Company law package: Good opportunity to safeguard workers' rights in the single market

25/04/2018

Letterbox

The PES welcomes the European Commission's proposals to strengthen company law and safeguard workers' rights in Europe, announced today by Commission first vice-president Frans Timmermans.

The new rules are designed to close loopholes which allow unscrupulous companies to misuse the freedom of establishment to create 'letterbox companies' -- purely artificial structures without real economic interest in one country with the sole purpose of evading workers' rights or tax obligations in another country.

The European Commission's proposals come against the background of the European Court of Justice’s judgment in the Polbud case (C-106/16) according to which companies in the EU can transfer their registered office from one member state to another, just to enjoy a more favourable jurisdiction, without any intention to conduct any genuine economic activity in the country of destination.

PES President Sergei Stanishev said:

"As PES, we have made clear our concerns that the current legal situation in the EU allows unscrupulous companies to misuse the freedom of establishment to create letterbox companies.

"Ahead of the presentation of the EU Company Law Package, we called on the European Commission to use the proposals as an opportunity to address these concerns raised by the Polbud and similar cases, and to close loopholes in European law. For us it is clear: Companies must prove genuine economic activity in the country where its office is based. Freedom of establishment must not be used to circumvent fiscal and social standards. Workers' rights, information and participation must be secured.

"Now the European Commission has listened to our concerns. With the S&D Group in the European Parliament, and with our ministers in the Council, we will stay strong to support and strengthen these safeguards.

"The single market is a great achievement of European integration. We must ensure that the economic freedoms become a tool to serve all Europeans, and not only a few corporations."

The news comes only a few days after the European Commission’s proposals to protect whistleblowers, another initiative to make the single market fairer.