# EUR-Lex - 52012DC0153 - EN

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# 52012DC0153

**COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS The External Dimension of EU Social Security Coordination /* COM/2012/0153 final */**

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COMMUNICATION FROM THE COMMISSION TO
THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL
COMMITTEE AND THE COMMITTEE OF THE REGIONS

The External Dimension of EU Social
Security Coordination

Introduction

In a globalised economic environment, labour
mobility both within the EU and between the EU and the rest of the world is a
growing reality and necessity. Social security coordination is a system of
rules aimed at facilitating such mobility. The EU has had a system of social
security coordination rules for mobility within the EU for over 50 years[1]. More recently, these rules
were extended to cover Iceland, Liechtenstein, Norway and Switzerland[2].

Social security coordination between the EU
and the rest of the world is dealt with in two ways. On the one hand, there is
the national approach, whereby Member States make bilateral agreements with selected
third countries. This approach is patchy: there is an incomplete network of
agreements, and agreements tend to have differing content from country to
country.

On the other hand, a common EU approach to social
security coordination with third countries is now developing.

Against this background, this Communication
has four aims:

–
to underline that migrants and businesses from
third countries, who generally see the EU as a single entity, face fragmented
social security systems which create obstacles in terms of entering, moving
within and leaving the EU;

–
to make the case for promoting and strengthening
cooperation between Member States so that a less fragmented approach to social
security coordination with third countries can be developed;

–
to set out the various ways in which the EU
rules already impact on the external dimension and to give clear guidance on
the legal relationship between EU law and national bilateral agreements;

–
to describe the existing components of a common
EU approach and to make proposals for developing this further.

1.           member states' bilateral agreements with
third countries

1.1.        What do national bilateral
agreements cover?

The social security rights of persons
moving into and out of the EU are still dealt with predominantly under national
rules. Individual Member States conclude bilateral social security coordination
agreements with third countries, and these agreements set up a system of
coordination rules for persons moving between the two countries. The reasons
behind such agreements vary: traditionally they are aimed at protecting
citizens who are working in other states; increasingly, though, they are viewed
as a way of attracting businesses and labour from third countries. Making an
agreement can also be an expression of political friendship between countries.
EU Member States are also parties to multilateral social security agreements,
e.g. the Ibero-American Social Security Convention, to which both Spain and
Portugal are parties.

Most agreements with third countries
typically contain rules on applicable legislation, equal treatment and
pensions. The pension provisions protect migrants’ acquired rights when they leave
the national territory and allow payment of the pension in the other territory.
In some cases, provision is made for aggregating insurance, employment or
residence periods. The applicable legislation rules generally include 'posting'
provisions. These enable workers who fulfil certain conditions to remain
subject to the social security legislation of the sending country and exempt them
from paying social security contributions in their country of work. The
principle of equal treatment guarantees migrant workers the same treatment as
nationals of the country of work.

EU Member States generally negotiate
bilateral agreements without reference to what their partner EU countries are
doing. The process is highly fragmented. In practice, certain EU countries may
be pinpointed by the EU’s main trading partners for the conclusion of
agreements, whilst other countries are left out. There is no mechanism for harmonising
approaches, and similarly no mechanism whereby EU countries can get together to
solve common problems they face with a particular country.

Moreover, the country-specific nature of
these national bilateral agreements means that migrants and businesses based in
third countries not only deal with fragmented social security systems when moving
between EU countries, but are also confronted with distinctive national
bilateral agreements when moving into and out of the EU. The network of
bilateral agreements is by no means complete: depending on the third country in
question, there may be no bilateral agreement in existence with the relevant EU
country. This can mean loss of acquired social security rights for persons
moving out of, or back into, the EU. This is just as likely to affect migrant
EU citizens as migrants from third countries. Overall there is a lack of transparency
as to what citizens’ rights are.

1.2.        The impact of EU law on
national bilateral agreements

The Gottardo Judgment

National bilateral agreements, like any
other type of Member State law, are subject to the supremacy of EU law. This
was made clear in the field of social security in 2002 when the Court of
Justice of the European Union held, on the basis of Article 39 EC (now Article 45
TFEU), that Member States may not limit the application of social security
agreements made with third countries to their own nationals and must treat
other EU nationals equally under the terms of the agreement[3]. The result of this ruling,
known as the Gottardo judgment, means that EU Member States which
operate agreements based on nationality, need to adjust the application of
their agreements with third countries to ensure that they can benefit nationals
of other Member States likewise[4].

Regulation No 1231/2010

The EU social security coordination rules
also impact on the ability of Member States to apply rules they have set down in
bilateral agreements. The EU rules, contained in Regulations (EC) No 883/2004
and (EC) No 987/2009 on the coordination of social security, contain a system
of coordination for persons who move within the EU. The rules were extended in
2003 to cover all third country nationals legally resident in the EU and ‘in a
situation which is not confined in all respects within a single Member State’.
The regulation in force is Regulation (EU) No 1231/2010[5]. It is in effect a ‘bridge’
that allows all persons legally resident in one EU country, but featuring a
cross-border element of some sort, to benefit from the EU coordination rules.
This covers practical issues such as enjoying the same rights as EU nationals
to receive all necessary medical care during a temporary stay in another Member
State (an entitlement evidenced by the European Health Insurance Card)[6].

The existence of Regulation (EU) No
1231/2010 gives the EU exclusive competence as regards the social security
coordination rights of nationals from third countries who are in a cross-border
situation within the EU. In cases of conflict, EU Regulations take precedence
over national rules contained in bilateral agreements with third countries.
Where, for example, a national from a third country is sent to an EU state
under the terms of a bilateral agreement with a third country and then moves to
work in another Member State, Regulation (EU) No 1231/2010 will apply to this second
move. Further, where a national from a third country works in two or more
Member States for an employer established outside the EU, the EU rules on
applicable social security legislation will apply[7].

1.3.        Common practical issues
and challenges

Member States are required by the 'duty of
loyal cooperation' in Article 4(3) TEU and by Article 351 TFEU to take all
appropriate steps to eliminate incompatibilities between agreements they have
with third countries and their duties arising from EU law. As regards the
impact of both the Gottardo ruling and Regulation (EU) No 1231/2010 on
bilateral agreements, Member States need to secure cooperation from the third
country concerned in ensuring that EU obligations can be met. This gives rise
to a number of common challenges.

To be in compliance with the Gottardo
judgment, the bilateral agreement needs to be applied in accordance with the EU
principle of non-discrimination. This may involve renegotiating the agreement,
or simply obtaining consent that a non-discrimination clause be incorporated into
the agreement. In practical terms, Member States may need to obtain social
insurance records from third countries for nationals of EU states other than
their own. This often raises administrative and legal difficulties. The
fundamental problem remains that, whilst the EU Member State is obliged to
comply with EU law, the third country is generally not bound to cooperate on
these issues.

Ensuring that the way bilateral agreements
are applied is compatible with Regulation (EU) No 1231/2010 raises similar
issues. There is a need to explain to third countries that, in certain
circumstances, bilateral agreements cannot be applied as EU law has primacy.
This is a problem for all the Member States, but at present there is no common
mechanism for Member States to deal with this. One possible simple solution is
to include a clause in all agreements to the effect that, in cases of conflict,
EU law will take precedence over the terms of the agreement.

In terms of substantive common concerns for
Member States, one such concern is how to resist pressure to agree to long
posting periods, which have the effect that workers from the third country are
exempted from contributing to the Member State’s social security system. In the
EU, the maximum period for which a worker can remain insured in the Member
State of origin is two years[8].
However, workers posted into the EU from third countries can remain insured in
their country of origin for much longer periods, and this exemption from
affiliation within the EU is frequently a sensitive point in concluding modern
bilateral agreements.

Finally, obtaining data from the third
country is a key concern for most Member States in the context of taking action
to combat fraud. The EU social security coordination rules contain legal
provisions which allow a Member State to request verification of information
from the Member State where the beneficiary resides[9]. This enables paying
institutions to ensure, for example, that the beneficiary of a pension is still
alive or that a person still meets the conditions for receipt of an invalidity
pension. Not many bilateral agreements contain this sort of verification
mechanism. Many Member States would welcome the introduction of an efficient
approach to combating fraud.

1.4.        Strengthening cooperation on
social security coordination with third
countries

–
In view of the practical issues and challenges
outlined above, it is clear that better cooperation between Member States on
social security coordination with third countries would be advantageous in many
respects. If Member States cooperate
and, where appropriate, act together, they will enjoy a stronger bargaining
position vis-à-vis third countries, be better placed to solve common problems
and together ensure that the way they apply bilateral agreements complies with
EU law. In general terms, greater cooperation should lead to a more coherent overall
approach by EU countries.

–
In this respect, a mechanism is needed at EU
level to strengthen cooperation between Member States. With this in mind, the
Commission will give its backing to a results-orientated working group of
experts from the Member States —meeting on an annual basis — in order to
facilitate such cooperation. The working group will also be an opportunity for
the Commission to share information on the state of play in the negotiation of EU
agreements with third countries. The new mechanism will also ensure complementarity
between the national bilateral approach and the developing EU approach to
social security coordination with third countries.

2.           the development of a common EU approach

2.1.        Regulation (EU) No 1231/10

Regulation (EU) 1231/10 applies the EU
social security coordination regulations to legally resident third-country
nationals who are ‘in a situation which is not confined in all respects within
a single Member State’. One effect of the Regulation is that citizens within
its scope can benefit from the principle of equal treatment contained in
Article 4 of Regulation (EC) No 883/2004. This means that any third-country
national in a cross-border situation falling within the scope of Regulation
(EU) No 1231/2010, who is entitled to an old-age pension from an EU state, will
enjoy equal treatment with nationals of the paying state as regards payment of
this pension outside the EU[10].

The Commission believes there is a need for
effective enforcement of the principle of equal treatment when it comes to
paying pensions in a third country. This is all the more important given the
case-law of the European Court of Human Rights, to the effect that the right to
a pension which is based on employment can in certain circumstances be
assimilated to a property right protected by the European Convention on Human
Rights[11].
To this end, the Commission will use its network of national social security
experts to gather information about legislation and other measures at national
level concerning the payment of pensions in third countries. This information
will be added to the country-specific social security profiles on the
Commission’s website, and will be supplemented with information on Member States'
bilateral agreements with third countries, again using information provided by
national social security experts.

2.2.        Rights given by EU
migration instruments

EU migration rules have imposed standards
that national social security legislation must meet in the case of third-country
nationals who reside in a Member State. For example, after five years' legal
residence in an EU Member State, and assuming certain conditions are met, third-country
nationals acquire the same rights as nationals in respect of social security,
social assistance and social protection as defined by national law[12]. In addition, there are three
EU migration directives, the so-called "Single Permit" Directive[13], the so-called "Blue Card"
Directive[14]
and a Directive dealing with third-country researchers[15], which guarantee third-country
nationals admitted to Member States – subject to certain limited exceptions - equal
treatment in social security with nationals of the state where they reside.
This guarantee includes equal treatment as regards the transfer of their state
pensions to a third country and is not dependent on the existence of bilateral
agreements[16].
The Commission’s proposals for further EU migration directives contain similar equal
treatment clauses[17].

2.3.        Association Agreements and
Stabilisation and Association Agreements

Generally, Association Agreements (including the Stabilisation and
Association Agreements concluded with the countries of the Western Balkans) contain
a number of principles which are to govern the coordination of social security
rules for workers and their families, who move between an EU country and the
associated country. In addition, the Association Councils set up by these
Agreements are given the task of adopting provisions to implement these
principles.

In October 2010, the Council took a first step in this process by deciding
on the position to be taken by the EU within the Association Councils set up by
the Agreements with Algeria, Morocco, Tunisia, Israel, Croatia and the former
Yugoslav Republic of Macedonia on the adoption by those Councils of decisions
regarding the coordination of social security systems[18].

These Association Council decisions should cover
the following rights for legally employed workers: equal treatment with workers
in the host state ; export of the full amount of old-age, survivors’ and
invalidity pensions and pensions in respect of accidents at work and
occupational diseases outside the territory of the paying state; and equal
treatment for legally resident family members. The rights should be reciprocal
— EU workers enjoy the same rights both in the associated countries and on their
return to the EU. Enjoyment of these rights should not depend on internal
movement within the EU. These decisions should also provide for a reciprocal
framework of cooperation and verification mechanisms to combat fraud.
Provisions of bilateral agreements concluded between the associated countries
and individual Member States, which provide for more favourable treatment of
nationals of the associated countries or Member States, will continue to apply
(taking into account, as the case may be, the above-mentioned Gottardo
case-law of the Court).

Once the Association Council Decisions are adopted,
the common EU approach to social security coordination will be effectively
implemented, with direct effect in national law. Following on from this, the
Commission will propose certain practical administrative arrangements of a
non-legislative nature to facilitate the application of these Association
Decisions. The Commission will help the Member States to apply these Decisions:
it will organise annual meetings to discuss the coordination arrangements with
the associated countries and to facilitate cooperation generally; it will
monitor closely the way the Member States are applying the Decisions.

Finally, no discussion of EU association
agreements and social security coordination would be complete without a mention
of the Association Agreement with Turkey, and in particular the 1970 Additional
Protocol to that Agreement[19],
which provide as an aim, to be achieved by progressive stages, the free
movement of workers between Turkey and the EU. In this context, Article 39 of
the Additional Protocol requires the Association Council to adopt social
security measures for Turkish workers moving within the EU. This provision was
executed by Association Council Decision No 3/80[20]. Although the necessary implementing
measures for this decision were never adopted, the Court of Justice has held
that the equal treatment principle and the pension export clause in Decision No
3/80 are directly applicable[21].
Therefore, by virtue of the case-law of the Court of Justice, there is in
effect already a certain common EU approach to social security coordination for
Turkish workers in the EU.

2.4.        Using association
agreements to develop further a common EU approach

The EU and its Member States have not only taken
on social security coordination obligations with respect to Turkey, but also in
the agreements with Albania, Montenegro and San Marino. The implementation of
these provisions is still outstanding. The Commission believes that the legal
obligations set out in these agreements should be observed, so it will be proposing
a second package of Council decisions on the position to be taken by the EU within
the relevant Stabilisation and Association, Association or Cooperation Councils
concerning the coordination of social security systems with these countries.

For Turkey in particular, the Commission
believes that steps should be taken to replace and update Association Council Decision
No 3/80[22].
This is all the more necessary in the light of the recent judgment of the Court
of Justice in Case C-485/07, Akdas. The Commission’s new proposal for
implementing the social security aspects of the Association Agreement will, for
example, take into account the principle in Regulation (EC) No 883/2004 that ‘special
non-contributory cash benefits’ are not exportable.

As regards the negotiation of new
Association Agreements with third countries, the Commission will seek to
include a standard social security coordination clause, based on the principles
of equal treatment, export of pensions and administrative cooperation.

2.5.        New EU social security agreements

In order to take into account the needs of
the globalised labour market, the Commission will open a debate in the
Administrative Commission for the Coordination of Social Security Systems to consider
whether, in certain circumstances, there may be a need for Member States to act
jointly on social security coordination in respect of a given third country. This
need could be addressed by a new instrument — an EU social security agreement. Such
agreements would allow a more flexible approach to social security coordination
than is possible under association agreements and could also be concluded with
third countries with which no association or cooperation agreement exists. An EU
agreement could be made as and when a need arose — for example, to deal with
difficulties arising with a particular third country from the application of
Regulation (EU) No 1231/2010 or to address issues linked to double social
security contributions. Such agreements would offer the possibility to
integrate possible bilateral particularities between a Member State and the
third country concerned and their application could be optional for the Member
States.

The Commission foresees such made-to-measure
agreements being concluded with some of the EU’s strategic partners, in
particular those with whom there are significant movements of labour. An
agreement with the countries of a regional integration organisation could also
be explored. The overall aim of such agreements would be to promote a coherent
EU approach vis-à-vis the third country concerned.

2.6.        Strengthening the EU’s
external profile on social security

Finally, as the Europe 2020 Strategy
underscored, it is essential for the EU to look outwards and to participate in
key discussions and actions on regulatory issues at a global level. As states
increasingly move to work together on cross-border social security matters, the
EU should, given its long experience of social security coordination, take a
lead role. This should include cooperation with other international
organisations, such as the ILO. The International Labour Conference in 2011
called upon ILO member states to consider the conclusion of agreements to
provide equality of treatment, as well as access to and the preservation and/or
portability of social security entitlements for migrant workers. Discussion on
social protection and social security coordination with other regions in the
world is of growing importance. The Commission will therefore promote
cooperation on social security coordination with other international
organisations and with other parts of the world.

[1]               The rules are currently contained in Regulation (EC)
No 883/2004 on the coordination of social security systems and its implementing
Regulation (EC) No 987/2009, OJ L166, 30.5.2004, p. 1; OJ L284, 30.10.2009,
p. 1.

[2]               The Agreement on the European Economic Area came into
force on 1 January 1994 (but became applicable for Liechtenstein only on 1 May
1995), OJ L 1, 3.1.1994, p. 3. The EU-Switzerland Agreement entered into force
on 1 June 2002, OJ L 114, 30.4.2002, p. 1.

[3]               Case C-55/00.

[4]               Recommendation No P1 of 12 June 2009 of the
Administrative Commission for the Coordination of Social Security Systems, OJ
C106, 24.4.2010, p 47.

[5]               OJ L 344, 29.12.2010, p. 1. The United Kingdom
continues to be bound by and subject to the application of the previous Regulation
(EC) No 859/2003. Denmark is not bound by or subject to
the application of Regulation (EU) No 1231/2010 nor of
Regulation (EC) No 859/2003 The EEA states and Switzerland do not apply either
of these regulations.

[6]               Article 19 of Regulation (EC) No 883/2004.

[7]               See, for example, Article 14(11) of Regulation (EC)
No 987/2009.

[8]               Article 12 of Regulation (EC) No 883/2004.

[9]               Article 5(3) of Regulation (EC) No 987/2009.

[10]             See Recital 13 of Regulation (EU) No 1231/2010.

[11]             ECHR, Klein v Austria (App no. 57028/00), 3
March 2011.

[12]             Article 11 of Council Directive 2003/109/EC concerning
the status of third-country nationals who are long-term residents, OJ L16,
23.1.2004, p. 44.

[13]             Directive 2011/98/EU of the European Parliament and of
the Council on a single application procedure for a single permit for
third-country nationals to reside and work in the territory of a Member State
and on a common set of rights for third-country workers legally residing in a
Member State, OJ L343, 23.12.2011, p. 1.

[14]             Council Directive 2009/50/EC on the conditions of entry
and residence of third country nationals for the purposes of highly qualified
employment, OJ L155, 18.6.2009, p. 17.

[15]             Council Directive 2005/71/EC on a specific procedure
for admitting third-country national for the purposes of scientific research,
OJ L 289, 12.10.05, p. 15.

[16]             This right is granted explicitly by Article 14(1)(f) of
Directive 2009/50/EC, but must also be inferred from the terms of Article 12(c)
of Directive 2005/71/EC.

[17]             Proposal for a Directive of the European Parliament and
of the Council on the conditions of entry and residence of third-country
nationals for the purposes of seasonal employment, COM(2010) 379 final;
Proposal for a Directive of the European Parliament and of the Council on the
conditions of entry and residence of third-country nationals in the framework
of an intra-corporate transferee, COM(2010) 378 final.

[18]             OJ L306, 23.11.2010.

[19]             Additional Protocol of 23.11.1970 to the Agreement
establishing an Association between the EEC and Turkey , OJ L293, 29.12.1972,
p. 3.

[20]             Decision 3/80 of the
Association Council of 19 September 1980 on the application of the social security
schemes of the Member States of the European Communities to Turkish workers and
members of their families, OJ C110, 25.4.1983, p. 60.

[21]             Case C-262/96, Sürül; Case C-485/07, Akdas; see also judgments in Case C-18/90, Kziber;
C-103/94, Krid, concerning the equal treatment clause in the cooperation
agreements with Maghreb countries, which are now replaced by Association
Agreements.

[22]             The Commission will withdraw its earlier proposal to
implement Association Council Decision No 3/80 (COM(83) 13).