EU Free Movement for Cross-Border Work and Living

By Dr. Theresa Rath, Attorney at Law

EU free movement as the basis of a cross-border work and living arrangement

Living in one EU Member State while retaining professional ties to Germany places a person within several legal systems. A self-employed activity for German customers or clients, a business or office in Germany and a home in Italy, Spain or Portugal may be compatible with EU law. Whether a right of residence exists, and on which basis, depends on nationality, the actual place of residence and the way the work is performed.

Free movement law addresses the residence question first. Tax, social-security and professional-regulation issues may also arise and need to be considered under their own rules.

Legal advice is limited to German law, including the EU-law rules applicable in Germany. Tax advice is not provided.

Identifying the free movement category that fits the activity

EU law distinguishes between workers, self-employed persons established in another Member State, cross-border service providers and recipients, and economically inactive persons. In remote-work cases, the label used in a contract is not conclusive. The actual work, its genuine economic nature, the place where it is carried out and the person’s integration into an employer’s or their own professional structure all matter.

For self-employed professionals, the distinction may be between permanent establishment in the country of residence and the temporary cross-border provision of services. An employee may live in one country, work for an employer in another and perform duties in several locations. This classification provides the residence-law basis for the rest of the analysis.

The first three months and residence thereafter

EU citizens may generally remain in another Member State for up to three months with a valid identity card or passport. Residence beyond that period requires a continuing basis under free movement law. Workers and self-employed persons rely on genuine economic activity. Economically inactive persons generally need comprehensive health insurance and sufficient resources.

Each Member State determines its own registration and documentary procedures within the EU framework. Anyone moving their centre of life or dividing it between two countries should establish early which registration, certificate or evidence the country of residence requires. The assessment covers the German nexus and the EU-law rules applicable in Germany; local advice is required for another country’s domestic law and procedures.

Facts relevant to the assessment

Remote work cannot usually be classified by looking at a single address. A German business address may remain in place even where much of the work is performed abroad. Conversely, a foreign residence alone does not establish where the professional activity is actually carried out. Travel days, premises, staff, client contacts and family ties may all affect the analysis.

Family members and third-country nationals

Spouses, registered partners, children and, in certain cases, other relatives may derive residence rights from a mobile EU citizen. This is particularly important where the EU citizen lives with a third-country national family member. Entry, a residence card and evidence of the family relationship may then involve separate procedures.

Where a German national has links to Germany, the applicability of EU free movement law requires separate analysis. A person living only in their own Member State cannot automatically rely on the same rules as an EU citizen who has exercised free movement rights. Return cases and genuine family life previously established in another Member State may be treated differently.

Free movement does not determine tax or social security

An EU right of residence does not determine tax residence or automatically identify the competent social-security system. Depending on the circumstances, national rules, double taxation treaties and EU social-security coordination rules may become relevant.

Tax advice is not provided. Potential tax issues may, however, be identified, the relevant information prepared for specialist review and suitable advisers in the countries concerned included.

Legal assessment before or after a move

The assessment begins with the planned or existing residence, physical working locations, continuing professional links to Germany and family circumstances. This identifies the residence-law questions and the points at which additional specialist review may be required.

The assessment covers the EU and German migration-law basis and the German nexus. Questions of foreign law or other specialist fields are identified separately and may be coordinated with suitable advisers where required. Advice is available in German, English, Spanish, Italian and Portuguese.