OBSTACLES IN THE EU SINGLE MARKET · Obstacles Itotaken cann be t from Art. 9 Para. 1e of Directive...

OBSTACLES IN THE EU SINGLE MARKET

CONTENTS3 Foreword

Introduction4 TheEuropeanSingleMarket5 BureaucracyImpedesEverySecondExporter

Three of the Main Trade Barriers7 PostingofWorkers8 UniformPointsofContactand

NotificationRequirements8 TurnoverTax

France9 ReportingofPostedWorkers10 Carted’identitéprofessionnelle11 AccompanyingDocumentation12 MinimumWageRegulations(CollectiveAgreements)13 GarantieDécennaleInsurance14 RGECertification

Austria16 DeclarationofPosting

Switzerland19 RegistrationofPostedWorkers20 CompulsoryDeposit21 ComparativeWageDetermination22 ControlProcedure23 VATObligation

Luxembourg25 DeclarationofPosting26 NoReverseChargeMechanism

withPropertyServices

BWHT27 RepresentingtheInterestsofthe

SkilledCraftsSector

FOREWORDEmbedded in the four basic freedoms regardingthemovementofgoods,people,servicesandcapitalwithout any customs barriers, the European singlemarketthatwasfoundedin1993isthebiggestcom-mon market in the world. Thanks to the freedom ofmovement of services, many companies from thecraftsectorfromBaden-Württembergarealsomakingsuccessful use of their market opportunities in otherEUcountries,thussecuringlocaljobs.

Although the single market has existed for over 25years now, there are still trade barriers which oftenresult from the non-uniform implementation of Euro-peanguidelinestothedetrimentofsmallandmedium-sized enterprises (SMEs). In light of the increase inprotectionisttendencieswithintheindividualmemberstates,weshouldreflectonwhatthefreesinglemarkethasachieveduptonowfortheeconomyandsocietyingeneral.Openmarketsareofparamountimportance,especiallyforafederalstatelikeBaden-Württembergwithitshighvolumeofexports.

Itisofdecisiveimportancefortheacceptanceofopenborders by the general public that a large number ofthesmallandmedium-sizedenterpriseswhichprovidethe majority of jobs in our economy benefit from thesinglemarket.Thisrequiresawatchfuleyefortheout-line conditions required here, as well as practicalimplementation of single market rules in a mannerwhichisgenerallyfriendlytoSMEs.

Withthisbrochure,wehavehelpedtomakeitcleartopolitics what effects trade barriers have on medium-sized businesses, while sharpening awareness on aEuropean level of the fact that the prosperity gainedfromtheEuropeansinglemarketcannotbetakenforgranted.Wehavetospeakupagainandagainforopenbordersandmarkets.

In thisnewedition,wepointout the latestobstacleswith the aim of sensitising decision-makers to them.Werepresentthe interestsofskilledcompaniesfromthe craft sector on a European level and show thatquicksolutionsarepossibleinseveralcases.Ourgoalis toenable fastandnon-bureaucraticcross-borderservicesforSMEsandcompaniesfromthecraftsectorinparticular.

Markets are like parachutes. They work best when they are open.

»«

Johannes Ullrich PresidentFreiburgChamberofSkilledCraftsandChairmanoftheRegionalCommitteeEurope

Rainer ReichholdPresidentBaden-WürttembergConfederationofSkilledCrafts

3ObstaclesintheEUSingleMarket–Foreword

INTRODUCTION

The European single market has been in existencesince1993.Thelargestmarketintheworldhasgrownfromtheobjectiveofcreatinganeconomicareawithuniform regulations without any customs. Grossdomesticproduct(GDP)todayisaroundtwelvetrillioneuros, while the competitiveness of the Europeaneconomy has been considerably increased at thesametime.Theadvantagesareachievedthroughuni-form legislation, such as directives and regulations.Whereas European regulations are legally adoptedone-to-oneinthememberstates,Europeandirectivesmust first be converted into the national law of eachmember state. This is done in many different ways,however, with the result that non-tariff barriers totradewithinthesinglemarketarealsocreatedthroughconstantupdating.

Thesetradebarrierscomprisespecialcertificationforproducts or services in a specific European country,for instance. The outline conditions created here areoften unclear and can only be implemented with thenecessarytechnicalandlinguisticknowledge.Thishasthe unfortunate result that small and medium-sizedenterprises(SMEs),whicharesupposedtobenefit inparticular fromthecommonmarketwhere regulatorypolicy is concerned, are often discouraged fromengagingincross-borderbusinesstransactions.

THE EUROPEAN SINGLE MARKET

� ObstaclesstandclearlyinthewayofcompletingtheEuropeansinglemarket.

� Theseobstaclesareoftenmotivatedbyprotectionismandtriggerbureaucraticprocesseswhichoftenhavenorelationtotheirpurpose.

� Someobstaclesareunjustified,somemeasuresaredisproportionate.

THE EUROPEAN PARLIAMENT ALSO DENOUNCES NON-TARIFF TRADE BARRIERS

� TheEuropeanParliamentisthereforedemandingthattheCommissiontakesactiontoremovethesebarriers.

� Ultimately,allnon-tariffbarrierswhichcreateun-equalcompetitiveconditionsshouldberemoved.

Source: Report of the European Parliament on non-tariff trade barriers in the single market of 28.04.2016

4 ObstaclesintheEUSingleMarket–Introduction

Switzerland

France

Austria

Other EU countries

Rest of Europe

Russia

Question 1: From which regions do you receive your foreign orders?

USA

Asia

Turkey

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

BUREAUCRACY IMPEDES EVERY SECOND EXPORTER

This question was only put to companies with foreign business in 2015.Reading aid: 70 % of the companies had foreign business transactions with Switzerland among other regions.Multiple answers were possible.

According to a survey conducted by BWHT in spring 2016, skilled crafts businesses in Baden-Württemberg achieve4.4percentoftheirturnoverabroad.Thisamountstoroughly3.7billioneuros.Addtothisaroundthreebillioneurosinindirectsales.

In2015,6,500(7.3percent)ofskilledcraftsbusinessesinBaden-Württembergachievedsaleswithforeigncustomers.42 percent of these exporters have fewer than five employees and almost two thirds of them fewer than ten. Foreignbusinesstransactionsarethereforeoffundamentalappealtosmallcompaniesfromthecraftsectortoo.

5ObstaclesintheEUSingleMarket–Introduction

Bureaucratic obstacles abroad

Customs and import restrictions

Insufficient market knowledge

Language difficulties

Tax law problems

Question 2: If you do business abroad or deliver to other countries, what obstacles are there to your foreign business?

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Unsuitable range of products and services

Lack of capacity

Bureaucratic obstacles abroad

Economic risk

Insufficient market knowledge

Customs and import restrictions

Question 3: If you do not do business abroad or deliver to other countries, why does your company not engage in foreign business?

Language difficulties

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

This question was only put to companies with foreign business in 2015.Multiple answers were possible.

Multiple answers were possible.

THREE OF THE MAIN TRADE BARRIERS

Obstacles � Theprovisionsforregisteringoccupationalhealthandsafetyrequirements,socialinsurancelawandtaxationdifferconsiderably

betweentheindividualmemberstates. � Specialsector-specificregulationsexist(e.g.forkliftlicense). � Moreandmoredataisbeingrequestedintheelectronicregistrationprocess. � Thebureaucraticeffortrequiredisoutofproportion,especiallywhenordersareplacedatshortnotice. � Thedetailsofexistingregulationsareoftenunclear. � Theexpenseandeffortrequiredforsmallerordersandoccasionalforeigntransactionsareoftenuneconomicalanddetersmaller

businessesfromenteringthemarket.

Demands of the skilled crafts sector

� TheEUregulationmustbeappliedidenticallybyallmemberstates. � Informationmustbeavailableinseverallanguages,atleastinEnglish. � Informationmustbeeasilyaccessible,ideallyonline. � Theremustbeuniformrequirementsforregistration.

1. POSTING OF WORKERS

7ObstaclesintheEUSingleMarket–Introduction


� Auniformofficialinfrastructuremustbebuiltup. � InformationmustbeavailableinEnglishatleast. � ItmustbepossibletousetheGermanlanguage. � Sector-specificregulationsmustbecomprehensible.

Obstacles

� Therearenumerousexceptionstochaintransactionsandproperty-relatedservices. � Taxlawisbeingconstantlychanged. � Theregistrationprocessiselaborate. � Thereversechargeprocessusedforon-siteassemblyworkandpropertyservicescannotbeappliedinauniformmanner. � Theinputtaxcompensationprocessisapplieddifferently.


� Theexceptionstotherulesmustbestopped. � Taxlawcannotkeepchangingallthetime. � Thereversechargemechanismmustbeapplieduniformly. � Inputtaxcompensationmustbedefinedinauniformmanner.

3. VALUE-ADDED TAX

Obstacles

� Technicalandofficialinfrastructureislackinginseveralcountries. � Communicationisoftenonlypossibleintheofficiallanguageofeachcountry. � Registrationandwageprovisionsarebeingconstantlychanged. � Accesstothelatestlegalinformationisdifficultatbest. � Anassessmentofthepracticaleffectsishardlypossiblewithoutexternalsupport. � Additionalcostsareincurredontopofthetimeexpenditure. � Therelationbetweenfinesandinfringementsisoftendisproportionate. � Notonlythetimeaspectbutalsothetypeandscopeoftheactivityaretakenintoaccount.

2. UNIFORM POINTS OF CONTACT AND NOTIFICATION REQUIREMENTS

8 ObstaclesintheEUSingleMarket–Introduction

FRANCE

Posted workers have to be registered using the SIPSI registrationsystem. Since the last revision, which introduced a languageselection option (French, English, German, Italian, Spanish)among other improvements, this registration system has workedverywell.AcompanylocatedinFrance,thecustomerorapostedemployeeand/ortheheadofthecompanycanbenominatedastherepresentativeaslongastheyremaininFranceduringthepos-ting.Althoughthisisfundamentallytobewelcomed,bothpostedemployeesaswellas theheadsofcompaniesmayonly thenbenominatedasrepresentativesiftheyareabletocommunicateinFrench.ThisisinterpretedbyFrenchworkinspectorstomeanthatthe person nominated as a representative must also be able tospeakfluentFrench.

REGISTRATION OF POSTED WORKERS

Obstacles

� ItcannotbetakenfromArt.9Para.1eofDirective2014/67/EUof15May2014thatthepersonnamedasthepointofcontactmustbeabletospeakthelocallanguage.Heorshemustonlybeabletosendandreceivedocumentsand/ormessageswhennecessary.ThisisalsopossiblewithoutknowledgeofspokenFrench.


� ItwouldbeahelpiftherequirementtospeakalanguageweretobeextendedtoincludetheofficialEuropeanlanguages–attheveryleastEnglish.

9ObstaclesintheEUSingleMarket–France

Withthe“LoiMacron”of 06.07.2015,employersintheconstructionsectorwereobligedtoapplytotheUnion des caisses de France Congés Intempéries BTP for professional ID for their posted workers (carte d’identité professionnelle BTP).EmployeesmustcarrytheIDcardwiththemontheconstructionsite.

CARTE D’IDENTITÉ PROFESSIONNELLE

Obstacles Demands of the skilled crafts sector

� TheCarteBTPcosts10.80eurosandhastobeappliedforanewforeverynewjobbyforeigncompanieswhopostemployeestoFrance,evenifthesameemployeesareposted.WhatthisleadstoinactualpracticeisthatbusinesseswhichperformminorworkinFrance(e.g.repairs,main-tenance,warrantywork,set-upetc.)sometimeshavetoapplyforseveralIDcardsaweekfortheiremployees,whereascompaniespermanentlylocatedinFranceareissuedwiththeCarteBTPfortheentiredurationoftheperiodofemployment.TheinformationrequiredfortheissueofaCarteBTPisloadedbythepostingcompanyintoitsaccountatthewebsitewww.cartebtp.frfromthe“SIPSI”postingreport.Aphotooftheemployeethenhastobeincludedintheapplicationpriortodispatch.

� AstheinformationrequiredfortheCarteBTPisidenticalwiththatoftheSIPSIpostingregistration,thecardhasnoadvantageswhenacheckismade.ItispossibletoproveidentitybymeansofthepassportphotointheIDdocumentsthatllworkerscarrywiththem.PresentationofthepostingregistrationandanIDdocumentwouldthereforebecompletelysufficient.TheobligationofcompaniesthatpostemployeestoapplyforaCarteBTPisthereforeasuperfluousformalitywhichisnotincompliancewiththeprincipleofthefreemovementofservices.

10 ObstaclesintheEUSingleMarket–France

Art. R.1263-1 Code du travail stipulates that thefollowing documentation for posted workers bekept on-site along with a French translation or, ifthis is not materially possible, at another placeaccessible by a representative of the company:

Pay slips, proof of wage payment, work reports,employmentcontracts,verificationofthenationallawapplicabletothecontractbetweentheemployeeandthe employer located in France, proof of the numberof fulfilled contracts and the amount of turnovergenerated by the employer in his/her home countryandinFrance,workpermits(forthirdcountrynationals)andoccupationalhealthcertificates.

ACCOMPANYING DOCUMENTATION


� TheprovisionsofArt.R.1263-1Code du travailhaveproventoputaparticularstrainoncompaniesthatonlyhandlesmallorderswhichonlylastforafewdaysorevenhours,asisoftenthecaseinborderregions.ThenecessitytocarryalotofdocumentationwithaFrenchtranslationistoomuchtroubleforsomebusinessesanddetersthemfromacceptingordersfromFrance.

� AsthenumberofdocumentstobecarriedlistedinArt.R.1263-1Code du travailissignificantlyhigherthanthenumberstipulatedinArt.9Para.1b)ofDirective2014/67/EUof15May2014,theformerdoesnotcomplywiththeprincipleofthefreemovementofservicesinouropinion.Itwouldatleastbeahelpifitems5,6and8didnothavetobecarriedandonlyhadtobesubmittedsubsequentlyonrequestorduringchecks.

Francenotonlyhasageneralstatutoryminimumwage (SMIC)butalsocollectiveagreements thathavebeendeclareduniversallyapplicableandthatcontainminimumwageregulationswhichpostingcompaniesalsohavetocomplywith.

MINIMUM WAGE REGULATIONS (COLLECTIVE AGREEMENTS)


� Itisnoteasytokeeptrackofthenumerouscollectiveagreementswhichnon-Frenchcompanieshavesuchgreatdifficultyunderstandingthattheycannoteveniden-tifytheapplicablecollectiveagreementregulations.

� TheFrenchcollectiveagreementslistedintheLegifrancewebsitewww.legifrance.gouv.fr/initRechConvColl.do,whichistheonlysourcewherecollectiveagreementregulationscanbeaccessed,arefartoocomplicatedfornon-Frenchcompaniesandarenoteasytofind.

� Theinformationonworkingconditionsandwagecomparisonmustbemadeavailableinawaywhichisclear,transparentandeasilyaccessible.

� Aclearlystructuredandunderstandablecompilationoftheminimumwageswhichmustbepaidshouldbeavailableonline.

12 ObstaclesintheEUSingleMarket–France

The“AssuranceR.C.décennale”isacompulsoryinsu-rance for possible warranty claims by the awardingauthorityorsubsequentpurchaserofstructureswhichwasintroducedbylawon04.01.1978(“LoiSpinetta”).Itapplies towarrantyclaimscoveredby the10-yearliabilityregulationforworkwhichservestheconstruc-tion of buildings and structures (Art. 1792 CC). Thiswarranty liability and related compulsory insurancesystem are mandatory law which cannot be waivedbyexplicitcontractualagreement.Theminimumpre-miumfor insurancepoliciesof thiskind ranges from2,500–3,000euros(forindividualordersaswellasannualcontracts).


� Garantie Décennaleinsuranceisworth-whileforbusinessesthatworkregularlyinFranceaswellasthosegrantedlarge-scalecontracts,butnotforcompanieswhichonlywanttodobusinesswithalowordervalueonceoroccasionally.Incasesofthiskind,theexpectedprofitisoftenlessthantheinsurancepremium.

� Unfortunately,theadviserstothechambersofskilledcraftsintheregionsborderingFranceexperienceagainandagainthatthecompaniesfromthecraftsectortheyadvisehavetorefuseordersfromFrancebecauseoftherequirementtotakeoutGarantie Décennaleinsurance.

� TheinsuranceshouldnotbecompulsoryasthisformofinsuranceonlyexistsinFranceandcaninvolveconsiderablecostsinindividualinstances.

� TheEUmemberstatesmustalsopermitotherformsofinsuringconsumers.

GARANTIE DÉCENNALE INSURANCE


Businesses which carry out energy-related reno-vation measures on buildings can apply for an RGEsealofqualityfromtheresponsibleauthorities(e.g.Qualibat).Thisqualitysealisrequiredsothatcusto-mers can secure interest-free loans and tax creditsfrom the state. As both the interest-free loans and

thetaxcreditsconstituteaconsiderableadvantage,Frenchcustomersarenotusuallypreparedtoawardcontractsforenergy-relatedrenovationmeasurestobusinessesthatdonothaveanRGEqualityseal.

RGE CERTIFICATION

Obstacles


� InordertoapplyfortheRGEqualityseal,aknowledgeablepersonfromthecompanyhastoparticipateinaFrench-languagetrainingcoursewhichlastsforseveraldaysandwhichculminatesinafinalexamination.

� TocompletethetrainingandacquiretheRGEqualitysealincurscostswhichcanvaryfrombetween600and1,000eurosperparticipanttobetween1,000and2,500euros,depen-dingonthenumberofemployees.Annualfeesarethenaddedtothissum.

� OfthenumerousGermanbusinesseswhichwereinterestedinobtainingtheRGEqualitysealinthepastbecausetheywereaskedaboutitbycustomersinFrance,onlyaverysmallnumberhaveobtainedittodate.MostofthemfailedtodosoduetoalackofknowledgeofFrenchandtherequirementtoparticipateinaFrench-languagetrainingcoursewithfinalexamination.

� TheFrenchsystemlackstheoptionofrecog-nisingforeignqualificationsdespitebeingobligedtodosoinaccordancewithArt.14Para.3oftherenewableenergydirective(Dir2009/28/ECof23April2009).TheGermanjourneymanandmastercraftsmanqualificationsobtainedintheprofessionswhichcarryoutenergy-relatedrenovations(e.g.electricaltechnician,roofer,carpenter,

plantmechanicforsanitation,heatingandairconditioningtechnology)involveskillswhicharetaughttoahighlevelsignificantlyabovethatattainedinthecoursesfortheRGEqualityseal.Thesequalificationsshouldthereforebeacknowledgedasbeingofequalvalueandtheirholdersreleasedfromtherequirementtoparticipateincoursesofthiskind.


AUSTRIA

REGISTRATION OF POSTING

ThepostingofworkerstoAustriamustberegisteredelectronicallyinadvanceusingtheZKO-3reportontheproperlegalbasis(postingdirective96/71/ECof16December1996anditslatestrevisioninJune2018,Directive(EU)2018/957of28.06.2018intheOfficialGazetteoftheEuropeanUnion2018L173/16withrelatedconversionintonationallawby30.07.2020).Thisprocessistransparentlystructured.Althoughregistrationofpostingmeansmorebureaucracyforcompaniesfromthecraftsector,itcannotbeseenasanobstacle.

Itisimperativethatthefollowingdocumentsarekeptonsiteforeveryemployeeforthedurationoftheposting:ZKO-3report,A1socialinsurancedocument,employmentcontract,payslips,proofofpaymentofwages,wagerecords,documentsonwagecategorisation,recordsofhoursworked.Businessesthatdonotkeeptheserecordsfacestifffineswhichposeproblemsforsmallandmedium-sizedenterprisesinparticular.

Obstacles


� Finesaredisproportionatelyhigh.Theframe-workforfinesformissingorincompletewagedocumentationandafailuretoreport,orfailuretoreportanychangespunctuallyandinfull,isinappropriateandcanbeasmuchas50,000euros.

� Afineisimposedforeverysinglemissingdocumentornon-submittedreportforeveryemployee.Finesquicklyaddupinthisway.Thesehighfinescanjeopardisetheveryexis-tenceofsmallfirmsinparticular.Addtothisthefactthatifcompanieshavemorethanonedirector,afineisimposedoneachofthem,effectivelydoublingoreventriplingthefine.

� Whenordersareplacedatshortnotice,thesedocumentscannotalwaysbeproducedintime.Serviceandmaintenancework,whichrequiresafastresponsetime,isthereforevirtuallyimpossibleforcompaniesfromthecraftsectorfromBaden-Württemberg.ThedocumentationmustbekeptavailableforallemployeesfortheentiredurationofthepostingtoAustria,evenifsomeworkersfinishearlierandhavereturnedtoGermany.

� DataprotectionproblemscanarisewhicharedifficulttoalignwiththeGeneralDataProtectionRegulationinthatsensitivewagedocumentsandemploymentcontractscanbeviewedbycolleaguesiftheyarekepton-site.Evenasealedenvelopecannotalwaysmaintainandguaranteediscretion.Thenewlycreatedoptionoflodgingwagedocu-mentationwiththelikesofanAustrianlawyeroraccountantisalsoawkwardandinvolvescostswhichtheGermanpostingcompanythenhastopay.ThatiswhythisoptionishardlyeverusedbycompaniesfromthecraftsectorfromBaden-Württemberg.

� Itmustbepossibletosubsequentlysubmitincompletedocumentationandthismustnotleaddirectlytotheimpositionofafine.

� Finesmustbeproportionatewiththeinfringe-ment.

17ObstaclesintheEUSingleMarket–Austria

ServicescanberenderedinSwitzerlandwithintheframeworkofatimecontingentof90workingdayspercalendaryearwithoutthenecessityofaworkpermit.Todoso,theemployeestobepostedmustberegisteredalongwiththecompanyownerandanyself-employedpersons.Registrationmustbemadeeightdaysbeforetheservicesarescheduledtobeginviaacentralonlineportalwhichforwardstheinformationtotheresponsiblecantonwhichthensendsonlineconfirmationbacktothecompany.Penaltiesandstifffinescanbeimposediftheregistrationdeadlineisnotcompliedwith.

REGISTRATION OF POSTED WORKERS

Obstacles

� Apartfromcontractnegotiationsornon-bindingmeetingswithcustomerstomaintainbusinessrelations,activitiesundertakenbeforeacontracthasbeensignedmustbereported(e.g.takingmeasurementsortradefairparticipation).

� Aquickresponsetocustomerinquiriesisnotpossibleduetotheeight-daywaitingperiod.

� xceptionstotheregistrationdeadlinearegrantedforwarrantyworkwithinaperiodofthreemonthsaftertheworkhasended.Aswarrantyperiodsareconsiderablylonger,however,thisexceptionruleisnotsufficientandanewregistrationunderobservanceoftheeight-daywaitingperiodbecomesnecessary.


� Pre-contractualcustomercontactsmustbeexemptedfromtheregistrationrequirement.

� Theeight-daywaitingperiodintheregistrationprocessshouldbeabolished.

SWITZERLAND

19ObstaclesintheEUSingleMarket–Switzerland

Dependingonthelineofworkandcanton,acompulsorydeposithasbeenimposedonbusinessesworkingintheconstructionandfinishingsectorsince2012.Foreignbusinessesarealsosubjecttothiscompulsorydeposit,theamountofwhichdependsontheordervolumewithforeigncompanies.SmallordersofuptoCHF2,000peryearareexemptedfromthecompulsorydeposit.AdepositofCHF5,000hastobepaidonordersofCHF2,000to20,000.OrdervolumesinexcessofCHF20,000peryeararesubjecttoadepositofCHF10,000.Severalcollectivelabouragreements(CLAs)evenrequiredepositsofuptoCHF20,000.Thedepositcanbepaidincash,throughaso-calledcraft’sdepositinsuranceorperbankguarantee,evenfromaGermanbank.

COMPULSORY DEPOSIT

Obstacles

� AsSwisscompaniesdonotdefactohavetopayadepositduetotheirmember-shipinaprofessionalassociation,thisamountstodiscriminationagainstforeigncompanies.


� Thedepositsmustbeabolishedastheydonotcomplywiththefreedomofmovementagreement.

� Eversincethefacilitationofso-calledcraft’sinsurancewasterminatedin2019,theexpenseofabankguaranteeorcashdepositisnolongerproportionate.

� CompulsorydepositsshouldatleastbelimitedtoserviceproviderswhodidnotfulfiltheirfinancialobligationstowardstheSwissenforcementauthoritiesinthecourseofpreviousservicecontracts.

� CompulsorydepositsofCHF10,000forordersofCHF20,000areoutofallpropor-tionandshouldonlybeappliedtoorderswithavolumeofCHF100,000andmore.

20 ObstaclesintheEUSingleMarket–Switzerland

Swissworkandwageconditionsmustbecompliedwithwhenpostingworkers.TheserelateinparticulartothepaymentofpostedworkerswhichhastobeadaptedtoSwissregulationswhenworkingonSwissterritory.Thewagesofpostedpersonnelarecalculatedusingacomplexprocedure.

Obstacles Demands of the skilled crafts sectorsector

� ItisnotclearwithextensiveserviceswhichCLAapplies.

� Theexpensesregulationisnottransparent. � Transparentpresentationoftheexpenses

rulingbyincludingexpensesdirectlyinthewagecalculator.

� Leniencymustbeshownintheeventofminorinfringementswhichobviouslyresultfromthecomplexprocessofcomparativewagecalculationornon-uniformappli-cationbythecantonsandincorrectallo-cationtoaCLA.TheminorinfringementlimitmustberaisedsignificantlyfromitscurrentlevelofCHF50or100.

COMPARATIVE WAGE DETERMINATION

ControlofcompliancewithSwissworkandwageconditionsisthetaskofaso-calledequalitycommittee(Paritäti-scheKommission).Dependingontheamountbywhichwagesareundercut,thiscommitteeoftenimposesacon-tractualpenaltyandalwayschargescontrolcosts.Theequalitycommitteecanuseapaiddepositforthispurpose.Intheeventthatundercuttingofwagesisdetermined,thecantonisalsoobligedtoimposeafineirrespectiveofwhethertherefundandthesanctionimposedbytheequalitycommitteehavebeenpaid.


� Thecalculationoftheamountofthecontrolcostsisnotregulatedanditisinexplicablehowtheyarecalculatedinthecaseofminorinfringements.

� Thechargingofenforcementcostsisinexplicable.Thesearehiddenchargeswhicharenotcompatiblewiththefreedomofmovementagreement.

� Onlyforeigncompaniesareaffectedbydoublesanctions.Thisamountstodiscriminationagainstforeigners.

� Controlcostsmustbetransparentandcomprehensible.

� Noenforcementcostsmaybecharged. � Doublesanctionsmustbeabolished. � Leniencymustbeshownintheeventof

minorinfringementswhichobviouslyresultfromthecomplexprocessofcompa-rativewagecalculationornon-uniformapplicationbythecantonsandincorrectallocationtoaCLA.

CONTROL PROCEDURE

22 ObstaclesintheEUSingleMarket–Switzerland

Since01.01.2018,theassessmentbasisforthemandatorytaxregistrationofforeigncompaniesinSwitzerlandhasbeenexpandedtoincludetheirtotalturnover(domesticandforeignturnover).Priortothisdate,onlyturnoverinSwitzerlandwasusedastheassessmentbasis.ThisnowmeansthatGermancompanieswithtotalworldwidesalesofCHF100,000perannumareobligedbylawtoregisterfortaxpurposes.OnlyverysmallcompaniesfallbelowtheCHF100,000(91,707.38euros,asof22.08.2019)globalsalesmark.Consequently,mostcompaniesareaffectedbythischange.

Obstacles

� Onthebasisofthebelow-listedcostfactors,itisnolongerworthwhiletotakeonsmallordersinSwitzerland,especiallyforcompaniesthatonlydosooccasionally.ThatiswhyweareobservingasharpdeclineinthenumbersofskilledcraftinBaden-WürttembergwhoareprovidingservicesinSwitzerland.

� ThefollowingprerequisitesmustbefulfilledinordertoobtainaregistrationnumberfromtheSwisstaxauthorities.Firstofallthereistheobligationtocommissionafiscalrepresentati-veorpersonauthorisedtoreceiveserviceofofficialcommunications.Foreignentrepre-neurswhodonothavetheirplaceofresidenceorseatofbusinessinSwitzerlandarepermit-tedtosubmittheirtaxreturnsbythemselvesinSwitzerlandbutonlyontheconditionthattheycommissionapersonauthorisedtoreceiveserviceofofficialcommunicationswhoisresidentinSwitzerland.ForeignbusinessesthatarenotcapableofsubmittingSwisstax

returnsbythemselves–whichisthecasewithmostofthem–requireafiscalrepresenta-tiveon-site.TaxofficesortheGerman-Swisschamberofcommerceandthelikeoffertheseservicesforafee.AlthoughanaturalpersonresidentinSwitzerlandcanbeappointedasapersonauthorisedtoreceiveserviceofofficialcommunications,companiesveryrarelymakeuseofthisoptionforunderstandablereasons.

� Ataxaccountmustbesubmittedatleastonceeveryquarter.

� Security,possiblyabankguaranteefromaCHbank,3 %ofexpectedtaxableturnoverinSwitzerlandbutatleastCHF2,000.

VAT OBLIGATION

23ObstaclesintheEUSingleMarket–Switzerland 23


� AlthoughthepostingportalpermitsregistrationinGerman,theinformationonhowthepostingistoberealisedandthetermsandconditionsfordoingsoisonlyprovidedinFrench.

� Evenwithsmallorders,offersmustbecalculatedwiththehigherLuxembourgincentivewagestructure.

� Withdormantexfactorydeliveries/provi-sionofassemblyservicesinLuxembourg,thereisnopossibilitytoapplythereversechargemechanism,whichwouldmeantransferralofthetaxliabilitytothereci-pientoftheservice.

� TheportalwiththeregistrationinformationshouldprovideverygoodinformationinGermanontheterms,conditionsandprocedure.

LUXEMBOURG

DECLARATION OF POSTING

TheservicesofforeigncompaniesmustberegisteredwiththeSMEministryforafeeof24euros.Thepostingofworkers (MEA)mustbereportedthroughtheonlineportalé-Détachement.DocumentssuchastheA1andEUcertificate,employee-specificcertificateofabilitytoworkissuedbytheindustrialhealthandsafetyserviceandconfirmationofregistrationmustbeuploadedduringregistration.AnaturalpersonresidentinLuxembourgmustbeappointedtoactasa“holdingagent”.Thehighersocialwageandbindingcollectiveagreementsmustbeobserved.Onemonthaftertheservicehasbeenprovided,proofoftheamountofwagespaidmustbeuploadedwithoutanyrequesttodoso.Intheeventofnon-compliance,areminderisissuedandthecompanyhas10daystimetofulfilitsobligations.

Thisprocedureispracticableforcompaniesfromthecraftsectorandeasytoimplement.Themostpracticalaspectisthatnodocumentshavetobekeptattheplacewheretheservicesarerenderedasitisapurelydigitalsolution.

25ObstaclesintheEUSingleMarket–Luxembourg 25


� Short-termordersarehardlypossiblefornewcomerstothemarketastheVATIDnumbermustalreadybeonhandinordertoregistertheposting.

� Forthisreason,thenecessitytoregisterisoftenrecognisedtoolateornotatallwithoutqualifiedexternaladvice.

� TheEuropeanVATregulationsregardingreversechargerulesinthepropertysectormustbesignificantlysimplified.

� Alternatively,transparencymustbeincre-asedwithregardtowhichrulesapplyinwhichEUcountry.

NO REVERSE CHARGE MECHANISM WITH PROPERTY SERVICES

Commercialcustomers requireaLuxembourgVAT IDnumber inorder to registerandchargeLuxembourgVAT.ThereversechargemechanismforservicesisappliedinabindingmannerintheB2BareaaccordingtoEClaw,providedthattheservicerecipientisestablishedinanotherEUcountry.

The option of applying the reverse charge mechanism is not uniformly regulated throughout the EU, however,wheredormantdeliveriesandassemblyworkareconcerned,asotherprinciplesapplytolocalisationforthistypeofperformance.ThismeansthattheoptiondoesnotexistinLuxembourgoftransferringtaxliabilitytotherecipientoftheservicewheredormantdeliveriesandassemblyworkareconcerned.

26 ObstaclesintheEUSingleMarket–Luxembourg

Baden-WürttembergischerHandwerkstage. V.istheumbrellaassociationoftheeightchambersofskilledcraftsand55professionalassociationsofskilledcrafts in theGermanstateofBaden-Württemberg. It isamemberof theGerman Confederation ofSkilledCrafts,whichhas its seat in Berlin. BWHTcarries out thecoordinatedfunctionbetweentheskilledcraftsorganisationsonaregionallevel,formulatesuniformpoliticalpositionsandistheexpertpointofcontactforpoliticsandthemediainallmattersconcerningskilledcraftsandtrades.

133,000 mainly small and medium-sized companies from the craft sector each with an average of sixemployeesgenerate salesofover100billioneuroseveryyear.That iswhypoliticsrelatingtosmallandmedium-sizedbusinessesisoneofthekeytasksofBWHTastherepresentativeoftheirinterests.

AssociatedwithitisHandwerk International Baden-Württemberg,thefirstpointofcontactforentrepreneursinallmattersconcerningEuropeandforeigntrade.Togetherwiththeforeigntradeexpertsofthechambersofskilledcrafts,theconsultantssupportthebusinessesinthestateintheircross-borderbusinessactivities,fromtheope-ningupofforeignmarketstotheprocessingoforders.Inthisway,theyexperienceeverydaytheconcreteeffectsthattradebarriershaveineverydaybusinesspractice.Theirdetailedspecialisedskillsandconsultingexperienceformthebasisofthisbrochure.

PointofcontactforEuropeanrelationsatHandwerkInternational:

Aline Theurer

HeadofEuropeanRelationsHeilbronnerStrasse4370191Stuttgart,GermanyTel+497111657-252at@handwerk-international.dewww.handwerk-international.de

REPRESENTING THE INTERESTS OF THE SKILLED CRAFTS SECTOR

BWHT

27ObstaclesintheEUSingleMarket–RepresentingtheInterestsoftheSkilledCraftsSector 27

Imprint

PublisherHandwerkInternationalBaden-WürttembergHeilbronnerStrasse4370191Stuttgart,GermanyTel +497111657-444Fax +497111657-827info@handwerk-international.dewww.handwerk-international.de

Asof:January2020

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Editors

AlineTheurer,MichaelRössler,CarmenCoupé,MarcelKönigHandwerkInternationalBaden-Württemberg

Dr.BrigittePertschyFreiburgChamberofSkilledCrafts

Dr.SonjaZeiger-HeizmannConstanceChamberofSkilledCrafts

MartinKunstConstructionIndustryBaden-Württemberg

OBSTACLES IN THE EU SINGLE MARKET · Obstacles Itotaken cann be t from Art. 9 Para. 1e of Directive...

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