What is posting fraud, and how does the A1 Certificate impact on this?

Thursday, August 2, 2018

The essence of posting fraud is to seek to avoid liabilities for tax and social security payments which would otherwise arise in respect of employees sent to work temporarily in other EU jurisdictions.

There has been understandable confusion as to which system should apply for such people.  Consequently the international legislator has issued so called “marking rules” which state that only one social security system can apply at any given time.  These rules are set out in the European Regulation 883/2004.  This Regulation applies specifically to employees seconded abroad by their employers.

It relates to a temporary secondment.  An example of this might be as follows:

A Belgian building company agrees a contract with a Polish sub contractor.  The Polish sub contractor then sends a number of its employees to Belgium to fulfil the contract.  Those Polish employees however will remain under the jurisdiction of the Polish social security system as they are only working on a temporary basis in Belgium. 

The way in which this works is that the Polish social security system will procure the A1Certificate that confirms that the employee remains subject to Polish social security rules.  This is a binding document on courts and public authorities throughout the EU.  The question has arisen though as to what should happen should this document be fraudulently obtained.

The A1-certificate and the Altun case (C-359/16)

Fortunately the European Court of Justice has issued a ruling in a case named “Alton” and gave Judgment on the 6th February 2018.  The court not surprisingly held that individuals cannot rely on EU law in cases of abuse or fraud relating to such laws.  The application of EU legislation cannot be extended to cover transactions carried out with the purpose of fraudulently or wrongfully trying to obtain advantages under EU legislation. This applies specifically in circumstances whereby there is an attempt to obtain and rely on an A1 Certificate where the requisite factors have not been met. An example of this would be where a Polish sub contractor sent his employees to Belgium on a permanent rather than a temporary basis.  The intention of the parties is also relevant in so far as their intention to seek to evade or circumvent the issue of the A1 Certificate with a view to benefitting from the advantages attached to it.

If a host member state believes that there has been fraud and puts appropriate evidence before the institution issuing the A1 Certificate, it is the duty of that institution to review the grounds for the issue of the certificate and, if appropriate, to withdraw it.  Even if the social security authority of the sending member state fails to carry out such a review, the member state to which the employees have been sent is nevertheless entitled to disregard the Certificate.  Therefore host member states are not bound to respect fraudulently obtained A1 Certificates exempting their holders from the host state’s social security system.



Charline Bulteel, Social Law, Crivits & Persyn

charline.bulteel@crivits-persyn.be T: +32 50 33 82 91