Fraudulent A1 forms: after the ALTUN decision, now also the answer of the Court of Cassation

Fraudulent A1 forms: after the ALTUN decision, now also the answer of the Court of Cassation

With its decision of 19 June 2018[1], the Court of Cassation has put a (provisional) cap on the discussion about disregarding A1 forms in cases of posting fraud. The Court is doing this after receiving a preliminary ruling from the Court of Justice, given in the high-profile ALTUN decision.[2] For more information see our earlier newsflash on this decision.

An A1 form furnishes the proof that a posted EU employee is subject to social security in his homeland. These forms are issued by the sending state of the posted employee and thus bind the other Member States, in particular the receiving state.

In case of doubt about the validity of the form or the correctness of the facts that lie at its basis, a European procedure must be followed: the receiving state must ask the social security institution of the sending state for clarification or to withdraw the form. This foreign institution must check the posting conditions and, if necessary, withdraw the A1 declaration. If the authorities involved are not in agreement, the dispute can be submitted to the Administrative Commission. 

The question that arose hereby and which also lies at the basis of the decision of 19 June 2018 is the following: can A1 forms be disregarded by the receiving state in the event of posting fraud?  

For a proper understanding, the facts and procedural history of the decision are sketched out below.

The case concerns a criminal proceeding against a Belgian construction company. From the criminal investigation it appeared that this company called upon Bulgarian subcontractors, which did virtually nothing other than post employees from Bulgaria. These employees possessed a valid form E101 (currently A1), so they remained subject to the Bulgarian social security contributions. Consequently the question arose of whether these Bulgarian subcontractors were not merely fronts for getting around the Belgian social security law.

The judge in the first instance gave an acquittal, ruling - in line with the case-law of the European Court of Justice at that moment - that the A1 forms were not withdrawn by Bulgaria and consequently could not be disregarded. On appeal there was a condemnation, on the ground that the judges deemed the forms not to be binding as a result of their fraudulent obtainment. An appeal to the Court of Cassation was filed against this ruling. The Court of Cassation in turn submitted the question to the Court of Justice.

In the ALTUN judgment, the Court of Justice for the first time answered affirmatively to the possibility for the national judge to disregard A1 forms. It did so on the basis of the general principle of Union law that prohibits fraud and abuse of right (Fraus omnia corrumpit). However, the following conditions were linked to this:

1. the competent body in the receiving state (in Belgium, the NSSO) must address a request to the competent body in the sending state (in this case, the Bulgarian social security institution) to reconsider and withdraw the delivered A1 forms;

2. the request of the receiving state must be based on concrete facts deriving from a judicial inquiry that point to posting fraud;

3. the competent body in the sending state (in this case, the Bulgarian social security institution) must have refused the request of the receiving state or not responded to it within a reasonable period, so that the A1 forms were not withdrawn.

After this Altun decision, the Court of Cassation had to apply the aforementioned principles to the case of the Bulgarian subcontractors working in Belgium.

The Court ruled that the A1 forms were rejected by the appeal judges in accordance with the conditions from the Altun decision. The inspection services had followed the European procedure without success, and there was objective evidence of the posting fraud.

The Cassation appeal was consequently dismissed, so that Belgian social security contributions are owed for the posted Bulgarian employees involved. 

The significance of this case-law must not be underestimated. Where the Belgian NSSO formerly was dependent on the goodwill of the sending states, the possibility of disregarding fraudulent A1 forms puts a formidable weapon in the hands of the inspection services fighting against posting fraud and social dumping.

For more information on this subject you can contact Sara Cockx (author).

[1]Cass. 19 June 2018, AR P.17.1252.N.

[2]ECJ 6 February 2018, no. C-359/16, ECLI:EU:C:2018:63, ´Altun´.