European Commission has referred the country to the European Court of Justice for “its rules on the cross-border provision of pensions and the transfer of pension capital”.

The Dutch cross-border pension tax regime is considered at fault for failing to accommodate freedom of establishment, freedom of movement of citizens, workers, capital, and freedom to provide services. At the heart of it, Dutch tax rules prevent for pension accumulated in the Netherlands to be transferred when a person moves abroad to another Member State. The Dutch government rejects European interference in taxes and pensions, which makes it mire difficult for people to move around the EU.

Specifically, the three aspects of the Dutch cross-border pension tax regime of concern are:

1 – foreign service providers are required to provide guarantees to the Dutch authorities if pension capital is transferred from the Netherlands to a foreign provider or if foreign providers want to provide services on the Dutch market;

2 – former employees also have to provide guarantees if the pension capital is transferred to a foreign service provider or if they want to buy pension services from a foreign provider

3 – transfers of pension capital to foreign providers by mobile workers taking up employment outside the Netherlands are tax exempt only if the foreign providers assume the responsibility for any tax claims, or the taxpayers themselves provide a guarantee.[1].

The system is set up this way so that the Netherlands do not miss out on tax revenue because of pensions being paid out in another country. Moreover, it is made more difficult for foreign pension providers to operate in the Netherlands because of additional obligations. Participants who wish to take their pension entitlements with them when moving abroad may be confronted with a tax settlement – this can amount to a high sum and that is not considered in line with the European free movement of persons and capital.

 

ECAS will closely follow the developments in these cases. We have a long history of constituting and targeting systematic breeches of EU freedom of movement rights by national governments that create visible and invisible barriers to European citizenship rights. Your Europe Advice (YEA) – a free online EU advice service provided by ECAS legal experts, operating under contract with the European Commission – gives us unique insight into the challenges faced by EU citizens when exercising their free movement rights.

Through the EU Rights Clinic and in the framework of the Act for Free Movement project, ECAS took part in the submission of several petitions to the European Parliament and complains to the European Commission, requesting the launch of formal infringement proceedings against the concerned Member States below:

 

Complaint and petition against Sweden (personal identification  number) 

Sweden, like many other countries, has a population register. Everyone who is a resident in Sweden must be registered in this registry and have a personal identification number, the personnummer. The personnummer features on all Swedish ID cards and is given to EU citizens in the form of a separate card. Many EU citizens and their family members are not able to obtain a personnummer in Sweden and without it many essential public and private services are inaccessible.

Since 2015, more than 200 citizens have contacted Your Europe Advice reporting problems they face as a result of not having a personnummer. EU migrants and their family members are denied a personnummer if:

  • they cannot show that they will reside in Sweden for more then one year (e.g. jobseekers, interim workers, students);
  • they are not working and cannot provide an S1 Form (which is evidence that their home EU country will cover their healthcare costs in Sweden). The European Health Insurance Card is not accepted. Private health insurance, although technically an alternative, is also, in practice, not accepted – there is no private health insurance product available on the Swedish market that can meet the requirements of the Swedish authorities.

Many EU countries require proof of residence in another EU country in order to issue an S1 Form. Since EU citizens no longer need to register with the immigration authorities in Sweden, the personnummer is their only official proof that they reside in Sweden. If EU migrants have no personnummer they often cannot get an S1 Form from their home country => no S1 Form, no personnummer!

Action in progress:

In cooperation with Crossroads Göteborg (Göteborgs Stadsmissionen), the EU Rights Clinic submitted a complaint in November 2017 to the Commission concerning the above-mentioned breach of EU free movement rules by Sweden.

In conjunction with the complaint, the EU Rights Clinic also submitted a petition to the European Parliament on 15 December 2017. The complaint related to the refusal of the Swedish tax authorities (Skatteverket) to issue a personal tax identification number (“personnummer”) to EU citizens and their family members who are living in Sweden, thereby affecting their ability to engage in everyday life in Sweden. It also covers Sweden’s restrictive administrative policy on comprehensive sickness insurance.

Following the filing of the complaint, the European Commission wrote back with an update of the made progress:

The Commission confirmed there is an on-going EU-Pilot Procedure in place with Sweden concerning difficulties resulting from the Swedish personnummer. The Commission’s services met with the Swedish authorities to discuss this issue and the following was reported:

  • As regards the situation of EU mobile citizens who do not meet the criteria for being registered in the Swedish population register (stay of one year and right of residence for non-workers) and thus denied personnummer, the Commission informed us that the Swedish Tax Agency has started work on possible improvements;
  • On the issue of comprehensive sickness insurance, the Tax Agency has amended its guidelines in regards to the requirements for the types of private sickness insurances accepted as comprehensive sickness insurance. In particular, it has extended the range of restrictions it accepts in private health insurances to include restrictions relating to criminal acts, self-injury and substance abuse, based on the types of insurance that are available on the global market. These changes came into force on 5 February 2018.
  • The certificate of insurance issued by the Social Insurance Agency on the basis of Regulation No 883/2004 (as a result of changes made to legislation made in 2016) was discussed. The form is used to prove the right to sickness care for individuals who are not registered in the population register, but is not regarded by the Tax Agency as qualifying as sickness insurance when registering a person in the population register.
  • Finally, the question of access to bank accounts was discussed. The Swedish authorities informed the Commission’s services that implementing legislation for the EU Payment Accounts Directive in Sweden came into force in June 2017 and banks can therefore no longer require a personnumer.

The personnummer problem in Sweden has existed for over 10 years. Action taken at EU and national level to date has not been sufficient to remedy it. On the contrary, the increasing number of citizen enquiries that YEA continues to receive on this issue indicate that this problem has worsened since 2015.

Action still needed:

The Swedish tax authority, which issues the personnummer, should:

  • accept the EHIC as evidence of comprehensive healthcare cover; and
  • relax the excessive requirements for private health insurance so that private health insurance policies taken out by citizens can, in practice, be accepted as evidence of comprehensive healthcare cover in Sweden.

 

Complaint and Petition against France (residence documentation)

There is no requirement for EU migrants residing in France to register with the national authorities, but French law provides that they can apply for a residence document if they wish and EU law gives them the right to obtain one after they have lived in France lawfully for five years or more. However, French prefectures often refuse to issue residence documents to EU nationals, even to those who have lived in France for more than five years. The reason given is that EU nationals are not required to have one.

Since the Brexit referendum vote, UK nationals have been particularly affected – they have been told to await the outcome of the Brexit negotiations before applying for residence documents. However, EU citizens are being asked for a residence document in order to:

  • continue receiving family or disability benefits;
  • continue receiving the guaranteed minimum income;
  • benefit from other public and private services.

In October 2018, the EU Rights Clinic submitted a complaint and petition against France in connection with the widespread problems facing British and other EU citizens who apply for residence documentation. This is a widespread problem and poses a particular challenge to the ability of British citizens to be able to prove they have been lawfully living in the country prior to the date on which UK withdraws from the EU. The French municipal authorities often fail to issue residence documents to applicants who meet the conditions of permanent residence under Article 16 of Directive 2004/38 or ordinary residence under Article 7. The French authorities often issue residence documentation with a reduced period of validity (less than 5 years for an ordinary residence card and less than 10 years for a permanent card) or are being refused outright. The source of the problem appears to be that different préfectures follow different procedures than those prescribed by the French rules (often by following the rules applicable to third-country nationals). Furthermore, part of the problem resides in the confusion displayed by officials because EU citizens in France are entitled to have these cards but are not obliged to hold them under French law.

Action still needed:

  • an investigation must be carried out to determine the reason behind the prefectures’ frequent refusal to issue residence documents to EU nationals, despite French and EU law allowing EU nationals to obtain such documents. (Citizens’ enquiries received by YEA have not provided an indication of the possible reasons behind this policy). The prefectures should be instructed to comply with the relevant French and EU legislation; and
  • the Caisse d‘Allocations Familiales (and any other government agency applying the same policy) should be instructed to cease making the payment of benefits conditional upon presentation of a residence document. This is a breach of EU law (Article 25 of Directive 2004/38), thus enforcement action might be considered by the European Commission, if necessary.

 

Complaint and Petition against Belgium (systematic verification of residence rights) 

The Belgian authorities have put in place an electronic system to exchange information between social security institutions and the Immigration Office that systematically provides information on all benefits granted to EU citizens and their family members. This electronic data exchange system covers social security institutions for workers and the self-employed, as well as job centres and public social assistance centres (CPAS/OCMW) throughout Belgium.

The social security data exchange system enables the Belgian Immigration Office to regularly and systematically obtain details of EU citizens who claim social security benefits. The information received is then used by the Immigration Office to launch an investigation of the residence rights of claimants with a view to terminating their residence rights. This contravenes the prohibition on systematic verification contained in Directive 2004/38.

A final complaint and petition were lodged in October 2018 before the EU authorities relating to the systematic verification by the Belgian authorities of residence rights of EU citizens who claim benefits. Confirmation of registration of the complaint has been received from the Commission (CHAP(2018)03481).

Update on the above petitions:

In October 2019, on behalf of the EU Rights Clinic, legal expert Anthony Valcke presented the petitions submitted as part of the Act For Free Movement project at the meeting of the PETI Committee. They were well received by the MEPs present at the meeting. The Commission provided information regarding the actions they have undertaken in order to address the problems. As for the petition regarding the systematic refusal of the Swedish tax authorities to issue personal identification numbers (personnummer), the EC said that they have contacted the Swedish authorities requesting an update on this issue, but have not received yet any constructive response, therefore, they are reflecting on the next steps. At the same time, Sweden re-assured that more private healthcare insurance providers are now accepted for the verification of the rights of residence (it was one of the problems flagged).

As regards the petition against Belgium relating to the systematic verification of residence rights of EU citizens claiming benefits from the Belgian authorities, the EC admitted that the MS should not conduct such verifications on a regular basis, but at the same time, they have a right to check the legality of EU citizens’ stay if there are some indications that a citizen lost his rights (lack of sufficient resources or healthcare coverage).

S&D group supported all the petitions, being particularly preoccupied with the situation in Sweden. They requested more pro-activity from the Commission’s side and suggested launching infringement procedure if Sweden does not act. Based on the submitted petitions, the PETI Committee is going to send letters requesting explanations from Belgium, Sweden and France.

 

What is in infringement procedure?

The Commission identifies possible infringements of EU law on the basis of its own investigations or following complaints from citizens, businesses or other stakeholders.

Formal procedure

If the EU country concerned fails to communicate measures that fully transpose the provisions of directives, or doesn’t rectify the suspected violation of EU law, the Commission may launch a formal infringement procedure. The procedure follows a number of steps laid out in the EU treaties, each ending with a formal decision:

  1. The Commission sends a letter of formal notice requesting further information to the country concerned, which must send a detailed reply within a specified period, usually 2 months.
  1. If the Commission concludes that the country is failing to fulfil its obligations under EU law, it may send a reasoned opinion: a formal request to comply with EU law. It explains why the Commission considers that the country is breaching EU law. It also requests that the country inform the Commission of the measures taken, within a specified period, usually 2 months.
  1. If the country still doesn’t comply, the Commission may decide to refer the matter to the Court of Justice. Most cases are settled before being referred to the court.
  1. If an EU country fails to communicate measures that implement the provisions of a directive in time, the Commission may ask the court to impose penalties.
  1. If the court finds that a country has breached EU law, the national authorities must take action to comply with the Court judgment.

Non-compliance with a court decision

If, despite the court’s judgment, the country still doesn’t rectify the situation, the Commission may refer the country back to the court.

Financial penalties

When referring an EU country to the court for the second time, the Commission proposes that the court impose financial penalties, which can be either a lump sum and/or a daily payment.

These penalties are calculated taking into account:

  • the importance of the rules breached and the impact of the infringement on general and particular interests
  • the period the EU law has not been applied
  • the country’s ability to pay, ensuring that the fines have a deterrent effect

The amount proposed by the Commission can be changed by the court in its ruling.

 

[1] https://ec.europa.eu/commission/presscorner/detail/en/IP_20_1678

ECAS encourages EU citizens to contact Your Europe Advice – a free online EU advice service provided by ECAS legal experts, operating under contract with the European Commission – if they have any enquiries regarding cross-border health care, consumer and passenger rights, social benefits or any other freedom of movement-related questions. Our experts will provide an answer relevant to your specific situation within 72 hours.

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