Bureaucracy costs in a European comparison

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:

• the A1 certificate for short-term work in EU countries
• the Posting of Workers Directive on services in the European Single Market
• the transparency register
• and parts of the General Data Protection Regulation (GDPR)

Volume 1 of our research has shown its initial findings. Three further investigations will follow for March 2023.

Laws and directives: How much effort is required?

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.

Results and adjustment proposals

Part 1: A1 certificate

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:

• the introduction of a European Social Security Card as proof of national membership to a social security system – as a result, A1 certificates would only need to be issued in a few cases
• the merging of the processes for A1 certification and the Posting Directive
• processing via an EU-wide portal: This would give companies a single point of contact for the posting of employees to another EU Member State
• EU countries (especially Germany) should set up online portals to enable user-friendly applications
• simplifying requirements, for example, for short stays (less than five days), in border regions, or for home-office working

Links and downloads

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)

Project team: Sarah Anders, Paul Braunsdorf, Pia Czarnetzki, Jan Felix Czichon, Henner Kropp, Lorenz Löffler, Michael Schaaf, Jan Tiessen

Last update: 10.1.2023