Centre for Industrial Studies (CSIL)
What is the bureaucratic burden on SMEs imposed by EU law? This question is answered by Prognos and the Centre for European Policy (cep) for the German Foundation for Family Businesses.
For this purpose, we look at four areas of law:
Volume 1, 2 and 3 of our research have shown initial findings. The final investigation will follow for June 2023.
To enable assessment of the four areas – A1 certification, the Posting of Workers Directive, the transparency register, and the GDPR – and the bureaucratic effort associated with them, the cep first issues a legal opinion for each of them. This is followed by an assessment conducted by Prognos and its partner, the Centre for Industrial Studies (CSIL) in Milan, on how much time and cost companies incur as a result of the regulations. We have focused on Germany, Austria, Italy, and France.
The extent to which the regulations themselves are effective is not taken into consideration. Rather, we estimate where, in the four areas, bureaucracy can become more efficient or digital. The empirical assessment is based on interviews we conducted with companies and experts in the four countries.
Under EU law, a person is only subject to the social security law of a single Member State, usually the state in which the person is working. However, if the employer decides to transfer this person to another EU country for a maximum of two years, the employee is subject to the law of the country they come from. In this case, upon request, the social security institution of the home country provides proof of the current validity of cover: The A1 certificate.
EU law does not, however, specify which information must be provided on the A1 certificate – the specifications vary from country to country and are sometimes extensive. Even though all four countries examined offer online solutions for applying for A1 certificates, the time required differs significantly: From over 30 minutes in Italy to just under 20 minutes in Austria. The resulting costs also fluctuate accordingly. Fulfillment costs range from seven euros per transaction in Austria (6.80 euros) and France (7.12 euros) to more than ten euros in Italy and Germany (10.28 euros).
Our research resulted in the following suggestions for reducing the bureaucratic burden:
If a company dispatches employees to another EU member state, not only must it apply for an A1 certificate from the national authorities, but under certain circumstances the dispatch must also be registered in the host country. This is to prevent a posting that would undermine national standards.
Here, EU law gives Member States the opportunity to adopt their own provisions on compliance with the Posting of Workers Directive. In reality the results are correspondingly diverse: in the four countries examined, the requirements to be observed when posting workers vary. Our study shows that, in particular, the information and reporting requirements in France and Austria are above averagely expensive, which points to socalled gold plating – the national tightening of European requirements.
Companies are challenged by the variety of national requirements to be met – from the translation of employment contracts into the respective national language to the submission of medical evidence. Our research shows:
In order to reduce the burden on companies, we therefore propose:
As one of the measures to combat money laundering, since 2017, EU law has required Member States to set up central transparency registers. These registers contain information about the “beneficial owners” of a company and make the ownership structure transparent. Transparency registers can take the form of an independent public register or be part of an existing commercial register – EU law does not specify this. As Volume 3 of our study, we examined the administrative implementation of this in Germany, Italy, France, and Austria, although, when the study was published, Italy did not yet have an active transparency register in place.
Our study shows that, despite the national registers themselves requiring largely identical information, there are large differences in the administrative burden on companies. The comparison of the time and costs involved to comply with legal requirements clearly shows the advantages of an automatic data synchronisation with existing registers according to the “once-only principle.” For many companies in Austria, for example, the filling out of the transparency register is automated based on the commercial register’s data, while companies in Germany required up to 45 minutes to register.
Therefore our recommendations aim primarily to simplify the implementation of the Transparency Registries, in particular:
More information on the evaluation of the results can be found on the pages of the Foundation for Family Businesses (in German).
Download Volume 1 (PDF in English)
Download Volumen 2 (PDF in Englisch)
Download Volumen 3 (PDF in Englisch)
Project team: Sarah Anders, Paul Braunsdorf, Pia Czarnetzki, Jan Felix Czichon, Henner Kropp, Lorenz Löffler, Michael Schaaf, Jan Tiessen
Last update: 22.3.2023
Vice Director, Head of Management Consulting
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