Documents considered by the Committee on 15 September 2010 - European Scrutiny Committee Contents

11   Intra-corporate Transfers



COM(10) 378

+ ADDs 1-2

Draft Directive on the conditions of entry and residence of third country nationals in the framework of an intra-corporate transfer

Commission staff working documents: impact assessment and summary of the assessment

Legal baseArticle 79(2)(a) and (b) TFEU; co-decision; QMV
Document originated13 July 2010
Deposited in Parliament16 July 2010
DepartmentHome Office
Basis of considerationEM of 28 July 2010
Previous Committee ReportNone
To be discussed in CouncilNo date known
Committee's assessmentLegally and politically important
Committee's decisionNot cleared; further information requested


11.1  In November 2004, the European Council approved a five-year programme on freedom, security and justice in the EU (the Hague Programme) which, among other things, invited the Commission:

"to present a policy plan on legal migration including admission procedures capable of responding promptly to fluctuating demands for migrant labour."[30]

The Commission responded by publishing a Policy Plan on Legal Migration in December 2005 which set out a "road-map" for the adoption of a general framework Directive establishing the rights of third country nationals legally resident and employed in a Member State, and four specific Directives determining the conditions and procedures for admitting certain categories of third country economic migrants, including highly skilled personnel seeking a temporary transfer from a parent company based outside the EU to a branch or subsidiary in one or more Member States. The proposals in the Policy Plan supplemented existing EU legislation on certain categories of third country national, such as students, researchers, and long-term residents.[31]

11.2  The previous Committee questioned the need to establish an EU policy on economic migration and stated that any future legislative proposals on migrants would be subject to particularly searching scrutiny.[32] Progress on implementing the Policy Plan since then has been slow. Only one Directive — on the entry and residence of highly qualified third country workers — has been adopted and was the subject of a debate in the European Committee on 17 March 2008.

11.3  In October 2008, the European Council endorsed the European Pact on Immigration and Asylum which included a commitment "to implement an immigration policy that is both managed, particularly with respect to all labour market needs, and concerted, given the impact it might have on other Member States" and "to increase the attractiveness of the European Union for highly qualified workers".[33] The Stockholm Programme, agreed by the European Council last December as the successor to the Hague Programme for the period 2010-14, gave renewed impetus to the Policy Plan on Legal Migration by calling on the Commission and Council to continue to implement it.[34]

11.4  Since the entry into force of the Amsterdam Treaty in May 1999, EU legislation on immigration matters does not apply to the UK unless the Government expressly opts in. So far, the UK has not opted in to any of the aforementioned EU legislation on the legal migration of third country nationals.

11.5  Article 79(1) of the Treaty on the Functioning of the European Union (TFEU) provides for the development of a common EU immigration policy to ensure the efficient management of migration flows, fair treatment of legally resident third country nationals, and measures to prevent and combat illegal immigration and trafficking in human beings. The development of the common EU immigration policy must not, however, affect "the right of Member States to determine volumes of admission of third country nationals coming from third countries to their territory in order to seek work" (Article 79(5) TFEU).

The draft Directive

11.6  The legal base for the draft Directive is Article 79(2)(a) and (b) TFEU which envisages the adoption of measures on the conditions of entry and residence of third country nationals and the definition of rights applicable to those legally resident in a Member State.

11.7  The purpose of the Directive is to establish a common EU framework for the admission of third country nationals resident outside the EU who are seeking a temporary transfer from a company based in a third country to a branch or subsidiary in a Member State (referred to in the draft Directive as "intra-corporate transferees" and hereinafter as "ICTs") for a period of more than three months and to define the rights of those admitted, including the possibility of onward transfer from the first (or host) Member State to another. Only third country nationals who have a binding contract with a company based outside the EU qualify for an intra-corporate transfer.

11.8  The main provisions of the draft Directive are as follows:

  • applications for admission, residence and work on the basis of an intra-corporate transfer to a branch or subsidiary within a Member State must be dealt with in a single procedure by the Member State where the intra-corporate transfer will mainly take place;
  • there is provision for Member States to introduce a simplified admissions procedure for recognised companies which have a good track record of compliance with the requirements of the draft Directive and local tax laws;
  • criteria for admission include production of a valid travel document, an "assignment letter" from the employer stating the place and length of the proposed transfer and pay, evidence that the ICT will be employed in the branch or subsidiary of the host Member State as a manager, specialist or graduate trainee and has the requisite professional or academic qualifications, and proof of sickness insurance (Article 5);
  • the grounds for refusing an application for admission include a decision by the host Member State to limit the number of third country nationals admitted (where, for example, there are national quotas) or where there is evidence of fraud;
  • a decision on admission must be taken within 30 days of the lodging of an application (with the possibility of extension in exceptional cases) and, in the event of refusal, withdrawal or non-renewal of an intra-corporate transferee permit, must include written reasons and be susceptible to legal challenge;
  • successful applicants must be issued with an intra-corporate transferee permit valid for up to three years (one year for graduate trainees), accompanied by an additional document listing branches, subsidiaries or clients of the parent company in other Member States in which the holder of the permit is authorised to work;
  • the ICT permit and additional document enable the holder to seek a further temporary transfer to a second Member State for up to twelve months, provided that the second Member State has sight of the documentary evidence establishing that the holder continues to fulfil the criteria for admission set out in Article 5 of the draft Directive (Article 16);
  • the ICT permit also entitles the holder to certain employment rights (similar to those applicable to posted workers within the EU)[35] and equal treatment with nationals of the host Member State as regards freedom of association, recognition of professional qualifications, access to certain goods and services, co-ordination of social security systems and payment of statutory pensions;
  • immediate family members (spouse and minor children) are entitled to join the holder of the ICT permit in the Member State issuing the permit; and
  • Member States may sanction the EU-based branch or subsidiary for any breach of the conditions of admission.

11.9  According to the Commission's explanatory memorandum, the complexity and inflexibility of various national schemes for intra-corporate transfers of third country nationals, differences in entry procedures and residency rights, and the multiple costs if several Member States are involved mean that the EU is insufficiently responsive to labour market needs and less likely to attract business and investment from outside the EU. The introduction of common procedures and conditions for the admission of ICTs and a more secure legal status which allows for mobility within the EU would, the Commission suggests, enhance the competitiveness of the EU while also helping the EU to fulfil its international trade commitments under GATS.[36] The draft Directive would also promote fair competition through the efficient allocation of knowledge and skills between Member States and guarantee certain social and economic rights.

11.10  The Commission's accompanying impact assessment identifies support for the economic development of EU business as the main objective of the draft Directive, citing in particular the EU's Europe 2020 Strategy and the goal of "smart growth" based on knowledge and innovation.[37] Recitals 3 and 4 of the draft Directive establish a broader context for the Commission's proposal, highlighting the Europe 2020 Strategy, the Stockholm Programme and the 2005 Policy Plan on Legal Migration.

The Government's view

11.11  The Minister of State at the Home Office (Damian Green) says that the Government's immigration policy recognises the need to facilitate the cross-border transfer of skilled personnel by multinational companies which have a branch in the UK. Tier 2 of the Points Based System has a specific category for intra-company transfers which specifies the criteria for admitting third country nationals. In 2009, 22,030 non-EEA nationals were given entry clearance under this category. Scottish Executive Ministers are also keen to encourage measures which might facilitate the transfer of highly skilled employees and their families from overseas to fill specialist positions in key sectors.

11.12  The Minister explains that there are some similarities between the scheme set out in the draft Directive and current arrangements in the UK under Tier 2. For example, third country nationals admitted on the basis of an intra-corporate transfer are treated as temporary workers and do not qualify for permanent residence. Family members are entitled to join them in the UK and have free access to the labour market. Applications for entry and residence in the UK are dealt with in a single procedure and must be submitted while the applicant is outside the UK. The criteria for admission in Article 5 of the draft Directive and the grounds for refusal are broadly consistent with UK practice.

11.13  There are also aspects of the draft Directive which might conflict with UK immigration rules. These include:

  • the definition of the terms "manager" and "specialist" in Article 3 (UK rules under Tier 2 are less prescriptive but UK requirements relating to salary and qualifications mean that most qualifying ICTs are likely to be filling managerial or specialist positions);
  • the requirement in Article 5 that the sending company based outside the EU and the branch or subsidiary within a Member State "belong to the same undertaking or group of undertakings" (UK rules may be broader, requiring that the sending company and the host entity must be linked by common ownership or control);
  • the requirement in Article 5 for an "assignment letter" (UK rules on admission require a Certificate of Sponsorship from the host branch or subsidiary in the UK and also require that the sponsor be licensed by UKBA);
  • the obligation in Article 12(2) to notify an applicant of the additional information required if the evidence supporting the application is inadequate and to set a reasonable deadline for providing it (it is standard practice in UKBA to refuse incomplete applications); and
  • the provision in Article 16 for mobility between Member States (UK rules make no distinction between applicants resident in another Member State on the basis of an intra-corporate transfer who seek entry to the UK and those seeking admission from outside the EU, and the Minister expresses concern that facilitated entry for those already admitted to another Member State might limit the UK's freedom to determine who to admit).

11.14  In addition, the Minister indicates that it will be necessary to clarify whether the existing provision for administrative review of adverse decisions under the Points Based System satisfies the requirement in Article 12(3) of the draft Directive that a refusal, withdrawal or non-renewal of an ICT permit must be open to legal challenge.

11.15  The Minister also explains that the provisions of the draft Directive on equal treatment would require the UK to provide a greater degree of access to social security benefits (notably income-related social security benefits, such as job-seekers' allowance, as well as family benefits) than is currently the case for third country nationals subject to immigration control in the UK. He expresses concern that there might also be scope for multinational companies to reduce liability for social security contributions in respect of ICTs moving within the EU. This would have financial implications for the UK but these have not yet been quantified.

11.16  The Minister appears to accept the Commission's view that the draft Directive complies with the principle of subsidiarity. He states that the Government must decide by 14 October whether to exercise its right to opt into the draft Directive and that the key criteria are likely to be the "implications for control of immigration, affordability, implications for the balance of UK and EU competence and issues of ECJ jurisdiction." Moreover, "the Government will not opt into a measure which is at odds with its approach to limits on economic migration." [38] The Minister notes the Government's commitment to introduce an annual limit on economic migration from outside the EU and indicates that the question whether to include intra-company transfers within the annual limit is currently subject to consultation.[39]


11.17  Article 79(2) TFEU specifies that EU measures based on this Article must serve the purposes of the EU's common immigration policy. These are defined in Article 79(1) as ensuring the efficient management of migration flows, fair treatment of legally resident third country nationals, and preventing and combating illegal immigration and trafficking in human beings. While we accept that the draft Directive serves some of these purposes, for example by establishing certain employment rights for holders of an ICT permit and common criteria for admission, its principal purpose (as indicated in recitals 3 and 4 of the proposal and in the Commission's explanatory memorandum and impact assessment) would seem to be to make the EU more commercially attractive to multinational companies. We should therefore be grateful for an explanation from the Minister as to why Article 79(2)(a) and (b) is an appropriate legal base for the principal purpose indicated.

11.18  The Minister expresses particular concern that Article 16 of the draft Directive, which provides for mobility between EU Member States once an intra-corporate transferee permit has been issued in one Member State, might undermine the Government's freedom to determine who to admit to the UK. While we understand the Minister's concern, we wonder whether the removal of the principle of intra-EU mobility in Article 16 would not also significantly diminish the justification for the draft Directive on the grounds of subsidiarity, and ask for his views.

11.19  We note that the Government has not yet reached a view on whether third country nationals moving to the UK on the basis of an intra-corporate transfer should be subject to the Government's proposed annual limit on economic migration from outside the EU. We ask the Minister to inform us of the outcome of the Government's consultations on this issue as we understand that this is likely to be a material factor in deciding whether or not to opt into the draft Directive.

11.20  In the event that the Government does opt into the draft Directive, we would also be grateful for further information from the Minister on the cost implications of participation for the UK, especially as regards social security contributions and payments.

11.21  Pending the Minister's reply, we shall retain the draft Directive under scrutiny.

30   European Council 4/5 November 2004, Presidency Conclusions, Annex 1, paragraph 1.4. Back

31   Directive 2003/86 on the right to family reunification; Directive 2003/109 on the status of third country nationals who qualify as long-term residents; Directive 2004/114 on the conditions of admission of third country nationals for the purposes of study, pupil exchange, unremunerated training or voluntary service; and Directive 2005/71 on a specific procedure for admitting third country nationals for the purpose of scientific research. Back

32   (27145) 5052/06: see HC 34-xviii (2005-06), chapter 20 (8 February 2006). Back

33   See Council document 13440/08. Back

34   European Council 10/11 December 2009, see paragraph 6.1.3 of the Stockholm Programme, Council document 17024/09. Back

35   See Directive 96/71 on workers posted by a company established in one EU Member State to provide a service in another. Back

36   The General Agreement on Trade in Services, concluded within the framework of the World Trade Organisation. Back

37   See the Commission's impact assessment, document 12211/10 ADD 1 at page 20. Back

38   Minister's Explanatory Memorandum, page 2, para 14. Back

39   Third country nationals who move to another country on the basis of an intra-corporate transfer under GATS are not subject to a numerical limit - see Minister's Explanatory Memorandum, page 4, para 20. Back

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