EUROPEAN COMMISSION Brussels, 27.4.2022 SWD(2022) 651 final COMMISSION STAFF WORKING DOCUMENT



IMPACT ASSESSMENT REPORT

Accompanying the document Proposal for a Directive of the European Parliament and of the Council concerning the status of third-country nationals who are long-term residents (recast) {COM(2022) 650 final} - {SEC(2022) 200 final} - {SWD(2022) 650 final}



Table of contents 1.Introduction: Political and legal context 2.Problem definition 2.1.What are the problems and their drivers? 2.2.How will the problem evolve? 3.Why should the EU act? 3.1.Legal basis 3.2.Subsidiarity: Necessity of EU action 3.3.Subsidiarity: Added value of EU action 4.Objectives: What is to be achieved? 4.1.General objectives 4.2.Specific objectives 5.What are the available policy options? 5.1.What is the baseline from which options are assessed? 5.2.Description of the policy options 6.What are the impacts of the policy options? 6.1.PO 1 – Actions to improve the effectiveness of the Directive (non-legislative option) 6.2.PO 2 Legislative option 1 – targeted revision of the Directive 6.3.PO 3: Legislative option 2 – wider legislative revision

6.4.PO 4: Legislative option 3 – major legislative revision, creating a single EU permanent residence status 7.How do the options compare? 8.Preferred option 8.1.REFIT (simplification and improved efficiency) 8.2.One-to-one approach 9.How will actual impacts be monitored and evaluated? Annex 1: Procedural information Annex 2: Stakeholder consultation Annex 3: Who is affected and how? Annex 4: Analytical methods Annex 5: Detailed assessment of policy measures Annex 6: Case law of the CJEU on Directive 2003/109/EC Glossary Term or acronym Meaning or definition AHQ Ad Hoc Query BIPs Beneficiaries of International Protection CJEU Court of Justice of the European Union DG Directorate General EGEM Expert Group on Economic Migration EMN European Migration Network EU European Union EU Charter Charter of Fundamental Rights of the European Union FRA Fundamental Rights Agency FTE Full Time Equivalent GDP Gross Domestic Product JRC Joint Research Centre LMT Labour Market Test LTR Long-term Resident LTRD Long-term residents Directive MS Member State/States NGO Non-governmental organisation PO Policy option RSB Regulatory Scrutiny Board REFIT Regulatory Fitness and Performance Programme SME Small and Medium-sized Enterprise SPD Single Permit Directive TCN Third country national TFUE Treaty on the Functioning of the European Union UN United Nations 1.1. Introduction: Political and legal context The vast majority of migrants arrive in Europe legally. In 2019, the EU Member States issued more than 3 million first residence permits to third-country nationals, of which over 1 million were for employment purposes. In the last decade, third-country workers filled a significant part of new jobs, helping to meet labour market needs. During the COVID-19 pandemic, the contribution of third-country nationals to the European economies, labour markets and public services has become all the more evident. For instance, 13% of key workers performing essential functions – from doctors to nurses and drivers – are migrants. The overall number of third-country nationals legally residing in the EU is 23 million, representing 5.1 % of the EU population. Out of this, over 10 million third-country nationals hold a long-term or permanent residence permit. This is the target group that Directive 2003/109/EC concerning the status of third-country nationals who are long-term residents – hereafter ‘the Directive’ – is meant to cover.

The Directive was the second EU legal instrument adopted in the field of legal migration, following the introduction by the Treaty of Amsterdam of the competence for the EU to set common rules for the entry and residence of third-country nationals. The Treaty explicitly requires the Union to develop a common immigration policy, so this is a clear objective to be pursued at EU level. At the same time, legal migration is an area of shared competence between the EU and the Member States, and the Treaty also reserves explicitly to the Member States the right to set volumes of admission for labour migrants they admit. The political framework for the adoption of this and the other first legal migration instruments were established at the Tampere European Council in October 1999. As regards long-term residents, the Tampere Council conclusions stated that ‘a person, who has resided legally in a Member State for a period of time to be determined and who holds a long-term residence permit, should be granted in that Member State a set of uniform rights which are as near as possible to those enjoyed by EU citizens; e.g. the right to reside, receive education, and work as an employee or self-employed person, as well as the principle of non-discrimination vis-à-vis the citizens of the State of residence’. The proposal of the Commission followed closely the political framework established by the European Council, and although a number of compromises were needed during the negotiations (at the time unanimity of Member States was required, and the European Parliament was not yet co-legislator in this policy area), the final text adopted by the Council overall complied with those political objectives. As it is apparent from its recitals 4, 6 and 12, the principal purpose of the Directive is the integration of third-country nationals who are settled on a long-term basis in the Member States, which in turn is a key element in promoting economic and social cohesion, a fundamental objective of the European Union stated in the Treaty. To this purpose, the Directive sets out the conditions under which third-country nationals who have legally and continuously resided in a Member State for at least five years can acquire ‘EU long-term residence status’ (hereafter ‘EU LTR status’). The advantages of this residence status are numerous: it is permanent, it grants equal treatment rights in many areas (including full access to employed and self-employed activities), and it ensures reinforced protection against expulsion. While these advantages may also be granted by permanent residence statuses regulated under national law (the Directive allows these parallel national schemes), the EU LTR status additionally grants the possibility to move and reside in other Member States, on the basis of three comprehensive grounds: exercise of an economic activity (work or self-employment); studies and vocational training; other purposes. This ‘right to intra-EU mobility’ is not, however, an automatic right, but is subject to a number of conditions. During the over 15 years of application of the Directive, the Commission has received a significant number of complaints, some of them followed up by infringement proceedings, and numerous issues were also subject to judgements of the Court of Justice of the European Union (hereafter CJEU). As elaborated below in Section 2, the case law of the CJEU has had an important role in clarifying a number of important aspects of the Directive: the relation between the EU permit and the national permits, the conditions to acquire the status, and the rights of long-term residents, with particular regard to the area of social security. A summary of the case law on the Directive is presented in Annex 6. The Commission adopted two implementation reports of the Directive, in 2011 and 2019, and also assessed it under the 2019 Fitness Check on legal migration. All this work has pointed out to a number of inconsistencies and shortcomings, as well as practical issues arising from the application of the Directive by the Member States. The Fitness Check, in particular, recommended in its conclusions ‘considering putting forward legislative measures to tackle the inconsistencies, gaps and other shortcomings identified, so as to simplify, streamline, complete and generally improve EU legislation’. The Commission’s Communication on a New Pact on Migration and Asylum, adopted on 23 September 2020, provides a new comprehensive policy framework at EU level for better management and implementation of asylum and migration policies. With particular regard to legal migration, the Pact sets out that: “More could be done to increase the impact of the EU legal migration framework on Europe’s demographic and migration challenges. There are a number of inherent shortcomings in the EU legal migration system (such as fragmentation, limited coverage of EU rules, inconsistencies between different Directives, and complex procedures) that could be addressed through measures ranging from better enforcement to new legislation”. Consequently, the Pact announced a plan to address the main shortcomings in the area of legal migration with a ‘Skills and Talent package’ that would include three new sets of measures, responding to the overall objectives of attracting the talent the EU needs, and facilitate intra-EU mobility of third-country workers who are already residing in the EU. The revision of the long-term residents Directive is part of this package, with the objective to create a true EU long-term residence status, in particular by strengthening the right of long-term residents to move and work in other Member States. Together with the revision of the Single Permit Directive 2011/98/EU, this initiative has been included in Annex II of the 2021 Commission work programme. The two legislative initiatives, the revision of the Long-term residents Directive and the revision of the Single Permit Directive are complementary as they address two different phases of the overall migration process: the latter aims at simplifying the first admission of third-country workers in the EU, and improving their rights, while the former aims at facilitating the acquisition of long-term resident status for those third-country nationals (including workers) who have settled down in the EU, as well as further improving their rights. The European Parliament, in its Resolution of 21 May 2021 on new avenues for legal labour migration, welcomed the Commission’s planned revision of the Directive, stating that this ‘presents an opportunity to enhance mobility and simplify and harmonise procedures’. 2.2. Problem definition 2.1.2.1. What are the problems and their drivers? The evaluation of the Directive carried out under the Fitness Check on legal migration and the above-mentioned implementation reports, and the consultation process carried out for this impact assessment, have revealed a number of gaps, inconsistencies and shortcomings, arising in particular from the application of the Directive by the Member States. These problems have been clustered into three main problem areas: 1)barriers for third-country nationals to access the EU LTR status and benefit from it; 2)barriers to the integration of long-term residents, due to a lack of clarity and consistency in the rights granted by the EU status; and 3)barriers to the intra-EU mobility of long-term residents. Other two more specific problems outside the three main problem areas have also been identified: 4) circular migration opportunities for long-term residents are limited; 5)there is a risk of abusive acquisition of the EU LTR status on the basis of investor residence schemes. The above-mentioned evaluation and consultation process showed, in general, that migrants already residing in, or considering moving to, the EU are negatively affected by the shortcomings of the current Directive, which results in administrative burden, lengthy waiting times, uncertainty and confusion as to applicable rules and outcomes. All this may even discourage migrants from applying for EU LTR status. A limited set of rights, especially as regards their families and intra-EU mobility, may limit their integration in the host societies. It also impacts countries of origin indirectly, as limited remittances are linked to insufficient integration of their nationals in the host countries.

According to several of the stakeholders consulted, EU employers, including big companies, start-ups and small and medium-sized enterprises (hereafter SMEs), are negatively affected by the under-use of the EU LTR status, as this status offers stability to their migrant workers. National, regional and local authorities of Member States are negatively affected, as they have to apply and enforce different and complex sets of rules to assess applications and grant permits. Indirectly, EU citizens are also negatively affected as the EU’s labour migration system insufficiently contributes to tackling skills shortages, demographic ageing, increasing old-age dependency ratio, and migrants’ integration in the host societies and labour markets. This affects the financial viability of the EU’s welfare systems. Furthermore, the way that most Member States have implemented the intra-EU mobility provisions of the Directive has not really contributed to the attainment of the EU internal market, which ultimately also impacts EU citizens. The main driver for these problems is a mix of a regulatory failure at EU and Member State level, and poor implementation by the competent national authorities. This leads to a general weakness of the current overall EU regulatory framework on granting permanent residence to third-country nationals: the rules across the Member States are incoherent, ineffective and inefficient, with complex and diverging procedures for the acquisition of the status and the exercise of the rights attached to it. Many provisions of the Directive also give a large margin of discretion to the Member States for their implementation, allowing for diverging rules, more or less favourable to the long-term residents. There are also inconsistencies between the Directive and other legal migration Directives adopted later. The following table presents the main problems and underlying drivers. Problem area 1: barriers for third-country nationals to access the EU LTR status Sub-problem 1.1: lack of information and uneven competition with the national permits Most Member States continue to issue almost exclusively national long-term residence permits. In 2019, in the 25 Member States bound by the Directive, there were around 3 million third-country nationals holding an EU LTR permit, compared to around 7 million holding a national long-term residence permit. That year, the EU LTR permits represented less than 5% of all long-term residence permits issued in 10 Member States, with 4 Member States (AT, CZ, EE, IT) issuing 88% of all EU LTR permits, as can be observed in the tables below. On the other hand, most of the permits issued by France, Spain and Germany were issued under national schemes. EU NATIONAL EU NATIONAL Italy 2.099.223 0 Poland 16.333 112.159 Romania 13.581 0 Spain 85.485 1.237.094 Estonia 155.936 1.525 Bulgaria 2.235 43.001 Austria 295.103 12.071 Hungary 1.989 64.676 Lithuania 15.934 2.424 France 65.276 2.087.825 Slovenia 48.994 39.431 Portugal 2.652 88.265 Slovakia 8.170 8.525 Finland 708 43.668 Czechia 98.217 107.443 Belgium 1.891 189.172 Croatia 4.862 6.646 Cyprus 193 26.975 Luxembourg 5.814 8.359 Germany 13.215 2.355.941 Malta 636 1.905 Latvia 793 269.794 Netherlands 38.390 115.480 Sweden 742 369.636 Greece 31.324 156.905 As highlighted in the 2011 and 2019 Commission implementation reports and confirmed in the consultations, this low uptake can be attributed to the lack of information available about the EU LTR status among not only third-country nationals but also the national migration administrations; and to the "competition" with long-established national schemes, as the Directive allows Member States to issue national permanent residence permits in parallel with the EU LTR permit. 21 Member States have parallel national schemes, which can have more favourable provisions (Article 13 of the Directive), thus creating a risk of competition. Besides the right to intra-EU mobility, which can only be granted by the EU LTR status, it is difficult to compare the EU status with the national ones. The co-existence of the two systems does not necessarily result in more favourable provisions being applied to the third-country nationals, due to the difficulty to compare advantages and disadvantages respectively granted by the two kinds of permits. This was confirmed by the results of a 2016 European Migration Network (EMN) ad-hoc query, highlighting that in some cases national long-term residence permits, while granted under more favourable conditions (e.g. less than five years of residence, or no income requirement), provide fewer equal treatment rights or less protection against expulsion. The preliminary findings of a study carried out by the Fundamental Rights Agency (FRA) further confirm this, with experts interviewed highlighting that third-country nationals do not necessarily understand the added value of applying for a residence permit which is more difficult to acquire. This implies that many third-country nationals who could benefit from the rights guaranteed by the EU status, as they do not have a real access to the EU status, they also do not have access to those rights. As a result, there is no ‘level-playing field’ between the EU LTR permits and the national permanent residence permits, as often third-country nationals do not have a real choice between the two. Drivers The main driver of this sub-problem is a regulatory failure, as the current Directive, on the one hand, allows Member States to keep their parallel national schemes, but, on the other hand, does not establish any clear rules on the co-existence of the EU and national permits or any mechanisms to ensure that third-country nationals have a real choice between the EU and national permits. This leads to competition which does not benefit the potential beneficiaries of the status and also undermines the broader benefits for the EU as a whole of having an LTR status. The above-mentioned regulatory failure adds to a poor implementation by the Member States, which in many cases do not actively promote the issuance of EU LTR permits, and do not provide sufficient and accessible information on the procedures to apply for the status; for instance, only eight Member States have a dedicated strategy in place to provide information on the EU LTR status. This is supported by preliminary findings from the FRA study, where experts and national authorities consulted from nine Member States considered that one of the main reasons for the lower number of EU LTR permits issued is the lack of information provided by the national authorities. It also emerged from the consultations that some national administration and local agencies in charge of immigration were not aware of the EU status or found it too complicated. This could be due to a lack of technical support or training on the EU LTR permit. However, the differences in Member States practices may also reflect political choices, national rules or local administrations’ practices. For example, in some Member States, third-country nationals may already acquire citizenship after five years of legal and continuous residence . Restrictions on the access to the EU status (see sub-problem 1.2) and on the rights attached to it (see problem area 2) further reduce its attractiveness, as well as barriers introduced by Member States to intra-EU mobility (see problem area 3). Sub-problem 1.2: the conditions to acquire the EU LTR status are too difficult to meet

The conditions to acquire the EU LTR status may be too difficult to meet for a significant number of third-country nationals, who are therefore prevented from benefiting from this status as a tool for integration in the host society. In particular: ·In most cases periods of legal residence on temporary grounds (such as student years, temporary work, or previous residence in other Member States) do not count to the calculation of the required period of five years of legal and continuous residence; ·Some Member States apply the condition for stable and regular resources and integration conditions strictly, going against the proportionality test set by the CJEU requiring an individual examination of the personal situation of each applicant . In most cases, third-country nationals are required to provide proof of having a regular income that is at least equivalent either to the minimum monthly salary (from 312€ in BG to 2142€ in LU) or the minimum monthly basic income or benefit (from 165€ in PL to 600€ in PT). Furthermore, 12 Member States request documentation with regard to appropriate accommodation, some of them considering that the failure to provide it is a ground for refusing an application . ·15 Member States have transposed the optional clause of requiring compliance with integration conditions. Academic studies report that in most cases, strict language knowledge requirements can limit access to permanent residence to “well integrated migrants”. Consultations with representatives of migrant organisations as well as preliminary findings from the FRA study showed that in some Member States, the level of language proficiency required was deemed disproportionate considering the difficulties that a third-country national might face to have access to language courses or certification. Drivers This sub-problem is due both to a regulatory failure, as the conditions set by the Directive are very broad and leave a wide discretion to the national migration authorities, and to the implementation of these conditions by the Member States, which eventually exclude a significant number of third-country nationals to benefit from the status. In particular: ·Resident permits on temporary grounds or formally limited are excluded from the calculation of the five years (Article 3(2)(e) of the Directive). Furthermore, this exception is not clear and some Member States apply it too strictly, despite the clarifications brought by the case-law of the CJEU. ·The residence periods spent as students may not be counted at all or, if counted, only as half (Article 4(2) second paragraph), so that a student who e.g. completed a Masters’ degree and started working afterwards cannot apply for the EU LTR status, even if he/she can demonstrate to be fully integrated; ·Periods of legal and continuous residence in different Member States cannot be cumulated (Article 4(1)); ·Member States have a large discretion in applying the requirements of “stable and regular resources” (‘shall clause’ in Article 5(1)(a)) and of compliance with “integration conditions” (‘may clause’ in Article 5(2)), and some Member States apply them in a very strict manner (though this discretion has been partially framed by the case law of the CJEU). Problem area 2: barriers to the integration of long-term residents As repeatedly confirmed by the CJEU, the principal purpose of the Directive is the integration of third-country nationals who are settled on a long-term basis in the Member States. Besides granting the right to reside permanently in a Member State, the main integration tool provided by the Directive is represented by the right to be treated equally as nationals, in a number of important areas such as work, education, and social benefits. While the status of long-term resident should benefit from the highest standard of rights compared to other (temporary) migration statuses, the consultation showed that there are still many instances where long-term residents face discrimination. Besides anecdotal evidence, however, there are no data to indicate to what extent the integration objective has been achieved, as there are no comprehensive and reliable study on the integration of long-term residents. The Fitness check showed clearly that there are a number of inconsistencies between the Long-term residents Directive and other EU Directives on legal migration adopted later, with regard to the rights granted to long-term residents and their family members. In particular: ·As the family situation of long-term residents is regulated only in case of mobility to other Member States, the spouse and children of long-term residents who do not move to other Member States may not benefit from the same rights of their ‘sponsor’, which may undermine the main objective of the Directive to be an instrument for integration; ·Access to housing for long-term residents is unclear, and in particular the right to buy immovable property. This lack of clarity has brought some Member States not to allow long-term residents to buy immovable property, which undermines the main objective of the Directive to be an instrument for integration; ·In some Member States long-term residents may only have access to ‘core benefits’ in relation to social assistance and social protection; ·If family members of a long-term resident reside outside the Member State, the latter may not have access to family benefits. The uncertainties in the application of the existing derogations to the principle of equal treatment led to several interventions of the CJEU. However, academics commented that, considering the large discretion offered to the Member States in their application of the principle of equal treatment, the “degree of convergence achieved by the Directive amounts to ‘comparable treatment’ instead of the original promise of ‘equal treatment’ in the areas covered by Article 11”. Drivers This problem is due both to a regulatory failure, as the current Directive in some instances fails to grant long-term residents and their family members a set of uniform rights which are as near as possible to those enjoyed by EU citizens (as per the objective stated in the Tampere Council conclusions and reiterated in Recital 2 of the Directive), and to poor implementation by the Member States. The Directive includes a number of derogations to the principle of equal treatment that are used by many Member States, showing their reluctance to grant third-country nationals, even those residing legally on their territory for years, the same rights as their nationals. In particular:

·The Directive does not grant specific rights to the family members of the long-term residents besides the case of mobility to other Member States; ·Under Article 11(1)(f), equal treatment with regards to housing is limited to “procedures for obtaining housing”. The fact that the article refers to access to the procedures rather than access to housing in general seems to emphasise that “the provision contains no individual right that housing shall be made available to individuals”. It also leaves discretion to the Member States when it comes to activities by long-term residents relating to housing, such as land purchases. This lack of clarity was also highlighted by Civil Society representatives. ·Article 11(4) allows the Member States to limit access to social assistance and social protection to ‘core benefits’, and the interpretation of this derogation has led to divergent implementation in the Member States (partially clarified by the case law of the CJEU ). Also, as highlighted by Civil Society representatives and members of the EU legal migration practitioners’ network, the definition of social security (including the export of pensions) is not aligned with the other legal migration Directives, and there are uncertainties as to the distinction with social assistance and social protection; ·Article 11(2) allows Member States to derogate from the principle of equal treatment with regard to family benefits where the family members of the long-term resident reside outside the Member State: this is inconsistent with the regime of the other legal migration Directives, including the Single Permit Directive. Problem area 3: Barriers to exercise the intra-EU mobility rights Holders of EU LTR permits face a number of barriers in exercising the right to move and reside in other Member States for work, study, or other reasons. In particular: ·When a long-term resident has an offer for a job in a second Member State, this country may apply a labour market test (hereafter LMT) before accepting his/her application, to check if that job could be filled first by EU nationals ; ·Delays in the assessment of an application in a second Member State can jeopardise the work or study opportunities there. In particular, only 12 Member States allow for the application to be submitted from the first Member State (to embassies or consulates of the second Member State). Civil society representatives stressed that this might demotivate employers from hiring long-term residents from other Member States or even considering them as job candidates; ·‘Mobile’ long-term residents face important difficulties in the recognition of their professional qualifications. Members of the European Network of Public Employment Services highlighted this as one of the key barriers preventing third-country nationals from accessing the labour market of other Member States, confirming the responses to the Legal Migration Fitness Check Public Consultation; ·11 Member States apply restrictions to the labour market access for ‘mobile’ long-term residents, either limiting it to a single employer or a single professional field. In addition, two Member States apply quotas for the admission of ‘mobile’ long-term residents, in line with Article 14(4) of the Directive. In three Member States ‘mobile’ long-term residents may be required to attend language courses. Experts in all nine Member States covered by the FRA study highlighted that such labour market restrictions limit the intra-EU mobility of EU LTR permit holders; ·‘Mobile’ long-term residents need to reside for five years in the second Member State before being allowed to apply for EU LTR status there. Members of the Informal Expert Group on Economic Migration highlighted that employers would prefer this time to be reduced, in order to lower their administrative burden in terms of having to request permit renewals, etc. Civil Society representatives and members of the EU legal migration practitioners’ network underlined that the current barriers to intra-EU mobility are one of the key factors decreasing the attractiveness of the EU to migrants with skills required by the European labour market, though there are no reliable data to assume that the ‘attractiveness’ of the EU LTR status is a decisive factor in the ‘attractiveness’ of the EU or some Member States as a migration destination. Some members of the Informal Expert Group on Economic Migration also highlighted that removing these barriers could be an important tool in times of crises and economic recessions. Those might have a very asymmetrical impact on Member States in terms of availability of occupations and employment rates, which has in the past pushed third-country workers and their families to move to other Member States for work. Some representatives considered this likely to happen again, with the crisis and recession triggered by the COVID-19 pandemic. Drivers This problem is due to a regulatory failure, as the right of long-term residents to move and reside in other Member States is subject to a number of strict conditions in the current Directive, as well as to the strict implementation of these conditions by the Member States, and to the fact that the competent national administrations are not sufficiently familiar with the mobility procedures. In particular: ·Member States may apply a LMT before accepting applications for intra-EU mobility (Article 4(3)); ·‘mobile’ long-term residents are not allowed to start working or studying in the second Member State while the application is being assessed (Article 21(2)); ·the deadline to process applications for intra-EU mobility is longer than in the more recent legal migration directives (four months vs. 90 days – Article 19(1)); ·‘mobile’ long-term residents do not benefit from the EU regime of recognition of professional qualifications when they apply for a residence permit in a second Member State; ·Member States may limit the access to the labour market for ‘mobile’ long-term residents and their family members for a period of up to 12 months (Article 21); ·‘mobile’ long-term residents need to reside for five years in the second Member State before being allowed to apply for EU LTR status there (Article 23).

Problem area 4: failure to ensure circular migration of long-term residents Long-term residents lose their status where they are absent from the territory of the EU for more than one year. This regime does not allow the circular migration for long-term residents, who are discouraged from leaving the territory of the EU for periods longer than one year because of the risk of losing the status. This also has an indirect impact on the countries of origin, who could benefit from circular migration in terms of brain gain. In the consultations, Civil Society representatives argued to increase the period of allowed absence, as this would facilitate circular migration and promote the possibility for migrants to invest in their countries of origin and share the knowledge and skills acquired during their time in the EU, as well as to return temporarily to their countries for personal and family circumstances. Drivers The main driver of this problem is a regulatory failure, as (Article 9(1)(c) of the Directive establishes that long-term residents lose their status where they are absent from the territory of the EU for more than 12 consecutive months, and the concept of absence is not defined in the Directive. While Article 9(2) of the Directive allows Member States to consider absences exceeding 12 consecutive months for specific or exceptional reasons, only 14 Member States have decided to apply this derogation. Also, Article 9(5) of the Directive introduced a facilitated procedure to reacquire the status in those cases, but this regime leaves a large room for discretion to Member States. Only 15 Member States have it in place and conditions are sometimes excessive. Problem area 5: risk of abusive acquisition of the EU LTR status through investor schemes Under the Directive, the EU LTR status is granted to third-country nationals who have resided legally and continuously within the Member States’ territory for five years and thus are deemed to be well integrated. The continuity of presence is normally interrupted by absences of more than six consecutive months, or by an overall absence exceeding ten months within five years. However, there could be situations where, in the absence of an effective monitoring of the continuity of presence in the country or even of a requirement on physical presence, third-country investors could acquire EU LTR status, including intra-EU mobility rights, without fulfilling the actual condition of the continuity of residence for five years. The 2019 Commission Report on “Investor Citizenship and Residence Schemes in the EU” identified this as a potential risk, especially in cases where the continuous physical presence of holders of investor permits is not required or required only for a limited time. There is no available evidence to indicate the scale of this risk, but the Commission has committed in the report to monitor identified risks and take steps, as necessary. Drivers The main driver of this problem is due to poor implementation by Member States of the Directive obligation to monitor the actual residence for investors, due to ineffective or non-existing monitoring systems on the residence requirement. The 2019 Commission Report highlighted that investor residence schemes exist to date in 19 Member States under different features (e.g. regarding the nature and amount of the investment), and that in several Member States the investor residence schemes do not require continuous physical presence or only require the investors’ presence for a very limited time. Given that the Member States concerned are obtaining a financial benefit from granting this type of residence permits, there are insufficient incentives to effectively monitor the continuous residence requirement. 2.2.2.2. How will the problem evolve? Without EU action, the problems identified will continue to exist and possibly, in a few areas, exacerbate. More particularly, the EU LTR status will continue to be under-used and, based on trends witnessed over the past 10 years, may further worsen proportionally: while from 2012 – 2015 the share of EU LTR permits on the total LTR permits was around 40%, the shares in the subsequent years have been going down to 29% in 2019. Without making it easier to obtain the EU LTR status, third-country nationals are likely to continue encountering difficulties when applying for the status. As a direct result, they may thus prefer applying for national schemes. Barriers to intra-EU mobility will also persist, in particular considering that there is no evidence that Member States are willing to remove the LMTs, and/or put in place a truly facilitated procedure for ‘mobile’ long-term residents. In addition, the declining trend in EU LTR permits granted would also imply that the cohort of those who are eligible for intra-EU mobility will gradually decrease in size or stabilise. This in turn means that labour markets cannot fully benefit from mobile long-term residents to address shortages. This will affect the potential contribution of long-term residents to the attainment of the internal market. Third countries will also continue not being able to fully benefit from the potential economic gain of their nationals being long-term residents in the EU, considering the restrictions in place on the allowed absences without losing the status. Such restrictions are currently hampering circular migration and the extent to which third-country nationals can invest, work or otherwise contribute to the economy in their home countries. EU long-term residents will continue facing legal uncertainty around their rights and those of their family members, and in some areas they will not be treated equally as EU citizens. Finally, the current risk of abusing investor schemes to obtain the EU LTR status is also expected to persist, in the absence of Member States taking appropriate measures. As a consequence, the attractiveness of the EU LTR status is likely to reduce or at least not to increase in the coming 10 years. The persisting problems may also have an effect on the integration of long-term residents. As European statistics on the integration of migrants consistently show , third-country nationals living in the EU continue to lag behind nationals and mobile EU citizens in terms of employment rates, being at-risk of poverty and median income. For example, as shown in Figure 1 below, the gap between the median equivalised income of citizens from EU countries and those living in the EU but from third countries is likely to widen somewhat also in the future, when applying extrapolation based on 2011-2019 Eurostat statistics. Figure 1.Median equivalised annual income in euro, by groups of country of birth Source: Eurostat statistics on migrant integration (ilc_di16_1_Data) 3.3. Why should the EU act?

3.1.3.1. Legal basis The legal basis for Union action in the area is established in Article 79(2) (a) and (b) of the Treaty on the Functioning of the European Union (TFEU), in connection with Article 79(1) of the same Treaty. These provisions state that the “Union shall develop a common immigration policy aimed at ensuring, at all stages, the efficient management of migration flows, fair treatment of third-country nationals residing legally in Member States, (…)”. For this purpose, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, "shall adopt measures in the following areas: (a) the conditions of entry and residence, and standards on the issue by Member States of long-term visas and residence permits (…)” and “(b) the definition of the rights of third-country nationals residing legally in a Member State, including the conditions governing freedom of movement and of residence in other Member States”. Directive 2003/109/EC was adopted on Article 63(3) and (4) of the Treaty establishing the European Community, the Article corresponding to Article 79(2) (a) and (b) prior to the changes brought by the Treaty of Lisbon. 3.2.3.2. Subsidiarity: Necessity of EU action The principle of subsidiarity applies since this is an area of shared competence. In particular, any measure proposed in the area of legal migration “shall not affect the right of Member States to determine volumes of admission of third-country nationals coming from third countries to their territory in order to seek work, whether employed or self-employed” (Article 79(5) TFEU). The need for a common EU framework on legal migration is linked to the abolition of internal border controls within the EU and the creation of the Schengen area. In this context, the migration policies and decisions of one Member State affect other Member States, so it is deemed necessary to have a set of common EU rules in relation to the conditions and procedures for allowing third-country nationals to enter and reside in the EU, and to lay down their rights following admission. 3.3.3.3. Subsidiarity: Added value of EU action The TFEU explicitly empowers the Union to develop a common immigration policy, so this is a clear objective to be pursued at EU level. At the same time, legal migration is an area of shared competence between the EU and the Member States, and the Treaty also reserves explicitly to the Member States the right to set volumes of admission for labour migrants they admit. The Fitness check showed that the legal migration Directives, including the long-term residents Directive, have had a number of positive effects that would not have been realised by Member States acting alone. While positions on specific aspects often vary (e.g. across Member States, Non-Governmental Organisations (NGOs), businesses, individual migrants), all stakeholders, including Member States, confirmed the continued overall added value of the EU legal migration acquis. The main positive effects identified by the Fitness check are: a degree of harmonisation of conditions, procedures and rights, helping to create a level playing field across Member States; simplified administrative procedures; improved legal certainty and predictability for third-country nationals, employers, and administrations; improved recognition of the rights of third-country nationals (namely the right to be treated on an equal basis with nationals in a number of important areas, such as working conditions, access to education and social security benefits, and procedural rights); improved intra-EU mobility. However, despite these positive effects, the Fitness check also concluded that there is clearly room for further harmonisation and simplification at EU level. The revision of the Long-term residents Directive aims precisely at such further harmonisation and simplification. In particular, improved rights would benefit third-country nationals and facilitated access to EU LTR status would ensure a secure and stable residence status for third-country nationals who would not otherwise satisfy the conditions for acquiring citizenship status. Finally, efficient rules on intra-EU mobility can be established only at EU level, since no national migration policy has ever provided facilitations for applications from third-country nationals residing in another Member State. Furthermore, the Member States’ prerogative to establish how many economic migrants they admit relates only to third-country workers from outside the EU, and does not apply to intra-EU mobility. Therefore, EU rules have an important influence on the efficient mobility of third-country nationals across the Member States. Improved intra-EU mobility rules for long-term residents would not require any significant additional transfer of competences from Member States to the EU level as easier intra-EU mobility is already envisaged — even if to a limited extent — in the current Directive. Moreover, further-reaching schemes on mobility have already been agreed for Intra-Corporate Transferees, Students and Researchers, and highly qualified workers (EU Blue Card). 4.4. Objectives: What is to be achieved? 4.1.4.1. General objectives Based on the problem analysis, and taking into account the role of the Directive within the overall EU’s legal framework in the field of legal migration as established in the 2019 Fitness Check, the general policy objectives of the initiative are: 1)To ensure the efficient management of migration flows in the EU through the approximation and harmonisation of Member States’ national legislation; 2)To ensure the fair treatment of third-country nationals legally residing in the EU; 3)To strengthen the EU’s competitiveness and economic growth. 4.2.4.2. Specific objectives This initiative does not aim to overhaul the objectives of the current Directive, but to address in a targeted way the problems analysed above. Based on that, the specific policy objectives of the initiative are: 1)To create a more coherent, efficient and fair system to acquire the EU long-term resident status; 2)To facilitate the intra-EU mobility of long-term residents; 3)To improve the rights of long term-residents and their family.

The three specific objectives are all complementary and inter-twined. In particular, there is no trade-off between the objective of integration in the first Member State and the right to move to a second Member State or to exercise circular migration. The acquisition of the EU long-term residence status is the ‘acknowledgement’ that a third-country national is well integrated in the first Member State, and full integration should also entail the right for long-term residents to reside in other Member States or to be absent for the EU for a period of time without losing the status. In particular, the integration of third-country nationals in one Member State needs to be seen in the overall context of the development of a common EU migration policy, where a third-country national who is integrated in one Member State should be entitled to continue this integration process in other Member States, and therefore able to move across the Union if he/she wishes so. The table below illustrates the links between the problems and their drivers with the objectives. Problems 5.5. What are the available policy options? 5.1.5.1. What is the baseline from which options are assessed? The current Directive would continue to be applied without legislative changes. Existing monitoring and enforcement activities of the current legislation would continue, as reported in the Commission implementation report of 2019. Furthermore, it can be expected that there would be additional guidance from the evolving case law of the EU Court of Justice and national courts. The baseline should also take into account the revision of the Single Permit Directive, which is expected to simplify the first admission for third-country workers and improving their rights. However, as the expected increase in the number of third-country nationals obtaining single permits is expected to be very limited as a result of the revision, it would also not have a significant impact on the number of potential applicants for EU LTR status. For the assessment of the policy options (PO), the following main baseline assumptions have been made: ·Without EU action, the number of EU LTR status holders (stock and flow) will evolve in a linear way, based on extrapolation using Eurostat statistics from 2015 to 2019, which thus takes into account the gradual decline in the share of EU permits vis-a-vis national permits over the second half of that decade , whilst also considering the continuously growing total number of third-country nationals with long-term residence status. Source: projections based on Eurostat data 2019 LTR status holders (migr_reslong) ·From the limited statistics available on overall movements of third-country nationals in absolute terms, it seems clear that these remain small when compared to movements of EU citizens across Member States. When processed and extrapolated, this limited data suggests that, compared to the 3-4% of EU citizens who are mobile, only 2% of the long-term residents are estimated to be mobile. The detailed assumptions used to estimate the costs and the economic impacts of the POs are summarised in section 6, and further explained in Annex 4. 5.2.5.2. Description of the policy options Based on the problem definition and objectives described above, four different policy options have been identified, one non-legislative and three legislative. The legislative policy options have been developed by presenting a range of increasingly ambitious policy measures (from PO2 – less ambitious to PO4 – more ambitious). No policy options have been discarded, as all different policy measures emerged from the consultation and impact assessment process have been included in the four options. Option 1: actions to improve the effectiveness of the Directive (non-legislative option) This policy option would involve non-legislative actions aimed at enhancing the implementation of the Directive and the promotion of the EU LTR status, without any legislative change. The key measures would be: 1.1. The Commission enhances the implementation of the Directive through increasing enforcement measures, including infringement procedures, and supports further practical cooperation between Member States. Member States’ experts exchange information on best practices and perceived trends, as well as on possible fraud and abuses of the EU LTR status.

1.2. EU and Member States increase the visibility of the EU LTR status through information sharing, promotion, and advertisement activities. The Commission issues guidelines and awareness-raising tools addressed to Member States authorities, third-country nationals, and legal practitioners. In particular, training activities are organised for national immigration authorities both on the procedures for the acquisition of EU LTR status and for intra-EU mobility. Option 2: targeted legislative revision of the Directive This option envisages a targeted revision of the Directive, which would address the following thematic areas, corresponding to the specific objectives: 1.Acquisition of the EU LTR status 2.Intra-EU mobility rights 3.Rights of long-term residents and their family members With regard to the acquisition of the EU LTR status, this option would introduce a ‘level-playing field’ mechanism between the EU LTR permit and the national permanent residence permits, so that third-country nationals have a real choice between the two permits. In implementing this mechanism, Member States should ensure that: 2.1. integration and resources requirements for acquiring the EU status are not stricter than the requirements to acquire the national status; 2.2. applicants for EU LTR permits pay the same level of fees for the handling of their application as applicants for national permits; 2.3. holders of EU LTR status do not enjoy a lower level of procedural safeguards and rights than holders of national residence permits; 2.4. the EU LTR status benefits from the same level of information, promotion and advertising activities as the national residence permits, for example through ensuring adequate information on the national websites on legal migration, information campaigns and training programmes for the migration authorities; 2.5. holders of national permits who apply for an EU LTR permit have a facilitated procedure (i.e. not presenting evidence already checked for the national permit). To prevent the risk of fraudulent acquisition of the EU LTR status, this option includes also a measure: 2.6. encouraging Member States to reinforce checks on the residence requirement with regard to application for EU LTR status on the basis of investor residence schemes. With regard to intra-EU mobility, this option would facilitate the right of long-term residents to move and reside in other Member States, in particular by: 2.7. not allowing the second Member State to apply a LMT; 2.8. allowing long-term residents to start working or studying in a second Member State while their application is being assessed; 2.9. allowing long-term residents to submit the application while still residing in the first Member State; 2.10. shortening the deadline for processing the application (from four months to 90 days); 2.11. granting ‘mobile’ long-term residents equal treatment with Union citizens as regards the recognition of professional qualifications in the second Member State, in accordance with applicable EU and national law;

2.12. improving the rules on access to the labour market for the ‘mobile’ long-term residents and their family members; 2.13. shortening the time needed to acquire EU LTR status in the second Member State (three years instead of five years) for those third-country nationals who already have EU LTR status in the first Member State. With regard to the rights of the long-term residents and of their family members, this option would improve them and address the identified consistency issues with other legal migration Directives, in particular by: 2.14. introducing derogations from the rules on family reunification of Directive 2003/86/EC to facilitate the family reunification for long-term residents; 2.15. automatically granting the EU LTR status to children of long-term residents born in the EU; 2.16. clarifying the access to housing, to include the right to buy immovable property; 2.17. aligning the definition of social security (and the export of pensions and family benefits) with the other legal migration Directives, and ensuring full equal treatment with regard to access to social assistance and social protection (beyond the concept of ‘core benefits’); 2.18. prolonging the allowed period of absence outside the EU from 12 to 24 months; 2.19. regulating in more detail the procedure to reacquire the EU LTR status following absence. Option 3: wider legislative revision of the Directive (Option 2 + facilitation of conditions to acquire the EU LTR status) This option would also address the three thematic areas as in options 2, including all the measures of option 2. In addition, with regard to the thematic area concerning the acquisition of the EU LTR status, this option would include additional measures aimed at facilitating the conditions to acquire the EU LTR status, in particular by: 3.1. Always allowing periods of residence as students to be counted fully; 3.2 Opening the possibility for Member States to lower the required residence period to apply for the EU LTR status from five to three years, but with intra-EU mobility rights only granted after five years; 3.3. Opening the possibility for Member States to allow cumulating residence periods in different Member States (subject to a residence in the Member State of application of at least two years); 3.4. Opening the possibility for Member States to include in the scope of the Directive permits issued on temporary grounds; 3.5. Clarifying and limiting the discretion of Member States in applying the requirement of stable and regular resources, by codifying the CJEU case law; 3.6. Clarifying and limiting the discretion of Member States in applying integration conditions, by codifying the CJEU case law. These measures would be a mix of obligations for Member States (measure 3.1), options (measures 3.2, 3.3, and 3.4), and clarifications of the current rules (measure 3.5 and 3.6). The added value of introducing new options, compared to the current Directive, is that in the current approach Member States are not allowed to facilitate the conditions set out in the Directive even if they wished, while with the proposed optional measures in Option 3, they would be able to facilitate those conditions. Option 4: major legislative revision of the Directive, creating a single EU permanent residence status This option would also address the three thematic areas as in options 2 and 3, by including the relevant measures concerning improved rights, and facilitated conditions to acquire the status, plus:

4.1. There would be a fully harmonised EU permanent residence status, as Member States would not be allowed to keep their national permanent residence schemes; 4.2. The required residence period to acquire the status would be lowered from five to three years; 4.3. The EU permanent residence status in one Member State would give an automatic right to move and reside in a second Member State, with conditions similar to the ones applicable to EU citizens exercising their free movement rights. The table below gives an overview of the various elements in each option. 6.6. What are the impacts of the policy options? This section assesses the impact of the policy options (hereafter ‘POs’) described in the previous section against a series of assessment criteria covering specifically effectiveness, efficiency and coherence. The selected impacts are assessed qualitatively and, where possible, quantitatively based on a number of key assumptions (see Annex 4). No significant environmental impact is expected from the initiative and has thus not been assessed further, as the magnitude of intra-EU mobility and mobility related to circular migration is expected to be low. Any pollution resulting for example from the means of transportation used for their move to another Member State is expected to be negligible, especially when compared to other intra-EU travel (e.g. for the purpose of tourism, business and other short-term stays) that causes pollution. The detailed and individual assessment of each policy measure is presented in Annex 5. 6.1.6.1. PO 1 – Actions to improve the effectiveness of the Directive (non-legislative option) 6.1.1.6.1.1. Effectiveness The effectiveness of this PO would be limited, mainly due to the fact that its measures are not binding. Nevertheless, this PO would have a moderate positive impact on creating a more coherent, efficient and fair system to acquire the EU LTR status, as a result of a better implementation by the Member States of the current rules. For instance, providing training and issuing non-binding guidelines would improve the situation in those Member States without a dedicated information strategy on the EU status, or information tools in place for applicants. The Commission’s compilations and sharing of best practice examples from Member States , and the increased enforcement measures, including infringement procedures, would also contribute to a better implementation of the current rules. This PO would have no direct effect on facilitating intra-EU mobility, given that application conditions for mobility would remain unchanged, thought the improved information and enforcement activities may have a positive indirect effect. This PO would also have a minor positive effect on the improvement of rights of long-term residents and their family members, as both them and national authorities would become better aware of these rights through improved implementation of the current rules. 6.1.2.6.1.2. Expected impacts Social impacts and impacts on fundamental rights Third-country nationals would become more aware of the rights and conditions of the EU LTR status, which would have a slightly positive impact, though not possible to quantify, on their integration and possibly also lead to cost savings for third-country nationals who would otherwise consult legal services and pay legal fees for support with their application. The increased information provision on the EU LTR status could lead to a higher demand for the EU LTR status compared to the national ones. This PO is unlikely to lead to a net increase in overall LTR applications for national authorities. This option would not have any specific impact on EU citizens. This PO would provide more clarity on the functioning of the EU LTR status, and in particular its mobility options, to businesses and employers interested in hiring third-country nationals from other Member States, which could lead to a minor reduction in the administrative burden. In addition, a slight increase in the number of EU LTR permits issued could lead to a lightly larger pool of qualified third-country nationals already residing in the EU, which would potentially help employers fill labour gaps. This PO would make a slightly positive contribution to the rights to family and professional life (Article 33 of the EU Charter of Fundamental Rights). Economic impacts Some Member States have already developed and invested in portals and other provision of information, and thus, this measure would mainly impact those Member States which currently do not provide sufficient and/or adequate information. Whilst the PO is expected to possibly lead to a minor increase in the number of EU LTR status holders, which may in turn increase intra-EU mobility, it is not possible to estimate the specific economic impacts of such developments, as they are likely to be negligible and influenced by many other factors.

6.1.3.6.1.3. Efficiency Administrative and compliance costs This PO would entail one-off cost for the European Commission estimated in 49 000 euro, resulting from the issuing of guidelines, training material, and information to national authorities. Furthermore, it would lead to costs for national authorities, to provide training, updating websites, and exchange best practices, as well as for the identification of cases of abuse of the EU LTR status (recurring administrative costs amounting to EUR 204 500 per year on average). Simplification The PO is expected to lead to cost savings for third-country nationals resulting from better quality information on the EU LTR status. However, these savings cannot be quantified as the measures included are not binding, and may be implemented in varying ways. 6.1.4.6.1.4. Coherence with other EU policies As it only aims to strengthen the implementation of the Directive, this PO is not fully coherent with the objective of the New Pact on Migration and Asylum to create a true EU long-term residence status, in particular by strengthening the right of long-term residents to move and work in other Member States. 6.1.5.6.1.5. Overall assessment The measure would have a limited positive effect on the creation of a more efficient system to acquire the EU LTR status and the other objectives of this initiative. However, as it is a non-binding measure, its impact would ultimately depend on the willingness of Member States’ authorities to implement and roll-out the guidelines and training provided by the Commission. 6.2.6.2. PO 2 Legislative option 1 – targeted revision of the Directive 6.2.1.6.2.1. Effectiveness Out of the 19 measures included in this PO, the majority would have positive impacts on achieving the policy objective of creating a more coherent, efficient and fair system to acquire the EU LTR status, in particular by introducing a level-playing field between EU and national permits . This concerns not only the specific measures 2.1-2.5, but also the measures aimed at facilitating intra-EU mobility and improving rights, as all these measures would improve the attractiveness of the EU LTR status for third-country nationals. In particular, it is estimated that, 10 years after the implementation of the revised Directive, there would be an increase of 20% in the number of EU LTR permits, compared to the baseline, corresponding to approximately 640 000 additional EU LTR holders. 2019 + 10 years Number of EU LTR permits Baseline evolution 3 007 696 3 198 515 PO2 (+20%) 3 007 696 3 838 218 With measure 2.6, Member States would be encouraged to reinforce checks on the residence requirement set out by Article 4 of the Directive for the acquisition of the EU LTR status and therefore, if implemented, this measure would have a positive impact on having a fairer system for the acquisition of the EU LTR status. This would have an impact in particular on the 14 Member States that do not require continuous physical residence for granting investor residence permits, which could lead investors not actually residing in the EU and not really integrated to acquire the EU LTR status. This PO would have positive impacts on achieving the objective of facilitating intra-EU mobility, through seven specific measures (2.7 – 2.13). In particular, not allowing the second Member State to apply a LMT would have a significant positive impact on the intra-EU mobility to those 16 Member States which apply such test . Out of the 19 measures in this PO, more than half would have positive impacts on achieving the policy objective of improving the rights of long-term residents and their family. In particular, the specific measures 2.14-2.17 would ensure long-term residents a fairer treatment in many areas relevant for their integration, including access to housing, social assistance, and better family rights. A particular positive impact would derive from the measure of granting automatic EU LTR status to children of long-term residents born in the EU, as it would significantly increase legal certainty for a category of third-country nationals that at the moment is not covered by EU law. Furthermore, allowing long-term residents to be absent up to 24 months without losing the status (measure 2.18) and regulating more in detail the procedure to reacquire the status in case of longer absences (measure 2.19) would strongly enhance the right to circular migration, with increased possibilities to study or work in their country of origin or outside the EU. 6.2.2.6.2.2. Expected impacts Social impacts and impacts on fundamental rights All measures of this PO would have positive social impacts, on most target groups. In particular, there would be significant positive impacts for third-country nationals, who: would benefit from the measures introducing a level-playing field by having a real choice between the EU LTR permit and the national LTR permits; would benefit from better intra-EU mobility rights by having more chances to be recruited or accepted for studies in other Member States; would have better rights for them and their family members, to support their full integration in the society; would be able to exercise circular migration without losing their EU LTR status. Nevertheless, as the conditions to acquire the status would remain the same, the acquisition of the EU LTR status would still be difficult for a significant number of third-country nationals.

The measures aimed at improving the rights of long-term residents and their family would also have positive impacts on a number of fundamental rights, and in particular the right to property (Article 17 of the EU Charter of Fundamental Rights), non-discrimination (Article 21), family and professional life (Article 33), social security and social assistance (Article 34). As the intra-EU mobility of long-term residents in this option would be facilitated (in particular through the abolition of the LMT), it may create some competition towards EU citizens. However, the most important safeguards to avoid pressure on labour conditions, wages and of displacement of EU workers are that the system remains demand-driven (long-term residents would still need a job offer to move to another Member State). Therefore, the potential displacement effect on EU workers is expected to be limited, first because of the proportionally low number of EU LTR holders expected to move over a 10-year period, and second because this number is still dwarfed by the number of vacancies. On the basis of available quarterly data from 2013Q1 until 2021Q2, there are on average approximately 1.75 million unfilled job vacancies every quarter, which is also similar to the annual level of unmet vacancies by EU companies. Mobile EU LTR status holders are therefore very likely to first fill the existing labour shortages, if these offer better conditions. Due to a lack of data and the number of assumptions required, it has however not been possible to quantify any possible displacement effect. A positive impact is also expected on third countries, as the measures facilitating circular migration would help counter the “brain drain” phenomenon allowing third-country nationals to move and stay longer in their country of origin, for instance for investment or business purposes. Furthermore, the measure enabling third-country nationals to re-acquire their EU LTR status would allow them to maintain a more stable economic situation and ultimately to maintain the level of remittances sent to their country of origin. This PO would also have impacts on legal practitioners and judiciary, as the simplification introduced by many measures would mean for third-country nationals to require less support as they will make the law more clear, precise, and predictable, which will have the effect of increasing the "legal certainty" attached to the implementation of these rights. Nevertheless, an increasing workload for this group can be expected in particular from the measures facilitating intra-EU mobility. As a consequence of these measures, legal practitioners may be confronted with additional queries for clarification on the new procedures, at least in the first months/year of their introduction. Finally, this PO would have important impacts on businesses/employers, in particular the measures facilitating intra-EU mobility In particular, removing the requirement to apply a labour market test for mobile long-term residents in 16 Member States would provide an incentive to employers to hire mobile third-country nationals, as they would benefit from a larger pool of qualified and already legally residing third-country nationals. Economic impacts Out of the 19 measures included in this PO, five are expected to have a measurable economic impact, whilst the remaining measures, in particular those aimed at improving the use of the EU LTR status, improving the rights of long-term residents and their family members, and facilitating circular migration are also expected to have positive economic benefits, but these could not be quantified. Those economic benefits would derive from that fact that more third-country nationals with an EU LTR status and the enhanced rights attached to it are expected to lead to improved integration, which in return could also lead to better wages, as well as benefits for employers in terms of access to more qualified workforce. Increased circular migration would be expected to result in increased investments in third countries. The measurable economic impacts concern the measures facilitating intra-EU mobility, as these are all expected to result in an increase of third-country nationals moving to a second Member State, where it is assumed that they would on average increase their wages by 10%, which in turn would lead to higher tax revenue, increased productivity and consumption, and enhanced economic growth. In addition, also as a result of their higher wages, remittances are also assumed to increase as a proportion of their income. Intra-EU mobility is expected to increase by 1.5 % points, thus from the baseline assumption of 2% to 3.5%, resulting in an increase of just over 70 000 additional mobile long-term residents at the end of a 10-year period, on top of the baseline scenario of around 64 000 mobile long-term residents. Mobile LTRs % 2019 + 10 years Baseline evolution 2% 60 148 63 970 PO2 3,5% 60 148 134 378 The total collective net economic effects of this increase are, over a 10-year period: -An increase in tax revenue of EUR 8 million; -Increased consumption by EUR 70.5 million; -Remittances increased by EUR 12.6 million (leaving the EU economy and thus subtracted from the total economic benefits). Adding up to a total economic benefit of EUR 66 million. Whilst it is not possible to estimate the impact on economic growth (i.e. increase in GDP), it can be assumed that the increased intra-EU mobility of long-term residents would also contribute to a rise in GDP, in particular considering that this group can be assumed to mostly move for (better) work opportunities and integrate easily, as they have already spent a minimum of five years in the EU. 6.2.3.6.2.3. Efficiency Administrative compliance costs Out of 19 measures in this PO, 14 are expected to trigger administrative and compliance costs for national authorities and the European Commission. For the European Commission, the additional costs will primarily relate to introducing the legislative revisions to the Directive and communicating the changes.

For national authorities, costs include adapting national legislation and relevant procedures, guidance and training, as well as ensuring enforcement and compliance, monitoring and reporting costs to the EU. Other cost categories include preparing information on the changes to disseminate to EU LTR applicants, as well as costs related to a potential increase in application for EU LTR status. However, the extent of the impact of the measures within this PO is varied, and can be grouped in measures that impact almost all Member States, and measures that impact a limited number of them. In particular, for the following measures additional costs are expected for all/most Member States, as they would need to adapt procedures, invest in additional staff and training, as well as providing information material for both staff and applicants: ·Measure 2.8 allowing third-country nationals to start working/studying in the second Member State while their application is being assessed would impact all Member States and brings additional costs to national authorities that would have to adapt their procedures. ·Measure 2.9 allowing third-country nationals to submit the application while still residing in the first MS would impact 15 MS, bringing additional costs to national authorities that would have to adapt their procedures. ·In the 20 Member States affected by measure 2.12 improving the rules on access to the labour market for long-term residents and their family, the changes would bring additional administrative costs to national authorities that would have to adapt their admission procedures. ·Measure 2.13 shortening the time needed to acquire EU LTR status in the second Member State would impact all Member States and bring some administrative compliance costs, such as through the updating of internal procedures (i.e. updating guidelines). ·Measure 2.14 introducing derogations from rules on family reunification would impact all Member States, resulting in some administrative and compliance costs for national authorities. ·Measure 2.19 regulating the procedure to reacquire the status would result in some compliance costs as 10 Member States would have to introduce a new procedure and 15 Member States would have to adapt their current procedure. ·Measure 2.6 would also result in compliance costs in setting up and running a monitoring mechanism on application for EU LTR status on the basis of investor residence schemes. The following costs are estimated (totals of the average yearly cost of all measures included in the PO, rounded to the nearest 1,000): European Commission: -One-off administrative costs for implementing and communicating the change: 43 000 euro; Member States: -One-off administrative costs for transposition, alignment of procedures, guidance and training, monitoring and reporting: 568 000 euro; -Recurring administrative costs for transposition, alignment of procedures, guidance and training, monitoring and reporting: 105 000 euro; -One-off compliance costs to develop and implement new procedures, inform and advise those concerned, etc.: 392 000 euro; -Recurrent compliance costs to develop and implement new procedures, inform and advise those concerned, etc.: 755 000 euro. Simplification Out of 19 measures in this PO, most (13) are expected to have some effects on simplification. Strong simplification effects are expected from the measures facilitating intra-EU mobility and improving the rights of long-term residents and their family. In particular, not allowing the second Member State to apply a labour market test would benefit 16 Member State in terms of administrative simplification, as they would no longer need to apply those tests; and allowing third-country nationals to start working/studying in the second Member State while their application is being assessed would reduce for them the costs induced by lengthy administrative procedures. Employers would also benefit from more efficient procedures for hiring ‘mobile long-term residents’ and reduced costs in the hiring process (e.g. situations of vacancies left unfilled or waiting for an administrative decision). The following costs saving are estimated (per average yearly cost):

Member States: -Recurring cost savings resulting from simplification of current procedures: 24 500 euro, Third-country nationals: -Recurring cost savings resulting from simplification: 1 145 000 euro Employers: -Recurring cost savings resulting from simplification: 112 700 euro 6.2.4.6.2.4. Coherence with other EU policies This PO is expected to contribute to greater coherence between the Long-term residents Directive and other legal migration Directives, and is in line with the New Pact on Migration and Asylum and the EU economic and social policies. 6.2.5.6.2.5. Overall assessment Overall, this PO would make a tangible contribution to most objectives and it would have a significant positive effect in terms of social impacts, particularly on third-country nationals and employers. It would lead to some minor administrative and compliance costs for national authorities, with a larger positive impact in terms of simplification. In addition, several measures included in this PO are expected to lead to more significant positive economic impacts. Lastly, most of the measures included under this PO were considered with favour by Member States, except for measure 2.7 - not allowing the second Member State to apply a labour market test, on which some Member States expressed their wish to keep full control over the arrival of third-country nationals in relation to the needs of their labour market. 6.3.6.3. PO 3: Legislative option 2 – wider legislative revision 6.3.1.6.3.1. Effectiveness Compared to PO2, PO3 includes six additional measures (3.1 – 3.6) that specifically aim to facilitate the conditions to acquire EU LTR status and therefore would contribute further to the objective of having a more efficient and fairer system to acquire the status. In particular, this PO would facilitate the fulfilment of the residence requirement, which numerous consulted stakeholders have noted as posing a significant barrier for the acquisition of the EU LTR status, by requiring Member States to count fully periods of residence as students, and by allowing Member States to lower the residence requirement from five to three years, to cumulate residence periods in different Member States, and to include in the scope of the Directive periods of residence spent solely on temporary grounds. Even though these latter would only be “may clauses” (and therefore not increase the level of harmonisation and the rights of third-country nationals in all Member States), they would still bring a positive impact on those Member States that would choose to implement them. The added value of introducing new options, compared to the current Directive, is that in the current approach Member States are not allowed to facilitate the conditions set out in the Directive even if they wished, while with the proposed optional measures in Option 3, they would be able to facilitate those conditions. This PO could have a stronger impact than PO2 in particular in those Member States that offer more favourable conditions as part of their national schemes. For instance, in those four Member States where the residence requirement for the national LTR schemes is less than five years, and in those 11 Member States where five years is also the minimum residence requirement for citizenship, the option to issue the EU LTR status after three years, if adopted, would lead to an increase in the use of the EU LTR status. It is estimated that, 10 years after the implementation of the revised Directive, there would be an increase of 25% in the number of EU LTR permits, corresponding to approximately additional 800 000 EU LTR holders compared to the baseline. 2019 + 10 years Number of EU LTR permits Baseline evolution 3 007 696 3 198 515 PO3 (+25%) 3 007 696 3 998 144 Allowing the Member States to (optionally) lower the period to acquire EU LTR status from five to three years would have a positive impact also on the integration of third-country nationals (as they would obtain full equal treatment rights faster), in those Member States implementing the option. At the same time, keeping the period of five years to acquire intra-EU mobility rights (also for those Member States choosing this option) would avoid fragmentation in the implementation of the Directive. Furthermore, the concepts of periods of residence spent solely on temporary grounds, regular and stable resources, and integration conditions would be clarified so to limit the discretion of Member States and codify the case law of the CJEU. This would help limit strict practices in certain Member States that pose significant barriers for EU LTR applicants. This PO could also have an additional positive impact on intra-EU mobility, in those Member States that would allow cumulating residence periods in different Member States, as this would be an incentive for third-country nationals who have not yet acquired EU LTR status in the first Member State to move to other Member States with the perspective of acquiring sooner the status in the second Member State. Finally, it is noteworthy that if measures 3.2 and 3.3 would be compulsory for Member States to implement, they would likely face considerable resistance, as many Member States are not in favour of an obligation to lower the required residence period to acquire the status. Nevertheless, this resistance would be avoided by introducing these measures as optional for Member States to implement, which is likely to prove more politically viable even though less effective. 6.3.2.6.3.2. Expected impacts

Social impacts and impacts on fundamental rights The additional measures of this PO could have additional positive social impacts on third-country nationals and their integration as, if implemented by the Member States, they would be able to fulfil easier the conditions to acquire the EU LTR status, and therefore an increased number of third-country nationals legally residing in the EU would benefit from its rights, contributing to more social cohesion, which benefits both third-country nationals and EU citizens. For the same reasons, this PO would also have an additional positive impact on the fundamental rights to family and professional life, as well on non-discrimination by limiting Member States’ discretion on assessing the conditions to acquire the EU LTR status. However, where Member States would opt for lowering the period to acquire EU LTR status from five to three years, this could, in certain cases, place third-country nationals in a better situation than Union citizens (and their third country family members) who are beneficiaries of the Free Movement Directive, as the latter acquire the status of permanent residents, and the rights connected to that status, after having resided legally in the host Member State for a continuous period of five years. The positive impacts identified could be also slightly offset by the small additional number of third-country students who are expected to stay in the EU after their studies, and the rather larger share of temporary permit holders who would wish to remain in the EU, as this may contribute to some displacement of EU workers. However, the effect is expected to be moderate as the number of additional students is low, and temporary permit holders are assumed to primarily be low or medium skilled, and potentially contributing to fill labour shortages. Also businesses/employers would benefit from the additional measures, as more third-country nationals with a permanent status and full access to labour market would help filling vacancies and labour shortages. Finally, third countries may also benefit from an indirect impact, as a facilitated access to EU LTR status for more third-country nationals would result in more stable economic conditions for third-country nationals and higher remittances towards countries of origin. Economic impacts The additional measures of this PO aimed at facilitating the conditions to acquire the EU LTR status are expected to have positive economic impacts, which are however impossible to quantify. These impacts would mostly relate to improved integration of the affected groups of third-country nationals, which in return could also lead to better wages and higher tax revenues. The main additional measurable economic impacts would derive from the expected (limited) higher number of intra-EU mobile long-term residents compared to PO2, due to the expected increase of EU LTR permits issued at the end of the 10 year period (25% increase in this PO compared to 20% increase in PO2). Mobile LTRs % 2019 +10 years Baseline 2% 60 148 63 970 PO3 3,5% 60 148 139 935 The total collective economic effects of this increase are, over a 10-year period: ·An increase in tax revenue of 8.5 million euro; ·Increased consumption by 74.2 million euro; ·Remittances increased by 13.2 million euro (leaving the EU and thus deducted from the total economic impact on the EU economy). Resulting in a total economic benefit to the EU of around 69.4 million euro. Whilst it is not possible to estimate the impact on economic growth (i.e. increase in GDP), it can be assumed that the increased inflow of third-country nationals will also contribute to a rise in GDP, in particular considering that this cohort is keen to remain and work in the EU and thus likely to integrate relatively easily. Annex 4 provides a hypothetical example of such effect. Finally, it is important to bear in mind that PO3 also includes the measures of PO2, and the economic effects of the two options should therefore be added up. 6.3.3.6.3.3. Efficiency Administrative and compliance costs This PO would trigger limited administrative and compliance costs in addition to those already foreseen in PO2. These include costs for the European Commission to adapt the text of the directive, and costs for national authorities to transpose and implement it, to ensure compliance and enforcement, and to monitor and report.

The administrative and compliance costs of policy measures 3.2 and 3.3 would differ depending on whether Member States would opt to implement them. Furthermore, costs would strongly depend on the degree to which a policy measure differs from the status quo. For instance, measure 3.2 does not propose any changes to administrative procedures, but rather a change in the timeline (three rather than five year residence requirement). Therefore, this would just require changes to information to disseminate to third-country nationals, as well as guidelines and training for national authorities in the initial phase. Measures 3.4, 3.5 and 3.6 also foresee minor costs, in that they do not propose large changes from the status quo. In fact, national competent authorities should to some extent already be familiar with the changes foreseen in those measures due to the relevant CJEU rulings. Measures 3.3 is expected to pose the highest potential administrative and compliance costs, as currently the accumulation of residence periods in different Member States is not possible, and processing proof of residence in different Member States may require slightly more complex application processes. The average yearly administrative and compliance costs per stakeholder category of this PO are, over a 10-year period (totals of the average yearly cost, rounded to the nearest 1,000): European Commission: -One-off administrative costs for implementing and communicating the change: 57 000 euro; Member States: -One-off administrative costs for transposition, alignment of procedures, guidance and training, monitoring and reporting: 781 000 euro; -Recurring administrative costs for transposition, alignment of procedures, guidance and training, monitoring and reporting: 151 000 euro; -One-off compliance costs to develop and implement new procedures, inform and advise those concerned, etc.: 452 000 euro; -Recurrent compliance costs to develop and implement new procedures, inform and advise those concerned, etc.: 900 000 euro. Simplification This PO promises some further simplifications across stakeholder categories. Firstly, the main added simplification in addition to PO2 would contribute to creating a uniform understanding among national authorities of different significant terminology used for conditions to acquire EU LTR status. This PO would clarify the concept of residence on ‘temporary grounds’, ‘stable and sufficient resources’ and ‘integration conditions’. This PO would also bring some simplification for third-country nationals, by addressing complexities within the EU LTR application that acted as a barrier to acquire EU LTR status. As highlighted by stakeholders, these included diverse readings across Member States of which third-country nationals with temporary/formally limited permits are within/out of the scope of the Directive. The following cost savings are estimated (per average yearly cost): Member States: -Recurring cost savings resulting from simplification of current procedures: 24 500 euro. Third Country Nationals: -Recurring cost saving resulting from simplification: 1 145 000 euro. Employers:

-Recurring cost savings resulting from simplification: 112 700 euro. 6.3.4.6.3.4. Coherence By facilitating the conditions for a wider group of third-country nationals to acquire EU LTR status, this PO would also bring additional contribution to the objectives of the Commission’s New Pact on Migration and Asylum to support migrants’ integration into local communities and attract (and retain) talent to the EU. 6.3.5.6.3.5. Overall assessment Overall, this PO is likely to offer many positive impacts especially with regards to increasing the EU LTR status attractiveness in comparison with national LTR schemes, and most significantly towards facilitating the conditions for a wider group of third-country nationals to acquire the EU LTR status. This PO also presents proportionate administrative and compliance costs and potential simplification for national authorities and third-country nationals. 6.4.6.4. PO 4: Legislative option 3 – major legislative revision, creating a single EU permanent residence status 6.4.1.6.4.1. Effectiveness This PO would by default create a more coherent and efficient system to acquire the EU LTR status, as it would make it the only EU permanent residence status by abolishing national LTR schemes. As a consequence, it is expected that, following the implementation of the revised Directive, all LTR permits issued in the EU-25 would be EU LTR permits. 2019 + 10 years Number of EU LTR permits Baseline evolution 3 007 696 3 198 515 PO4 3 007 696 17 745 156 Furthermore, in all Member States, third-country nationals would be able to apply for the EU LTR status after three years of residence. This PO is also likely to have a significant impact on facilitating intra-EU mobility, as it would grant to long-term residents automatic intra-EU mobility rights resembling EU citizens’ freedom of movement. This PO is likely to have a minor negative effect on enabling circular migration. Indeed, studies found that drivers for migrants to return to their countries are unemployment in the destination country and economic opportunities in their country of origin. Therefore, granting EU LTR holders automatic intra-EU mobility rights would give them the possibility to more swiftly capitalise on employment opportunities across the EU, thus diminishing their incentive to return to the country of origin for other opportunities. This PO would have a positive effect on improving the right of long-term residents, though the abolition of the national long-term residence statuses would not result in a further improvement in the rights for all potential beneficiaries, as those categories of third-country nationals who benefit from the specific conditions of those national schemes (e.g. bilateral agreements based on shared history with third countries) would have a less facilitated access to permanent residence in the EU. 6.4.2.6.4.2. Expected impacts Social impacts and impacts on fundamental rights The stakeholder group expected to benefit the most from this PO are third-country nationals. This PO would enable a higher number of third-country nationals to have access to EU LTR status and intra-EU mobility rights. This may also mean that with more employment opportunities, remittances are likely to increase, indirectly stimulating the third countries’ economic growth. Nevertheless, the abolition of national schemes would also mean that some categories of third-country nationals who benefit from the specific conditions of those schemes (e.g. bilateral agreements based on shared history with third countries) would have a less facilitated access to permanent residence in the EU. This PO would also have a positive contribution to fundamental rights of long-term residents. Assuming that this PO would lead to an increase of intra-EU mobility, employers and businesses would benefit from a larger pool of third-country nationals with facilitated admission into their Member State. This would result in less delays to fill positions and complex bureaucratic procedures to hire an EU LTR holder in another Member State. Indirectly, this may also have an impact on rectifying labour mismatches by facilitating the filling of shortages and alleviating unemployment in certain Member States and thus contribute to economic growth. Nevertheless, as the mobility of long-term residents in this option would be largely similar to that of EU citizens, this would potentially add more competition towards EU workers compared to POs 2 and 3, which could lead to a moderate to significant displacement effect on EU workers. However, this number, spread over 10 years, is still substantially lower than the approximately 1.75 million unfilled job vacancies every quarter, which is also similar to the annual level of unmet vacancies by EU companies. Mobile long-term residents are therefore still likely to rather contribute to filling existing labour shortages, resulting in a low displacement effect of EU workers. Due to a lack of data and the number of assumptions required, it has not been possible to quantify this effect. As with PO 3, this option could, in certain cases, place third-country nationals in a better situation than Union citizens (and their third-country family members) who are beneficiaries of the Free Movement Directive, as the latter acquire the status of permanent residents, and the rights connected to that status, after having resided legally in the host Member State for a continuous period of five years. Economic impacts This PO would entail improved integration of the affected groups of third-country nationals, which in return could also lead to better wages. Measure 4.3, in particular, is anticipated to result in an increase of third-country nationals moving to a second Member State, where it is assumed that they would on average increase their wages by 10%, which in turn would lead to higher tax revenue, increased productivity and consumption, and enhanced economic growth. In addition, also as a result of their higher wages, remittances are also assumed to increase as a proportion of their income. With measure 4.3, long-term residents are expected to have the same intra-EU mobility rights than EU citizens, and therefore it is assumed that their intra-mobility would increase from the baseline assumption of 2% to 4%, resulting in a net increase of around 645 000 additional mobile long-term residents at the end of a 10-year period. Mobile LTRs % 2019 Year 10 Baseline 2% 60 148 63 970 PO4 4% 60 148 709 806

The total collective economic effects of this increase are, over a 10-year period: ·An increase in tax revenue of 70 million euro; ·Increased consumption by 615 million euro; ·Remittances increased by 110 million euro (leaving the EU and thus subtracted from the total economic benefit); Resulting in a total economic benefit to the EU of 575 million euro. Whilst it is not possible to estimate the impact on economic growth (i.e. increase in GDP), it can be assumed that an increased intra-EU mobility of third-country nationals will also contribute to a rise in GDP, in particular considering that this cohort of EU LTR status holders can be assumed to mostly move for (better) work opportunities and integrate easily, as they have already spent a minimum of five years in the EU. Annex 4 provides a hypothetical example of such effect. 6.4.3.6.4.3. Efficiency Administrative and compliance costs The additional measures within this PO pose administrative and compliance costs, in addition to those in PO2 and PO3. The largest costs foreseen are for national authorities to revise their administrative procedures and ensure the transition of national statuses to EU LTR statuses. The measures within this PO propose many substantial changes from the status quo, and thus would require considerable training and revisions to guidelines. In addition, harmonising administrative procedures for the automatic intra-EU mobility for EU LTR holders would have an impact on several national competent authorities (processing legal migration permits, border management, etc.) and their cooperation with one another. The average yearly administrative and compliance costs per stakeholder category of this PO are (totals of the average yearly cost of all measures included in the Policy Option, rounded to the nearest 1 000): European Commission: -One-off administrative costs for implementing and communicating the change: 68 000 euro; Member States: -One-off administrative costs for transposition, alignment of procedures, guidance and training, monitoring and reporting: 928 000 euro; -Recurring administrative costs for transposition, alignment of procedures, guidance and training, monitoring and reporting: 151 000 euro; -One-off compliance costs to develop and implement new procedures, inform and advise those concerned, etc.: 401 000 euro; -Recurrent compliance costs to develop and implement new procedures, inform and advise those concerned, etc.: 1 133 000 euros. Simplification This PO is expected to bring simplification for national competent authorities processing LTR applications (in both the first and second Member State), as well as for third-country nationals and EU LTR holders, by ensuring there is one single process to apply for EU LTR status and eliminating the pre-conditions for intra-EU mobility by making it automatic. This would significantly reduce the administrative burden on national authorities and employers. The following cost savings are estimated (per average yearly cost):

Member States: -Recurring cost savings resulting from simplification of current procedures: 24 500 euro. Third-country Nationals: -Recurring cost saving resulting from simplification: 1 145 000 euro. Employers: -Recurring cost savings resulting from simplification: 112 700 euro. 6.4.4.6.4.4. Coherence Overall, this PO is in line with the New Pact on Migration and Asylum. Nonetheles