Case C-168/04: Action brought on 5 April 2004 by the Commission of the European Communities against the Republic of Austria
Date: 2004-05-29
Institutions: Court of Justice
Subjects: Austria, European Commission, action for failure to fulfil an obligation, free movement of workers, migrant worker, residence permit

C 146/2

EN

Official Journal of the European Union

29.5.2004

ii) order the Commission to pay the costs.

The Republic of Finland claims in the alternative that the
Court should:

2004 by the Commission of the European Communities, repre-
sented by Barbara Eggers and Enrico Traversa, with an address
for service in Luxembourg.

iii) annul Commission Decision 2004/136/EC of 4 February
2004 excluding from Community financing certain expen-
diture incurred by the Member States under the Guarantee
Section of the European Agricultural Guidance and Guar-
antee
sum of
as
EUR 3 194 596;

(EAGGF)

regards

Fund

the

iv) order the Commission to pay the costs.

Pleas in law and main arguments

The applicant claims that the Court should:

— Declare that the Republic of Austria has failed to fulfil its
obligations under Article 49 EC inasmuch as by means of
Article 18(12) to (16) of the AuslBG and Article 10(1)(3)
FrG it
is disproportionately restricting the posting of
workers who are third-country nationals in connection with
the provision of services.

Finland considers that when adopting the contested decision
the Commission:

— Order the Republic of Austria to pay the costs.

i) misapplied Article 9(2) of Regulation No 3887/92 (1) and
wrongly assessed the factual situation in Pohjois-Karjala.
The Commission failed to demonstrate that
there were
substantial defects in the Finnish system of control of area
aid in Pohjois-Karjala and that the Finnish authorities had
not taken the corrective measures required by the Commis-
sion;

ii) wrongly

the

assessed

situation in Pohjois-
factual
Pohjanmaa, Pohjois-Savo, Keski-Suomi, Kainuu and Lappi.
The Commission failed to demonstrate that
there were
serious defects in the Finnish system of control of area aid
in those regions and that the Finnish authorities had not
taken the corrective measures required by the Commission;

iii) breached the principle of proportionality by extending the
contested decision to apply, in addition to Pohjois-Karjala,
also to Pohjois-Pohjanmaa, Pohjois-Savo, Keski-Suomi,
Kainuu and Lappi; and

iv) failed to demonstrate that the methods of measurement
used in the system of control of area aid in Pohjois-Karjala,
Pohjois-Pohjanmaa, Pohjois-Savo, Keski-Suomi, Kainuu and
Lappi were contrary to Community law.

(1) OJ L 40 of 12.2.2004, p. 31.
(1) Commission Regulation (EEC) No 3887/92 of 23 December 1992
laying down detailed rules for applying the integrated administration
and control system for certain Community aid schemes, OJ L 391
of 31.12.1992, p. 36.

Pleas in law and main arguments

in another Member State are
Providers of services resident
adversely affected by three different supervisory procedures
with three different Austrian authorities in regard to the
posting of workers who are third-country nationals to Austria.
Thus the Ausländerbeschaftigungsgesetz (Law on employment
foreign nationals - AuslBG) requires an ‘EU Posting of
of
Workers Certificate’ to be obtained at the regional branch of
the employment service in addition to the visa under the Frem-
dengesetz (Law on foreign nationals - FrG)
issued by the
competent consulates, and a notification procedure to check
pay and working conditions in accordance with the Arbeitsver-
tragsrechtsanpassungsgesetz
employment
contracts - AVRAG).

(Law adapting

I. EU Posting of Workers Certificate, Article 18 (12) to

(16) AuslBG

The requirement of an EU Posting of Workers Certificate
pursuant to Article 18(12) to (16) of the AuslBG has a restric-
tive effect on freedom to provide services in the Community.

The requirement of an EU Posting of Workers Certificate in
addition to the visa under the FrG and the notification proce-
dure under the AVRAG is disproportionate to the objectives
pursued by the Republic of Austria of combating abusive prac-
tices and protecting workers.

Action brought on 5 April 2004 by the Commission of the
European Communities against the Republic of Austria

(Case C-168/04)

(2004/C 146/03)

An action against the Republic of Austria was brought before
the Court of Justice of the European Communities on 5 April

1. Pr e v e n ti on of a bu si ve p r a c t i c e s

The Austrian Government is infringing the principle of propor-
tionality, as effective control of the conditions governing the
posting of workers in connection with the provision of services
can be ensured through less far-reaching measures.

29.5.2004

EN

Official Journal of the European Union

C 146/3

The legitimate interest of a Member State in checking compli-
ance with the conditions governing the posting of workers
who are third-country nationals by companies providing
services can be adequately served by the requirement of a visa.
Any additional control, as here by way of an EU Posting of
Workers Certificate, which is issued by another authority,
is
unjustified.

The automatic refusal of a visa in cases of merely formal illegal
entry considerably restricts freedom to provide services and
renders that freedom illusory in some service sectors. In the
current state of Community law the Austrian Republic has, by
virtue of the checks on issue of entry visas, means available to
it which are just as effective but less far-reaching of reviewing
whether third-country nationals are entering the country for
the purpose of providing services.

2. Complianc e with pa y a nd worki ng con di tion s

The substantive condition in Article 18(13)(2) AuslBG under
which the EU Posting of Workers Certificate is issued only if
the Austrian wage and working conditions laid down in the
AVRAG are complied with likewise results in disproportionate
duplicated checks.

The requirement of an EU Posting of Workers Certificate and
the procedure associated with it are disproportionate to the
objective sought of ensuring worker protection, since the
Republic of Austria already has available to it less far-reaching
means.

The Republic of Austria transposed the posting of workers
directive by means of the AVRAG which provides for the possi-
bility of ex post controls in order to check that the requisite
salaries are actually being paid.

3. R e g u la r w or ke r s

The requirement set out in Article 18(13)(1) AuslBG as a condi-
tion for the EU Posting of Workers Certificate of at least one-
year's employment or an indefinite employment contract with
the provider of services constitutes an unjustified restriction on
freedom to provide services. The objective of combating
abusive practices can also be attained through far less restrictive
measures.

II. Refusal of residence permits, Article 10(1)(3) FrG

Under Article 10(1)(3) FrG a residence permit must be refused
when the worker has already entered the country without a
visa. That provision prohibits a posting, even if the providers
of the services can establish lawfulness, namely that an applica-
tion has already been made on the basis of which a Member
State can carry out the required checks.

The automatic refusal of a residence permit under Article
10(1)(3) FrG is disproportionate to the objective of control of
the conditions governing the right of residence and should
therefore be declared unlawful.

Reference for a preliminary ruling by the VAT and Duties
Tribunals, London Tribunal Centre, by direction of that
court dated 2 April 2004, in the case of Abbey National
plc (with Inscape Investments Ltd as Joined Party) against
Commissioners of Customs and Excise.

(Case C-169/04)

(2004/C 146/04)

Reference has been made to the Court of Justice of the Euro-
pean Communities by direction of the VAT and Duties Tribu-
nals, London Tribunal Centre, dated 2 April 2004, which was
received at the Court Registry on 5 April 2004, for a preli-
minary ruling in the case of Abbey National plc (with Inscape
Investments Ltd as
Joined Party) and Commissioners of
Customs and Excise on the following questions:

1. Does the exemption for ‘management of special investment
funds as defined by Member States’, contained in Article
13B(d)(6) of
the
Member States have the power to define the activities
comprising the ‘management’ of
investment
funds, as well as the power to define the special investment
funds which may benefit from the exemption?

the Sixth VAT Directive (1) mean that

the special

2. If the answer to question 1 is no and the term ‘management’
in Article 13B(d)(6) of the Sixth VAT Directive is to be
given an independent Community law meaning, in the light
of Council Directive 85/611/EEC as amended on the co-
ordination of laws, regulations and administrative provisions
relating to undertakings for collective investment in transfer-
able securities (‘the UCITS Directive’) (2), are charges made
by a depositary or trustee for the services it provides
pursuant
the UCITS Directive,
national regulatory provisions and the relevant fund rules,
exempt supplies of
investment
funds’ under Article 13B(d)(6) of the Sixth VAT Directive?

to articles 7 and 14 of

‘management of special