Vander Elst exemption-again under the ECJ’s scrutiny

22 years after the ECJ landmark case in Raymond Vander Elst (C-43/93, 9 August 1994), The Hague District Court (Netherlands) referred for a preliminary ruling several questions, the first aiming to clarify whether the right of residence in the host Member State is directly derived from Art 56TFEU(C-540/22).

In such a case, the obligation to apply for a residence permit (if the duration of stay exceeds 90 days), would be in breach of EU law.

Provided that the employees’ right of residence is not directly derived from the freedom to provide services, the second question is whether Article 56TFEU precludes an application having to be made for a residence permit for each individual worker, in addition to the posting of workers notification.

Pursuant to Article 21.1 Convention implementing the Schengen Agreement of 14 June 1985 between the Governments of the States of the Benelux Economic Union, the Federal Republic of Germany, and the French Republic on the gradual abolition of checks at their common borders (‘the Schengen Convention’), free movement of third country nationals who hold a valid residence permit issued by a Member State, is limited to three months:

Aliens who hold valid residence permits issued by one of the Contracting Parties may, on the basis of that permit and a valid travel document, move freely for up to three months within the territories of the other Contracting Parties, provided that they fulfil the entry conditions referred to in Article 5(1)(a), (c) and (e) and are not on the national list of alerts of the Contracting Party concerned.

Regardless of an eventual right of residence directly derived from Art56TFEU, the host Member State should not be precluded from issuing residence permits that materialise such a right, possibly considering the information contained by the posting of workers notification (and not based on a distinctive application). It is hard to imagine how such a possibility can be implemented.

The question is thus whether Art56TFEU precludes an application having to be made for a residence permit for each individual worker, in addition to the posting of workers notification (regardless of the host Member State’ right to issue such a permit).

The third question is relevant if Art56TFEU does not preclude an application for a residence permit in addition to the posting of workers notification (if the duration of stay exceeds 90 days).

In such a case, the referring Court seeks to clarify whether Art 56TFEU precludes provisions of national law of the host Member State that lay down restrictive measures such as limited validity of residence permits irrespective of the duration of services (and consequently the obligation to renew such permits), limitation of validity of residence permits to the period of validity of the work and residence permit in the Member State in which the service provider is established, and charging a fee per (renewal) application which is higher than the fee payable for proof of lawful residence for a Union citizen.

If it is admitted that Art56TFEU might preclude applications for residence permits (in addition to posting notifications), however not the issuance of such permits, the third question if of relevance regardless of whether Art56TFEU precludes applications for residence permits.

As regards the limitation of validity of a residence permit issued by the host Member State, to the period of validity of the work and residence permit in the Member State in which the service provider is established, it must be observed that pursuant to the ECJ ruling in Vander Elst (and subsequent ECJ case-law), third-country nationals must be lawfully and habitually employed by the undertaking providing the service. That implies lawful residence, and such rights are necessarily materialised by work and residence permits (or single permits) issued by the Member State in which the service provider is established.

Exclusively the latter Member State may ascertain such rights (not harmonised throughout the EU).

Challenging the limitation of residence permits validity (in the host Member State) to the period of validity of the work and residence permit in the Member State in which the service provider is established, triggers an eventual breach of Art56TFEU by the latter Member State. The “sending” Member State would need to issue unlimited duration residence permits to third-country nationals locally employed, merely because they might be posted to another Member State, their residence permit (with limited validity) might expire during the posting period, and consequently, the residence permit will be issued by the host Member State will need to be renewed.

Moreover, not any situation of lawful stay and work in the Member State in which the service provider is established, falls under the scope of the so called Vander Elst exemption : in 2021, the Administrative Tribunal of Luxembourg was called upon to rule on an appeal seeking the annulment or amendment of a decision made by the Minister of Immigration and Asylum to order a three-year entry ban (accompanying an order to immediately leave the country), to a Brazilian national overstaying in the Schengen territory, however “covered” by :

  • an employment contract concluded with a Portuguese employer
  • lawful residence in Portugal under “tolerance measures” (registered in the population register and the central register of contributions, however, not covered by a valid residence permit)
  • a social badge issued by the ITM

Exclusively residence permits that fall under the scope of the notification obligation laid down in Article 39 Regulation 2016/399, may be considered when enforcing the Vander Elst exemption.

The question relating to (renewal) application fee which is higher than the fee payable for proof of lawful residence for a Union citizen, should be indeed of high relevance.

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