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Legal bindingness of fraudulently obtained social security certificates from another Member State

On June 2, 2018 (C-359/16), the ECJ decided that a national court can, in a procedure against persons who are suspected of having employed expatriats using fraudulently obtained or claimed social security certificates, disregard these certificates.

Facts of the case

A Belgian company active in the construction sector entrusted Bulgarian companies as sub-contractors with the work on all of its construction sites. The subcontractors posted employees to Belgium. The employees were not registered with the Belgian body for collecting social security contributions because they possessed the E 101 certificates (now: A 1), which concern social security for employees who are temporarily posted to another Member State. These certificates had been issued by the responsible Bulgarian authorities. The legal investigation by a Belgian investigating judge in the context of a request for legal assistance revealed that the Bulgarian company did not exercise any notable commercial activity in Bulgaria. The Belgian authorities submitted an application to the Bulgarian body for a further review or revocation of the certificates. The body thereupon sent a list of the certificates issued and communicated that the Bulgarian company had satisfied the requirements for posting administratively, without having considered the facts established and proven by the Belgian authorities.

The Belgian authorities introduced criminal proceedings against the persons responsible at the Belgian company. These persons were sentenced by the court of appeal. The court found that it is not bound to the certificates issued because these had been obtained fraudulently.

The Belgian court of cassation, which was involved in this legal issue, submitted the following question to the ECJ for a preliminary ruling: Can an E 101 certificate, which was issued pursuant to Art. 11 (1) of the version of Regulation No. 574/72 applicable before its repeal by Art. 96 (1) of Regulation No. 987/2009, be declared void or disregarded by a court other than the court of the posting Member State if the facts about which it is to decide carry the finding that the certificate was obtained or claimed fraudulently?

Reasons for the decision

On the one hand, the ECJ made it clear that the principle of sincere cooperation pursuant to Art. 4(3) TFEU obligates the issuing body to properly assess the facts that are decisive for the determination of the legal requirements applicable in the area of social security, and therefore to guarantee the correctness of the information cited in the E 101 certificate. Since this certificate justifies the assumption that the inclusion of the employee concerned in the social security system of the Member State, in which the company that employs him/her is located, is correct, they subsequently and fundamentally bind the responsible body of the Member State in which this employee carries out work.

It also arises from the principle of sincere cooperation that the body of the other Member States may legitimately expect that the body of the Member State concerned complied with its duty to carefully check the application of its own rules. The responsible body of the Member state which issued the E 101 certificate would therefore have to check whether the certificate was issued correctly and to revoke this certificate if the responsible body of the Member State, in which the employee carries out work, claims doubt in the correctness of the facts forming the basis of the certificate and therefore in particular the information provided therein because these did not satisfy the facts of Art. 14 No. 1 (a) of Regulation No. 1408/71.

If the evidence collected during legal examination therefore allows the finding that the certificates were obtained or claimed fraudulently and the body of the host Member State then engages the body which issued the certificates to further check and revoke these certificates, the issuing body is to consider these facts and check again whether the certificate was correctly issued. If it omits to do so, the court can disregard these certificates if it finds that there is such fraud on the basis of the evidence mentioned and considering the guarantees included in the right to a fair trial, which are to be granted to this person.

Practice notes

The decision concerns criminal law responsibility for the employment of (alleged) posted employees/expats. The assumption of the correctness of the social security certificate from the issuing body is not always for the benefit of the responsible parties. In fact, a court of the Member State, in which the employees are employed, can disregard such a certificate if the issuing body has not undertaken a renewed check in spite of sufficient indications of the certificate having been obtained fraudulently. When employing expats, contractors will not (any longer) be able to fall back on the inaction of the body that issued the social security certificates. Cases of fraud in the area of (alleged) employee posting should therefore be pursued more effectively.

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