EUROPEAN COMMISSION Brussels, 15.7.2022 COM(2022) 344 final REPORT FROM THE COMMISSION Monitoring the application of European Union law























2021 Annual Report {SWD(2022) 194 final}



FOREWORD I.THE EUROPEAN GREEN DEAL Clean air and water Protecting biodiversity Promoting a circular economy Clean energy Sustainable agriculture Sustainable fisheries and maritime spatial planning Health and food safety II.A EUROPE FIT FOR THE DIGITAL AGE Technology that works for people A fair and competitive digital economy Promoting the data economy Accessibility of websites and mobile applications Strengthening cybersecurity and protection from cyber threats An open, democratic and sustainable digital society Protection for consumers and companies

Transparent information about and for businesses Digital transport systems III.AN ECONOMY THAT WORKS FOR PEOPLE Working conditions Health and safety at work Labour mobility Social security coordination Information and assistance for people and businesses Better regulation of professions and recognition of qualifications Sound public procurement and fighting delayed payments Internal energy market Keeping nuclear power safe Mobility and transport Direct taxation Indirect taxation Customs Competition Financial services Money laundering and terrorist financing IV.PROMOTING OUR EUROPEAN WAY OF LIFE AND EUROPEAN DEMOCRACY

Rule of law and fundamental rights European Union citizenship Free movement of people Rights of travellers during the pandemic Safer transport Equality and non-discrimination Combating racism and xenophobia, including hate speech Improving the protection of personal data Justice cooperation and individual guarantees in criminal law Security New Pact on Migration and Asylum

Foreword

This report comes at a time when European democracy is being challenged, both from outside and from within. Russia’s aggression against Ukraine is an attempt to override the rule of law with the right of might. The European Union stands firmly on the side of Ukraine and of democracy over autocracy, because the rule of law is the basis for a fair and peaceful international order. Ukraine’s fight for freedom is also a reminder of the value of our own democracy. Democracy must be nurtured, exercised and renewed every day for it to thrive. This is what the European Commission, under my leadership, has strived for since the start of its mandate. The Commission has put in place historic measures to strengthen the EU’s capacity to promote and protect the rule of law. These measures are based on dialogue with the European Parliament and Member States, alongside civil society. The Commission uses its enforcement powers and resorts to infringement procedures where this is necessary to protect our commonly agreed rules. This year’s report shows how over the past year, the Commission has continued to safeguard EU law to ensure that citizens in our Single Market fully benefit from the implementation of key policies. Democracy is always a work in progress. The Commission is committed to defending the rights of EU citizens, wherever they live in our Union. The rule of law is the glue that binds the European Union together. It is essential for the protection of the values on which the EU is founded: democracy, freedom, equality and respect for human rights. And this is what all 27 Member States have signed up to as part of the EU as sovereign countries, and free peoples. Sincerely, Dr. Ursula von der Leyen President of the European Commission

I.The European Green Deal ‘It was Robert Schuman who said: Europe needs a soul, an ideal, and the political will to serve this ideal. […] And in the gravest planetary crisis of all time, again we chose to go it together with the European Green Deal.’ - President von der Leyen, in her 2021 State of the Union Address The world is facing climate and biodiversity emergencies that are an existential threat to our planet. The EU is determined to lead the way in addressing these challenges. The European Green Deal is the Commission’s plan towards zero pollution for air, water and soil, and transforming the EU’s economy into a modern, resource-efficient one. There is no time for hesitation: the Commission’s enforcement efforts aim for swift implementation and rigorous application of the EU rules that will make the Green Deal a reality. Decisions by the Commission to refer Member States to the EU Court of Justice include: – France , Hungary and Slovenia over their treatment of waste water. – Greece and Portugal for poor air quality due to high levels of nitrogen dioxide (NO2); - Slovakia for high concentrations of particulate matter (PM10); - Romania due to the illegal operation of industrial plants; - Ireland and Italy for breaches with regard to substances in drinking water that could pose a potential health danger; - Spain for insufficient protection of waters against nitrates pollution; Clean air and water Air pollution is among the key factors affecting human health. The full implementation of the EU’s air quality standards is key to effectively protect our well-being and safeguarding the natural environment. In addition, a large number of people are still exposed to harmful substances in their drinking water, contrary to EU rules . And urban wastewater is still not properly collected or treated in several hundreds of cities across the EU. The Commission has launched and pursued further infringement cases against several Member States to ensure an appropriate level of treatment of waste water. Protecting biodiversity

Health and food safety The legislation in this area intends to make Europe a healthier and safer place. Proper and consistent implementation of EU rules by national authorities is crucial to achieving these objectives. The Commission takes a ‘one health’ approach to preparedness and prevention, integrating human, animal and environmental health, as well as food and feed safety. ‘One health’ recognises that human health is intimately connected to the health of animals and the environment. Audits remained a key tool in enforcing EU rules on food and feed safety, animal health, plant health and animal welfare. They also proved important in the quality control of pharmaceutical products and medical devices. Ensuring patients’ rights to access cross-border healthcare remained a priority for the Commission in 2021. Therefore, the Commission continued to push for the full implementation of the Cross-Border Healthcare Directive , carrying out dialogues with Member States to improve its application. Tobacco consumption remains the single largest avoidable health risk, and the most significant cause of premature death in the EU. The Tobacco Products Directive contributes to reducing tobacco consumption and generates positive outcomes for public health. Its rules ensure that the public is made aware of the harmful effects of tobacco and that characterising flavours are banned for the main product categories. In 2021, the Commission continued its work to fully enforce the Directive: It conducted conformity checks on the national laws transposing the Directive, held dialogues with Member States to strengthen its implementation and published a report on the application of the Directive. II.A Europe fit for the Digital Age ‘We have to double down to shape our digital transformation according to our own rules and values.’ - President von der Leyen, in her 2021 State of the Union Address Digital technology is changing people’s lives. The COVID-19 pandemic has radically changed the role and perception of digitalisation in our societies and accelerated its pace. Digital technologies are central for working, learning, entertaining, socialising, shopping and accessing everything from health services to culture. Pursuing and enforcing digital policies that empower people and businesses to embrace a human-centred and prosperous digital future has become more relevant than ever before. Technology that works for people The COVID-19 crisis has demonstrated the importance of proper functioning of the European emergency number 112, identifying caller location and ensuring equivalent access for disabled end-users. Emergency communications and access to emergency communication services via 112 are just some of the things regulated by the 2020 European Electronic Communications Code . The Commission launched infringement proceedings against 24 Member States for failure to transpose on time the European Electronic Communications Code. It pursued these proceedings further against 20 Member States later in 2021. As one of the building blocks of the Digital Single Market, the Code modernises the European regulatory framework for electronic communications, to enhance consumers' choices and rights. It ensures clearer contracts, quality of services and competitive markets. Central objectives of the Code are promoting connectivity, and investment in / access to very high-capacity networks. The deadline for transposing the rules in the Code into national legislation expired on 21 December 2020. A fair and competitive digital economy

Transparent information about and for businesses With an increasing number of cross-border businesses, having easy access to information on companies in different Member States is crucial. EU legislation requires Member States to link their national business registers with the business registers interconnection system (BRIS). BRIS facilitates cross-border operations and makes procedures less costly and time-consuming for companies. It enables individuals, businesses and entrepreneurs to obtain information on companies. In 2021, the Commission decided to refer Bulgaria to the Court of Justice for not yet being connected to BRIS, while it closed infringement procedures against Ireland and France who had completed the connection of their business registers to BRIS. The Commission continued existing infringement procedures against all Member States on the implementation of Points of Single Contact . These are e-government portals that allow service providers to get the information they need and complete administrative procedures online. Compliance efforts on the application of the Services Directive are at the heart of digitalisation and e-government and also aim to support the work under the Single Digital Gateway . Progress made by Member States is substantial but uneven. Digital transport systems Digitalisation can make transport safer, more efficient and more sustainable. Information and communication technologies offer new opportunities to all modes of passenger and freight transport. Moreover, the integration of existing technologies can create new services. For example, for road transport, the European Electronic Tolling Service ensures tolling services are interoperable across roads in the EU. It makes it possible for road users to easily pay tolls throughout the whole EU with only one subscription contract with one service provider and a single on-board unit. Eliminating cumbersome procedures for occasional users and facilitating daily operations for road users improves traffic flow and reduces congestion. To enforce the tolling service’s rules, the Commission launched an infringement procedure against Slovenia and took further steps in a procedure against Hungary . On aviation safety, data link services are communications between aircraft and ground that complement the voice communication traditionally used in air traffic control. They improve pilot-controller communication efficiency, thereby increasing air traffic control capacity. The Commission pursued further infringement procedures against six Member States for failing to provide and operate data link services for all aircraft operators flying within their airspace. It closed infringement procedures on the same issue against Bulgaria, Lithuania and Finland.



III.An Economy that Works for People ‘We have all benefited from the principles of our European social market economy – and we must make sure that the next generation can do so, to build their future.’ - President von der Leyen, in her 2021 State of the Union Address Living in the EU today means having the right to a safe and decent living, and having the opportunity to succeed. Thanks to the EU’s social market economy, the EU has some of the highest standards of living, best working conditions and most effective social protection in the world. However, there are still too many cases of incorrect or incomplete application of single market or employment rules. The Commission’s enforcement policy addresses these shortcomings so that these rules can deliver their intended effects to the full. Working conditions Fair and dignified working conditions are a key element of Europe’s social market economy, across economic sectors and Member States. The EU has rules on working time, part-time and fixed-term work, temporary workers and the posting of workers – defining minimum requirements that apply across the EU. In 2021, the Commission has taken a number of decisions to enforce these rules. On the application of fixed-term work rules, the Commission launched infringement procedures against Italy concerning the working conditions of honorary magistrates. It also took action against Portugal for the employment conditions of fixed-term teachers. The Commission opened an infringement case against Spain highlighting conformity issues with national rules on temporary agency work . Furthermore, in the sea fisheries sector, the Commission called on Cyprus to transpose EU rules on the protection of workers into national legislation.

Health and safety at work The Commission launched infringement procedures against Denmark and pursued further an existing procedure against Cyprus for failing to transpose EU rules on protecting workers from exposure to carcinogens or mutagens at work. Furthermore, following information received in a complaint, the Commission opened an infringement procedure against Germany for an alleged breach of EU rules to protect workers' safety and health at temporary or mobile construction sites. The Commission’s enforcement efforts continued to focus on a timely transposition of EU occupational health and safety rules into national legislation. The Commission closed 12 infringement procedures, as Member States transposed two directives on the protection from exposure to carcinogens or mutagens at work, as well as updated rules . These updated rules concerned the addition of the SARS-CoV-2 virus to the list of agents in the Biological Agents Directive , for which the Commission was able close four infringement cases. To ensure the conformity of national measures with the Directive establishing a fourth list of indicative occupational exposure limit values , the Commission launched dialogues with a series of Member States. Five of these were successfully concluded in 2021, with national rules brought into line with EU rules. Labour mobility Free movement of workers is one of the fundamental freedoms on which the EU is founded. The Commission therefore places particular importance on enforcing the rules on this. During 2021, in the context of the COVID-19 pandemic, free movement of workers continued to be put to the test. The Commission opened an infringement procedure against Italy for failing to comply with EU law on free movement of workers with regard to foreign language assistants (‘Lettori’) in universities. While Italian law provides an acceptable framework for the reconstruction of careers of foreign lecturers, the majority of universities have not implemented it. As a rule, every Member State must treat the nationals of other Member States the same as their own nationals. For public-sector positions, a generalised exclusion of EU workers from public posts based on their hierarchical level, without carrying out an analysis on a case by case basis, is contrary to EU law. In 2021, the Commission pursued further an infringement procedure against Greece for restricting high-level posts in the public administration and a number of public entities to candidates with Greek nationality. The Commission launched infringement procedures against 24 Member States to bring various national provisions into line with the Enforcement Directive on Posting of Workers . This directive reinforces the practical application of the rules on posting workers by addressing issues related to fighting fraud and the circumvention of rules, access to information, and administrative cooperation between Member States. EU rules on posting workers regulate situations where an employee is sent by his employer to carry out a service in another EU Member State on a temporary basis. Recently updated rules have introduced significant improvements to the situation of posted workers and a level playing field for service providers. Under the new rules, all the mandatory elements of remuneration applicable to local workers will also be applicable to posted workers. Following infringement proceedings against 14 Member States on the transposition of the updated rules, all of them notified complete transposition in 2021. Social security coordination EU legislation coordinates the national social security systems of the Member States to guarantee that the right to the free movement of persons can be exercised effectively. EU rules thereby contribute to an improved standard of living and conditions of employment of persons who move within the EU. In 2021, the Commission launched an infringement procedure against Germany for failing to comply with these rules and EU rules on free movement of workers . The German State of Bavaria had introduced a new scheme of family allowances providing for different amounts of family benefits according to the place of residence within the EU of a child concerned. A similar case regarding Austria 's indexation system for family benefits was already referred to the Court of Justice. Information and assistance for people and businesses In 2021, it was more important than ever that individuals and businesses could continue to rely on the opportunities offered by the single market and that Member States and the Commission worked closely together to address barriers to free movement. The consequences of the COVID-19 pandemic, such as border closures, supply chain interruptions and uncoordinated national and regional restrictions, underlined the importance of protecting the functioning of the single market. The pandemic’s impact was particularly harsh in border regions. The EU's online problem-solving service SOLVIT continued to work seamlessly throughout the pandemic to help business and individuals facing COVID-19-related cross-border difficulties and played an important part in ensuring that the single market remained resilient. The single market governance tools – such as the Your Europe portal , Your Europe Advice and SOLVIT – offer clear information, assistance and problem-solving to both individuals and businesses who have issues related to the single market and free movement. They enable these groups to make full use of their EU rights in the single market. In addition, evidence from the tools helps the Commission identify and correct existing problems. In 2021, SOLVIT assisted over 2 400 people and businesses by addressing their problem, and Your Europe Advice gave guidance to individuals and businesses about their single market rights on over 27 800 occasions. Better regulation of professions and recognition of qualifications The Commission opened infringement cases against 18 Member States for failing to properly implement the proportionality test directive, to achieve its intended effect for qualified job candidates. The EU proportionality test directive requires Member States to ensure that any new requirements for regulated professions are necessary and balanced. It aims to avoid burdensome national rules that make it harder for qualified candidates to access or exercise a wide range of professions.

Competition authorities in Member States play an important role in enforcing EU competition rules. The ECN+ Directive aims to empower national competition authorities to be more effective in doing so. The Commission opened infringement procedures against 22 Member States for failing to communicate complete national transposition measures on time, namely by 4 February 2021. Financial services The Commission launched 96 infringement procedures against Member States for failing to adopt the necessary measures to fully transpose the Directives, which further unify the regulatory framework for credit institutions and investment firms. Financial services are a key pillar of the single market. EU legislation covers all financial intermediaries and capital markets. Credit institutions and investment firms are important actors of the EU financial system. The EU rules ensure that banks and investment firms are even stronger and better supervised, to increase their capacity to support the post-COVID recovery. There are four directives of particular interest for credit institutions and investment firms, on which the Commission focussed its enforcement efforts in 2021: the Capital Requirements Directive V , the Bank Recovery and Resolution Directive II , the Covered Bonds Directive and the Investment Firms Directive . Timely and full implementation of these directives is important for completing the single market in financial services and keeping the financial system sufficiently robust to weather the consequences of the pandemic. Money laundering and terrorist financing For late or incorrect transposition into national law of the EU’s rules to fight money laundering and financing of terrorism (Directives 2015/849 , 2018/843 and 2019/2177 ), the Commission took formal steps in 41 infringement cases, including the closure of 19 cases. Money laundering and terrorist financing pose a serious threat to the integrity of the EU economy and financial system, and the security of European citizens. These illicit financial flows have continued during the COVID-19 pandemic. EU legislation is designed to prevent the financial market from being misused for these purposes. In 2021, the Commission focused on enforcing the 4th and the 5th anti-money laundering directives, as well as the rules concerning a new role for the European Banking Authority in preventing the financial system from being used to launder money or finance terrorism. IV.Promoting our European Way of Life and European Democracy