Fraud can undermine the binding nature of an A1 form

Written by Bart Elias 19 February 2018


On 6 February, the Court of Justice of the EU presented its highly anticipated judgement in the case n° C-359/16 ‘Altun’. In its judgement, the CJEU ruled that, in case of posting, the courts of the host Member State can disregard an A1 form issued by the competent authorities of the home Member State provided fraud is evidenced and certain conditions are met.

Validity of A1 forms

When an employee is posted by his employer to work in another EEA Member State or Switzerland, he will remain subject to the social security scheme of the home country if a number of conditions are complied with. In the event of a valid posting, the home country’s competent authorities will issue a so-called ‘A1 form’ detailing this continued subjection.

The CJEU has a longstanding and extensive body of case law on the validity of A1 forms in which the guiding principle has always been the fact that, in case of posting, an A1 form has a binding effect on the competent authorities and courts of the host Member State, as long as the issuing home Member State has not retracted said A1 form or declared it invalid.

Sincere cooperation between Member States

In the present case, the CJEU reiterates that the above-mentioned binding nature of an A1 form is rooted in the principle of sincere cooperation between Member States but that this principle of sincere cooperation also entails that the competent authorities of a Member State must carry out a diligent examination of the application of their own social security scheme when issuing an A1 form. This in turn brings about the obligation for the issuing authorities to reconsider the grounds for the A1 form they issued and, if necessary, to retract the A1 form in question if the authorities of the host Member State express doubt on the accuracy of the underlying facts of the A1 form.

“Fraus omnia corrumpit”

Although the CJEU’s case law clearly sets forth the binding nature of the A1 form and the exclusive competence of the issuing authority to assess the validity of said form, the CJEU also states in the case at hand that these considerations may not result in individuals being able to rely on those principles for abusive or fraudulent ends. Indeed, the principle of prohibition of fraud is a general principle of EU law which individuals must comply with.

The Court determines that findings of fraud have to be based on a consistent body of evidence and that both an objective factor and a subjective factor have to be present in this respect. The objective factor consists of the fact that the conditions for a valid posting are not complied with. The subjective factor corresponds to the intention of the parties concerned to circumvent the conditions for a valid posting, with a view to obtaining the advantage attached to it, i.e. remaining subject to the home country’s social security scheme.

Disregarding A1 forms in case of demonstrated fraud

If the competent authorities of the host Member State to which the employees are posted, would produce to the authorities of the Member State that issued the A1 form, concrete evidence of such fraud, collected in the course of a judicial investigation, it follows from the principle of sincere cooperation that it is the duty of the latter authorities to examine the grounds for the issue of said A1 form and – if necessary – to retract it. If the latter authorities fail to carry out such review/retraction within a reasonable deadline, the CJEU argues that it must be possible for a national court in the host Member State to disregard the A1 forms after adversarial legal proceedings with respect for the right to a fair trial.

Impact

The CJEU applies the principle of prohibition of fraud – which is a general principle of EU law – for interpreting the validity of an A1 form. However, it must be emphasised that the general principle of the binding nature of A1 forms remains fully in effect and that applying the notion of fraud in this respect constitutes a limited exception to this general principle. In addition, note that the present ruling by the CJEU only concerns the possibility for national courts to disregard the application of an A1 form in case of demonstrated fraud, determined after adversarial legal proceedings and does not support national competent authorities unilaterally disregarding an A1 form when evidence of fraud is unearthed.