A recent proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulation (EC) No 883/2004 on the coordination of social security systems and regulation (EC) No 987/2009 laying down the procedure for implementing Regulation (EC) No 883/2004, significantly toughen the current procedure to determine the legislation applicable.

A new definition of fraud is laid down by Article 1 Regulation 987/2009 as amended:

“‘fraud’ means any intentional act or omission to act, in order to obtain or receive social security benefits or to avoid to pay social security contributions, contrary to the law of a Member State”

Certain provisions aim to provide increased legitimacy to the Member States to contest “the validity of a document or the accuracy of the facts on which the particular contained therein are based”, laying down clear related procedures:

• Article 5.1 Regulation 987/2009 is amended to provide that documents issued by the competent authorities of a Member State (stating the position of a person for the application of the Regulations and the supporting evidences) shall be valid only if all sections indicated as compulsory are filled in.
• Article 5.2 Regulation 987/2009 is amended to provide for the issuing institution’s obligation, to review upon request, the grounds for issuing a document and where relevant to amend or withdraw that document within twenty-five working days. A proven fraud will result in withdrawal with retroactive effect. Where the issuing institution having reviewed the grounds for issuing a document is unable to detect any error, the latter shall forward to the requesting institution all available supporting evidence on which it has based its decision (within twenty-five working days or two working days in cases of demonstrable urgency).
• Article 16 Regulation 987/2009 concerned with employment in two or more Member States, is amended to provide inter alia for the employer’s right to initiate the procedure on behalf of the employee and as a consequence to be notified of the decision. Interestingly, where the institution of the place of residence determines that its own legislation applies, that determination is deemed to be definitive.

The “revolutionary” provision is undoubtedly Article 19 read in conjunction with Article 2 Regulation 987/2009, both amended The new provisions will result in discretionary interpretation of laws by the competent authorities in determining the legislation applicable before issuing the A1.

Article 2 is amended to provide a ground for Member States to exchange data in order to facilitate identification of fraud.

Article 19 is amended to provide for the obligation of the Member States “to carry out a proper assessment of the relevant facts”, the principle of sincere cooperation, laid down by the EC Treaty and upheld by settled ECJ case law.

It also provides for exchange of information “directly between the competent institutions and the labour inspectorates, immigration or tax authorities of the States concerned this may include the processing of personal data for purposes other than the exercise or enforcement of rights and obligations under the basic Regulation and this Regulation in particular to ensure compliance with relevant legal obligations in the fields of labour, health and safety, immigration and taxation law” (emphasis added).

In my view, it must be distinguished between on the one hand, determining the residence for the social security purposes considering inter alia the habitual and/or temporary residence eventually in the sense of the ECJ’s judgment of 5 June 2014 (C-255/13) and the residence for taxation purpose, and on the other hand, ensuring “compliance with relevant legal obligations in the fields of labour, health and safety, immigration and taxation law”.

Such broad reference can only create legal uncertainty and that, regardless further clarifications the European Commission will bring.