Presenting his respective ideas with regard to the controversial proposal of the EU Commission on a “single-member private limited liability company (SUP)”, the rapporteur in the EU Parliament let the cat out of the bag this week. At first glance, his thoughts could almost not have been more contradictory. For example, on the one hand the Conservative Spanish MEP Luis de Grandes Pascual wants harmonisation, i.e. the same rules for a future SUP throughout Europe; on the other hand he is willing to leave many delicate decisions to the Member States. This is almost as if one was striving to breed an egg laying wool milk pig, knowing perfectly well that this is impossible. The agreement to the SUP project among MEPs still seems to be a far way off.

SUP: More wish than reality

Everything started in April 2014. Then the EU Commission presented the Proposal for a Directive of the European Commission on single-member private limited liability companies (Societas Unius Personae - SUP). Allegedly, it is the objective of the Proposal to make it easier for potential company founders, in particular of small and medium-sized enterprises (SMEs), to set up companies abroad with the target to promote and support entrepreneurship and to bring about more growth, innovation and employment within the European Union. Even though all of this sounds very nice and reasonable, it did not take long for doubts - not only from the employees' side - to surface in respect of feasibility and for the question to arise whether a SUP would represent European added value. Hence, at an event in Brussels organised by AK and ÖGB, a representative of UEAPME, the European Association of Craft, Small and Medium-sized Enterprises, put it in a nutshell when he said that he was not aware of any SME that would demand a SUP. It would rather be the case, so the tenor, that by using the SUP large corporations would benefit as it gave them the opportunity to refine their tax engineering, i.e. their tax-saving constructions.

Forum shopping, undermining co-determination and decreasing tax and social insurance regulations (wage and social dumping) would be the consequence of SUPs

During the debate on the Working Document of the rapporteur, Evelyn Regner, MEP and competent coordinator in the Legal Committee of the EU Parliament, commented that the SUP would not demonstrate any added value. In particular with regard to the separation of administrative seat and registered office, the SUP may, according to Regner, result in undermining or even removing co-determination. Hence, the separation of seats equals a provocation and almost an open invitation to force wage and social dumping. Waiving minimum capital requirements and the ban to enforce the creation of reserves produces a society in which you can have something for nothing, said Regner. Apart from that, the SUP may be understood as an invitation to false self-employment, as it has become quite common for certain industries and sectors in many Member States to adopt the practice of employing dependent employees formally as self-employed staff, thereby denying them the protection of the labour law, of collective agreements and in some cases even of social law.

Working Document on single-member private limited liability companies (SUP) provides opportunities

As the author of the Working Document has put it himself, he is now asking all members of the European Parliament and stakeholders to participate in the debate and to join in with regard to looking for acceptable solutions. He made it clear that he is opposed to any attempt to bypass the rights of employees. If this is so, one can only hope that the SUP Proposal will be rejected at the end of the debate!

Further Information:

Working Document on SUP by Rapporteur Luis de Grandes Pascual

AK EUROPA Position on SUP