Judgment;Abstract — ECLI:EU:C:2021:427
Date: 2021-06-03
Language of the case: Bulgarian
Court formation: Grand Chamber
Subject matter: Social security for migrant workers;Free movement of workers
Procedure: Reference for a preliminary ruling
Origin: Bulgaria

Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged:  
22 October 2019 
Referring court:  
Administrativen sad Varna (Bulgaria) 
Date of the decision to refer:  
4 October 2019 
Applicant in the main proceedings:  
‘TEAM POWER EUROPE’ EOOD  
Defendant in the main proceedings:  
Direktor na Teritorialna direktsia na Natsionalna agentsia za 
prihodite — Varna  
  
Subject matter of the main proceedings 
Action against the administrative authority’s refusal to issue certification 
regarding the legislation applicable to a person who pursues an activity as an 
employed person in a Member State on behalf of an employer established there 
and who has been posted thereby to another Member State to pursue an activity as 
an employed person on behalf of the same employer. 
Subject matter and legal basis of the request for a preliminary ruling 
The request for a preliminary ruling is based on Article 267(1)(b) of the Treaty on 
the Functioning of the European Union (‘the TFEU’) and concerns the 
interpretation of Article 14(2) of Regulation (EC) No 987/2009 of the European 
Parliament and of the Council of 16 September 2009 laying down the procedure 
for implementing Regulation (EC) No 883/2004 on the coordination of social 
security systems (‘the Implementing Regulation’) in conjunction with 
Article 12(1) of Regulation (EC) No 883/2004 of the European Parliament and of 
EN 
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the Council of 29 April 2004 on the coordination of social security systems (‘the 
Basic Regulation’). 
Question referred 
Is Article 14(2) of Regulation (EC) No 987/2009 of the European Parliament and 
of the Council of 16 September 2009 laying down the procedure for implementing 
Regulation (EC) No 883/2004 on the coordination of social security systems to be 
interpreted as meaning that, in order for it to be possible to assume that an 
undertaking engaged in providing temporary personnel normally carries out its 
activities in the Member State in which it is established, it has to perform a 
substantial part of the employee assignment activity for hirers established in the 
same Member State? 
Legislation and case-law of the European Union 
Article 2(1), Article 11(1) and Article 12(1) of Regulation No 883/2004; 
Article 14 of Regulation No 987/2009; judgments of the Court of Justice of 
17 December 1970, Manpower (C-35/70, EU:C:1970:120) and of 10 February 
2000, FTS (C-202/97, EU:C:2000:75). 
National legislation 
Article 51(1) and Article 52(1) of the Konstitutsia na Republika Bulgaria 
(Constitution of the Republic of Bulgaria); Article 107r(1) and Article 107s(2) of 
the Kodeks na truda (Labour Code); Article 4(1) No 1 and Article 9(1) No 1 of the 
Kodeks za sotsialnoto osiguryavane (Social Security Law); Article 2(1) of the 
Naredba za sluzhebnite komandirovki i spetsializatsii v chuzhbina (Regulation on 
posting workers and specialisation placements abroad); Article 88, Article 90(2), 
Article 91(1), Article 92(1), Article 95(1) and Article 97 of the Danachno-
osiguritelen protsesualen kodeks (Tax and Social Security Code). 
Brief summary of the facts and procedure 
1 The company ‘TEAM POWER EUROPE’ EOOD (‘the applicant’) was founded 
under Bulgarian law with the object of arranging temporary employment and 
work placements in Bulgaria and other States. The applicant is registered with the 
Bulgarian Agentsia po zaetostta (Agency for Employment) for pursuing the 
activity of arranging temporary employment and also has a worker assignment 
permit issued by the Düsseldorf Agentur für Arbeit (Agency for Employment) of 
the German Bundesagentur für Arbeit (Federal Agency for Employment). 
2 On 8 October 2018, the applicant concluded a contract of employment with a 
Bulgarian citizen (‘the employee’). According to the contract, the applicant is 
obliged to post the employee to Germany, where he will work for the company 
TEAM POWER EUROPE 
 
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‘CLW Clausthaler Laser- und Werkstofftechnik’ GmbH (‘the hirer’) under the 
direction and supervision thereof. The contract also provides that the duties of the 
employee in the position of ‘machine operator — metalworking’ are specified by 
the hirer in the description of his field of activity. The applicant is obliged to pay 
the wages to the employee. 
3 On 9 May 2019, the applicant asked the Teritorialna direktsia na Natsionalna 
agentsia po prihodite (Territorial Directorate of the National Revenue Agency) in 
Varna to issue certification that the employee is subject to Bulgarian legislation 
during the period of assignment. In the request, the applicant indicated that the 
employment relationship between the employee and the applicant had continued 
to exist throughout the period of assignment and that the employee had received 
wages and social security and health protection from the applicant. 
4 By decision of 30 May 2019, the competent administrative authority refused to 
issue the requested certification on the grounds that the two cumulative conditions 
under which the employee could still be subject to Bulgarian social security law 
had not been met, as the direct relationship between the employee and the 
employer had not been maintained and the latter did not pursue its substantial 
activity in the territory of Bulgaria. 
5 In relation to the first condition, the administrative authority assumes that, despite 
the payment of the wages by the applicant as employer, the direct relationship 
between the applicant and the employee has not been maintained as, according to 
the contract of employment, the work is performed for the hirer under the 
supervision and direction thereof and the hirer determines the duties of the 
employee. With regard to the second condition, the administrative authority is of 
the opinion that the applicant does not pursue a substantial activity in the territory 
of Bulgaria since, as a company registered under the Zakon za danaka varhu 
dobavenata stoynost (Value Added Tax Law; ‘the ZDDS’), it exclusively declares 
the provision of services with place of performance in Germany and there are no 
indications of contracts with contracting partners carrying out their activities in 
Bulgaria. 
6 In the administrative proceedings, the applicant filed an opposition against the 
decision refusing to issue the requested certification. By decision of 11 June 2019, 
the Direktor na Teritorialna direktsia na Natsionalna agentsia za prihodite — 
Varna (Director of the Territorial Directorate of the National Revenue Agency — 
Varna; ‘the defendant’) rejected the opposition and confirmed the refusal decision. 
Principal arguments of the parties in the main proceedings 
7 The applicant is of the opinion that the two cumulative conditions for issuing the 
requested certification are met in the present case. 
8 In relation to the first condition, it claims that there is a ‘direct relationship’ 
between itself and the employee since, as employer, it pays wages to that 
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employee and is entitled to end the employment relationship where there are 
grounds for termination. Furthermore, according to the employee assignment 
contract concluded between the hirer and the applicant, the former is prohibited 
from offering the employee the opportunity to pursue an activity other than that 
contractually agreed, which means that only the applicant is allowed to determine 
the nature of the work to be performed by the employee mentioned. In relation to 
the second condition, the applicant argues that it pursues its substantial activity of 
recruiting, selecting and providing temporary personnel in the territory of Bulgaria 
and that the generation of revenue from transactions with customers established 
outside of Bulgaria does not mean that the company pursues its activity abroad. 
9 The defendant considers neither of the two conditions mentioned to have been met 
in relation to the applicant. With regard to the direct relationship between the 
applicant and the employee, it states that this is impaired as, according to the 
contract of employment concluded between the applicant and the employee, the 
latter does not have to perform any work for his employer in Bulgaria. 
Furthermore, the contract was concluded under German law on the basis of the 
authorisation granted by the competent authority in Germany and not on the basis 
of the applicant’s registration with the Agency for Employment in Bulgaria. In 
relation to the substantial activity of the applicant in Bulgaria, the defendant is of 
the opinion that, with the exception of administrative and management staff, the 
applicant does not have any employees in the territory of Bulgaria and its revenue 
was generated entirely from employment relationships in Germany. 
Brief summary of the basis for the reference 
10 The referring court considers the interpretation of Article 14(2) of the 
Implementing Regulation in conjunction with Article 12(1) of the Basic 
Regulation to be necessary for resolving the dispute between the parties. 
11 Within the meaning of Article 12(1) of the Basic Regulation, a person who 
pursues an activity as an employed person in a Member State on behalf of an 
employer which is established there and who is posted by that employer to another 
Member State to perform work on that employer’s behalf shall continue to be 
subject to the legislation of the first Member State if two cumulative conditions 
are met, namely, firstly, there is a direct relationship between that person and the 
employer and, secondly, the latter normally carries out its activities in the territory 
of that Member State. 
12 In relation to the second condition, it is necessary that the employer, in accordance 
with the first sentence of Article 14(2) of the Implementing Regulation, ‘performs 
substantial activities, other than purely internal management activities, in the 
territory of the Member State in which it is established, taking account of all 
criteria characterising the activities carried out by the undertaking in question’ in 
order for it to be possible to assume that it normally carries out its activities in that 
Member State. Pursuant to the second sentence of Article 14(2) of that regulation, 
TEAM POWER EUROPE 
 
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‘the relevant criteria must be suited to the specific characteristics of each 
employer and the real nature of the activities carried out’. 
13 The case-law of the Administrativen sad (Administrative Court) of Varna in 
relation to when the second condition of Article 12(1) of the Basic Regulation is 
met is inconsistent. This inconsistency results from the different interpretation of 
Article 14(2) of the Implementing Regulation, in particular with regard to the 
question as to which criteria are to be taken as a basis for determining whether the 
employer performs ‘substantial activities’ in the Member State in which it is 
established. 
14 In order to assess whether the second condition of Article 12(1) of the Basic 
Regulation has been met, account must be taken of all the criteria characterising 
the activities carried on by the employer. Those criteria include the place where 
the employer is established; the number of administrative staff working in the 
Member State in which it is established and in the other Member State to which it 
has posted workers; the place where posted workers are recruited; the place where 
contracts with hirers are concluded; the law applicable to the employment 
contracts concluded by the undertaking with its workers, on the one hand, and 
with its clients, on the other hand, and the turnover during an appropriately typical 
period in each Member State concerned (judgment [of the Court of Justice] of 
10 February 2000, FTS, C-202/97, EU:C:2000:75, paragraphs 42 and 43). 
15 The fact that the posted workers performed, for hirers, work other than the main 
activity of the undertaking which recruited and posted them is of little 
consequence. Consequently, an undertaking engaged in providing temporary 
personnel normally carries on its activities in the Member State in which it is 
established if it habitually carries on significant activities in that State (judgment 
of 10 February 2000, FTS, C-202/97, EU:C:2000:75, paragraphs 44 and 45). 
16 However, it cannot be gathered from the aforementioned judgments of the Court 
of Justice whether it is sufficient for the satisfaction of the second condition of 
Article 12(1) of the Basic Regulation if the employer concludes contracts of 
employment with the workers posted to another Member State in the Member 
State in which it is established or whether it is necessary for substantial employee 
assignment activities to be performed for hirers carrying out their activities in the 
territory of the Member State in which the employer is established. 
17 As the applicant’s main activity comprises arranging temporary employment and 
work placements in Bulgaria and other States, one possible interpretation appears, 
for the reasons given, to be that it is necessary for a substantial proportion of its 
contracts to be concluded and performed with hirers who carry out their activities 
in the territory of Bulgaria in order for it to be possible to assume that the 
applicant normally carries out its activities in Bulgaria. 
18 The other possible interpretation is that, regardless of the fact that all the hirers are 
established and carry out their activities in Germany and all the workers are 
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posted to perform work for German undertakings, it is sufficient that the applicant 
is registered in the territory of Bulgaria and concludes the contracts of 
employment with the posted workers in that Member State in order for it to be 
assumed that it normally carries out its activities in the territory of Bulgaria.