EUROPEAN COMMISSION

Brussels, 27.4.2022

SWD(2022) 651 final

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT REPORT

Accompanying the document

Proposal for a Directive of the European Parliament and of the Council

concerning the status of third-country nationals who are long-term residents (recast)

{COM(2022) 650 final} - {SEC(2022) 200 final} - {SWD(2022) 650 final}

Table of contents

1.Introduction: Political and legal context

2.Problem definition

2.1.What are the problems and their drivers?

2.2.How will the problem evolve?

3.Why should the EU act?

3.1.Legal basis

3.2.Subsidiarity: Necessity of EU action

3.3.Subsidiarity: Added value of EU action

4.Objectives: What is to be achieved?

4.1.General objectives

4.2.Specific objectives

5.What are the available policy options?

5.1.What is the baseline from which options are assessed?

5.2.Description of the policy options

6.What are the impacts of the policy options?

6.1.PO 1 – Actions to improve the effectiveness of the Directive (non-legislative option)

6.2.PO 2 Legislative option 1 – targeted revision of the Directive

6.3.PO 3: Legislative option 2 – wider legislative revision

6.4.PO 4: Legislative option 3 – major legislative revision, creating a single EU permanent residence status

7.How do the options compare?

8.Preferred option

8.1.REFIT (simplification and improved efficiency)

8.2.One-to-one approach

9.How will actual impacts be monitored and evaluated?

Annex 1: Procedural information

Annex 2: Stakeholder consultation

Annex 3: Who is affected and how?

Annex 4: Analytical methods

Annex 5: Detailed assessment of policy measures

Annex 6: Case law of the CJEU on Directive 2003/109/EC

Glossary

1.1.    Introduction: Political and legal context

The vast majority of migrants arrive in Europe legally. In 2019, the EU Member States issued more than 3 million first residence permits to third-country nationals, of which over 1 million were for employment purposes. In the last decade, third-country workers filled a significant part of new jobs 1 , helping to meet labour market needs. During the COVID-19 pandemic, the contribution of third-country nationals to the European economies, labour markets and public services has become all the more evident. For instance, 13% of key workers performing essential functions – from doctors to nurses and drivers – are migrants 2 .

The overall number of third-country nationals legally residing in the EU is 23 million, representing 5.1 % of the EU population 3 . Out of this, over 10 million 4  third-country nationals hold a long-term or permanent residence permit. This is the target group that Directive 2003/109/EC concerning the status of third-country nationals who are long-term residents 5 – hereafter ‘the Directive’ – is meant to cover.

The Directive was the second EU legal instrument adopted in the field of legal migration, following the introduction by the Treaty of Amsterdam of the competence for the EU to set common rules for the entry and residence of third-country nationals. The Treaty explicitly requires the Union to develop a common immigration policy, so this is a clear objective to be pursued at EU level. At the same time, legal migration is an area of shared competence between the EU and the Member States, and the Treaty also reserves explicitly to the Member States the right to set volumes of admission for labour migrants they admit.

The political framework for the adoption of this and the other first legal migration instruments were established at the Tampere European Council in October 1999. As regards long-term residents, the Tampere Council conclusions stated that ‘a person, who has resided legally in a Member State for a period of time to be determined and who holds a long-term residence permit, should be granted in that Member State a set of uniform rights which are as near as possible to those enjoyed by EU citizens; e.g. the right to reside, receive education, and work as an employee or self-employed person, as well as the principle of non-discrimination vis-à-vis the citizens of the State of residence’ 6 .

The proposal of the Commission followed closely the political framework established by the European Council, and although a number of compromises were needed during the negotiations (at the time unanimity of Member States was required, and the European Parliament was not yet co-legislator in this policy area), the final text adopted by the Council overall complied with those political objectives.

As it is apparent from its recitals 4, 6 and 12, the principal purpose of the Directive is the integration of third-country nationals who are settled on a long-term basis in the Member States, which in turn is a key element in promoting economic and social cohesion, a fundamental objective of the European Union stated in the Treaty. To this purpose, the Directive sets out the conditions under which third-country nationals who have legally and continuously resided in a Member State for at least five years can acquire ‘EU long-term residence status’ (hereafter ‘EU LTR status’). The advantages of this residence status are numerous: it is permanent, it grants equal treatment rights in many areas (including full access to employed and self-employed activities), and it ensures reinforced protection against expulsion. While these advantages may also be granted by permanent residence statuses regulated under national law (the Directive allows these parallel national schemes), the EU LTR status additionally grants the possibility to move and reside in other Member States, on the basis of three comprehensive grounds: exercise of an economic activity (work or self-employment); studies and vocational training; other purposes. This ‘right to intra-EU mobility’ is not, however, an automatic right, but is subject to a number of conditions.

During the over 15 years of application of the Directive, the Commission has received a significant number of complaints, some of them followed up by infringement proceedings, and numerous issues were also subject to judgements of the Court of Justice of the European Union (hereafter CJEU). As elaborated below in Section 2, the case law of the CJEU has had an important role in clarifying a number of important aspects of the Directive: the relation between the EU permit and the national permits, the conditions to acquire the status, and the rights of long-term residents, with particular regard to the area of social security. A summary of the case law on the Directive is presented in Annex 6.

The Commission adopted two implementation reports of the Directive 7 , in 2011 and 2019, and also assessed it under the 2019 Fitness Check on legal migration 8 . All this work has pointed out to a number of inconsistencies and shortcomings, as well as practical issues arising from the application of the Directive by the Member States. The Fitness Check, in particular, recommended in its conclusions ‘considering putting forward legislative measures to tackle the inconsistencies, gaps and other shortcomings identified, so as to simplify, streamline, complete and generally improve EU legislation’.

The Commission’s Communication on a New Pact on Migration and Asylum 9 , adopted on 23 September 2020, provides a new comprehensive policy framework at EU level for better management and implementation of asylum and migration policies. With particular regard to legal migration, the Pact sets out that: “More could be done to increase the impact of the EU legal migration framework on Europe’s demographic and migration challenges. There are a number of inherent shortcomings in the EU legal migration system (such as fragmentation, limited coverage of EU rules, inconsistencies between different Directives, and complex procedures) that could be addressed through measures ranging from better enforcement to new legislation”.

Consequently, the Pact announced a plan to address the main shortcomings in the area of legal migration with a ‘Skills and Talent package’ that would include three new sets of measures 10 , responding to the overall objectives of attracting the talent the EU needs, and facilitate intra-EU mobility of third-country workers who are already residing in the EU. The revision of the long-term residents Directive is part of this package, with the objective to create a true EU long-term residence status, in particular by strengthening the right of long-term residents to move and work in other Member States. Together with the revision of the Single Permit Directive 2011/98/EU, this initiative has been included in Annex II of the 2021 Commission work programme 11 .

The two legislative initiatives, the revision of the Long-term residents Directive and the revision of the Single Permit Directive are complementary as they address two different phases of the overall migration process: the latter aims at simplifying the first admission of third-country workers in the EU, and improving their rights, while the former aims at facilitating the acquisition of long-term resident status for those third-country nationals (including workers) who have settled down in the EU, as well as further improving their rights.

The European Parliament, in its Resolution of 21 May 2021 on new avenues for legal labour migration 12 , welcomed the Commission’s planned revision of the Directive, stating that this ‘presents an opportunity to enhance mobility and simplify and harmonise procedures’.

2.2.    Problem definition

2.1.2.1.    What are the problems and their drivers?

The evaluation of the Directive carried out under the Fitness Check on legal migration and the above-mentioned implementation reports, and the consultation process carried out for this impact assessment 13 , have revealed a number of gaps, inconsistencies and shortcomings, arising in particular from the application of the Directive by the Member States. These problems have been clustered into three main problem areas:

1)barriers for third-country nationals to access the EU LTR status and benefit from it;

2)barriers to the integration of long-term residents, due to a lack of clarity and consistency in the rights granted by the EU status; and

3)barriers to the intra-EU mobility of long-term residents.

Other two more specific problems outside the three main problem areas have also been identified:

4) circular migration opportunities for long-term residents are limited;

5)there is a risk of abusive acquisition of the EU LTR status on the basis of investor residence schemes.

The above-mentioned evaluation and consultation process showed, in general, that migrants already residing in, or considering moving to, the EU are negatively affected by the shortcomings of the current Directive, which results in administrative burden, lengthy waiting times, uncertainty and confusion as to applicable rules and outcomes. All this may even discourage migrants from applying for EU LTR status 14 . A limited set of rights, especially as regards their families and intra-EU mobility, may limit their integration in the host societies 15 . It also impacts countries of origin indirectly, as limited remittances are linked to insufficient integration of their nationals in the host countries.

According to several of the stakeholders consulted, EU employers, including big companies, start-ups and small and medium-sized enterprises (hereafter SMEs), are negatively affected by the under-use of the EU LTR status, as this status offers stability to their migrant workers 16 . National, regional and local authorities of Member States are negatively affected, as they have to apply and enforce different and complex sets of rules to assess applications and grant permits 17 .

Indirectly, EU citizens are also negatively affected as the EU’s labour migration system insufficiently contributes to tackling skills shortages, demographic ageing, increasing old-age dependency ratio, and migrants’ integration in the host societies and labour markets 18 . This affects the financial viability of the EU’s welfare systems. Furthermore, the way that most Member States have implemented the intra-EU mobility provisions of the Directive has not really contributed to the attainment of the EU internal market, which ultimately also impacts EU citizens 19 .

The main driver for these problems is a mix of a regulatory failure at EU and Member State level, and poor implementation by the competent national authorities. This leads to a general weakness of the current overall EU regulatory framework on granting permanent residence to third-country nationals: the rules across the Member States are incoherent, ineffective and inefficient, with complex and diverging procedures for the acquisition of the status and the exercise of the rights attached to it. Many provisions of the Directive also give a large margin of discretion to the Member States for their implementation, allowing for diverging rules, more or less favourable to the long-term residents. There are also inconsistencies between the Directive and other legal migration Directives adopted later 20 .

The following table presents the main problems and underlying drivers.

Problem area 1: barriers for third-country nationals to access the EU LTR status

Sub-problem 1.1: lack of information and uneven competition with the national permits

Most Member States continue to issue almost exclusively national long-term residence permits. In 2019 21 , in the 25 Member States bound by the Directive, there were around 3 million third-country nationals holding an EU LTR permit, compared to around 7 million holding a national long-term residence permit. That year, the EU LTR permits represented less than 5% of all long-term residence permits issued in 10 Member States, with 4 Member States (AT, CZ, EE, IT) issuing 88% of all EU LTR permits, as can be observed in the tables below  22 . On the other hand, most of the permits issued by France, Spain and Germany were issued under national schemes. 

As highlighted in the 2011 and 2019 Commission implementation reports and confirmed in the consultations 23 , this low uptake can be attributed to the lack of information available about the EU LTR status among not only third-country nationals but also the national migration administrations; and to the "competition" with long-established national schemes, as the Directive allows Member States to issue national permanent residence permits in parallel with the EU LTR permit. 21 Member States 24 have parallel national schemes, which can have more favourable provisions (Article 13 of the Directive), thus creating a risk of competition. 

Besides the right to intra-EU mobility, which can only be granted by the EU LTR status, it is difficult to compare the EU status with the national ones 25 . The co-existence of the two systems does not necessarily result in more favourable provisions being applied to the third-country nationals, due to the difficulty to compare advantages and disadvantages respectively granted by the two kinds of permits. This was confirmed by the results of a 2016 European Migration Network (EMN) ad-hoc query 26 , highlighting that in some cases national long-term residence permits, while granted under more favourable conditions (e.g. less than five years of residence, or no income requirement), provide fewer equal treatment rights or less protection against expulsion. The preliminary findings of a study carried out by the Fundamental Rights Agency (FRA) 27 further confirm this, with experts interviewed highlighting that third-country nationals do not necessarily understand the added value of applying for a residence permit which is more difficult to acquire.

This implies that many third-country nationals who could benefit from the rights guaranteed by the EU status, as they do not have a real access to the EU status, they also do not have access to those rights. As a result, there is no ‘level-playing field’ between the EU LTR permits and the national permanent residence permits, as often third-country nationals do not have a real choice between the two 28 .

Drivers

The main driver of this sub-problem is a regulatory failure, as the current Directive, on the one hand, allows Member States to keep their parallel national schemes, but, on the other hand, does not establish any clear rules on the co-existence of the EU and national permits or any mechanisms to ensure that third-country nationals have a real choice between the EU and national permits. This leads to competition which does not benefit the potential beneficiaries of the status and also undermines the broader benefits for the EU as a whole of having an LTR status.

The above-mentioned regulatory failure adds to a poor implementation by the Member States, which in many cases do not actively promote the issuance of EU LTR permits, and do not provide sufficient and accessible information on the procedures to apply for the status 29 ; for instance, only eight Member States have a dedicated strategy in place to provide information on the EU LTR status 30 . This is supported by preliminary findings from the FRA study, where experts and national authorities consulted from nine Member States 31 considered that one of the main reasons for the lower number of EU LTR permits issued is the lack of information provided by the national authorities. 32  It also emerged from the consultations that some national administration and local agencies in charge of immigration were not aware of the EU status or found it too complicated 33 . This could be due to a lack of technical support or training on the EU LTR permit. 

However, the differences in Member States practices may also reflect political choices, national rules or local administrations’ practices 34 . For example, in some Member States, third-country nationals may already acquire citizenship after five years of legal and continuous residence 35 . Restrictions on the access to the EU status (see sub-problem 1.2) and on the rights attached to it (see problem area 2) further reduce its attractiveness, as well as barriers introduced by Member States to intra-EU mobility (see problem area 3).

Sub-problem 1.2: the conditions to acquire the EU LTR status are too difficult to meet

The conditions to acquire the EU LTR status may be too difficult to meet for a significant number of third-country nationals, who are therefore prevented from benefiting from this status as a tool for integration in the host society. In particular:

·In most cases periods of legal residence on temporary grounds (such as student years, temporary work, or previous residence in other Member States) do not count to the calculation of the required period of five years of legal and continuous residence;

·Some Member States apply the condition for stable and regular resources and integration conditions strictly, going against the proportionality test set by the CJEU requiring an individual examination of the personal situation of each applicant 36  . In most cases 37 , third-country nationals are required to provide proof of having a regular income that is at least equivalent either to the minimum monthly salary (from 312€ in BG to 2142€ in LU 38 ) or the minimum monthly basic income or benefit (from 165€ in PL to 600€ in PT 39 ). Furthermore, 12 Member States request documentation with regard to appropriate accommodation, some of them considering that the failure to provide it is a ground for refusing an application 40 .

·15 Member States 41 have transposed the optional clause of requiring compliance with integration conditions. Academic studies report that in most cases, strict language knowledge requirements can limit access to permanent residence to “well integrated migrants” 42 . Consultations with representatives of migrant organisations as well as preliminary findings from the FRA study showed that in some Member States 43 , the level of language proficiency required was deemed disproportionate considering the difficulties that a third-country national might face to have access to language courses or certification 44 .

Drivers

This sub-problem is due both to a regulatory failure, as the conditions set by the Directive are very broad and leave a wide discretion to the national migration authorities, and to the implementation of these conditions by the Member States, which eventually exclude a significant number of third-country nationals to benefit from the status. In particular:

·Resident permits on temporary grounds or formally limited are excluded from the calculation of the five years (Article 3(2)(e) of the Directive). Furthermore, this exception is not clear and some Member States apply it too strictly 45 , despite the clarifications brought by the case-law of the CJEU 46 .

·The residence periods spent as students may not be counted at all or, if counted, only as half (Article 4(2) second paragraph), so that a student who e.g. completed a Masters’ degree and started working afterwards cannot apply for the EU LTR status, even if he/she can demonstrate to be fully integrated 47 ;

·Periods of legal and continuous residence in different Member States cannot be cumulated 48 (Article 4(1));

·Member States have a large discretion in applying the requirements of “stable and regular resources” (‘shall clause’ in Article 5(1)(a)) and of compliance with “integration conditions” (‘may clause’ in Article 5(2)), and some Member States apply them in a very strict manner (though this discretion has been partially framed by the case law of the CJEU) 49 .

Problem area 2: barriers to the integration of long-term residents

As repeatedly confirmed by the CJEU 50 , the principal purpose of the Directive is the integration of third-country nationals who are settled on a long-term basis in the Member States. Besides granting the right to reside permanently in a Member State, the main integration tool provided by the Directive is represented by the right to be treated equally as nationals, in a number of important areas such as work, education, and social benefits. While the status of long-term resident should benefit from the highest standard of rights compared to other (temporary) migration statuses, the consultation showed that there are still many instances where long-term residents face discrimination 51 . Besides anecdotal evidence, however, there are no data to indicate to what extent the integration objective has been achieved, as there are no comprehensive and reliable study on the integration of long-term residents.

The Fitness check showed clearly that there are a number of inconsistencies between the Long-term residents Directive and other EU Directives on legal migration adopted later, with regard to the rights granted to long-term residents and their family members. In particular:

·As the family situation of long-term residents is regulated only in case of mobility to other Member States, the spouse and children of long-term residents who do not move to other Member States may not benefit from the same rights of their ‘sponsor’, which may undermine the main objective of the Directive to be an instrument for integration;

·Access to housing for long-term residents is unclear, and in particular the right to buy immovable property. This lack of clarity has brought some Member States not to allow long-term residents to buy immovable property, which undermines the main objective of the Directive to be an instrument for integration;

·In some Member States long-term residents may only have access to ‘core benefits’ in relation to social assistance and social protection;

·If family members of a long-term resident reside outside the Member State, the latter may not have access to family benefits.

The uncertainties in the application of the existing derogations to the principle of equal treatment led to several interventions of the CJEU. However, academics commented that, considering the large discretion offered to the Member States in their application of the principle of equal treatment, the “degree of convergence achieved by the Directive amounts to ‘comparable treatment’ instead of the original promise of ‘equal treatment’ in the areas covered by Article 11” 52 .

Drivers

This problem is due both to a regulatory failure, as the current Directive in some instances fails to grant long-term residents and their family members a set of uniform rights which are as near as possible to those enjoyed by EU citizens (as per the objective stated in the Tampere Council conclusions and reiterated in Recital 2 of the Directive), and to poor implementation by the Member States. The Directive includes a number of derogations to the principle of equal treatment that are used by many Member States, showing their reluctance to grant third-country nationals, even those residing legally on their territory for years, the same rights as their nationals. In particular:

·The Directive does not grant specific rights to the family members of the long-term residents besides the case of mobility to other Member States;

·Under Article 11(1)(f), equal treatment with regards to housing is limited to “procedures for obtaining housing”. The fact that the article refers to access to the procedures rather than access to housing in general seems to emphasise that “the provision contains no individual right that housing shall be made available to individuals”. It also leaves discretion to the Member States when it comes to activities by long-term residents relating to housing, such as land purchases 53 . This lack of clarity was also highlighted by Civil Society representatives 54 .

·Article 11(4) allows the Member States to limit access to social assistance and social protection to ‘core benefits’, and the interpretation of this derogation has led to divergent implementation in the Member States (partially clarified by the case law of the CJEU 55 ). Also, as highlighted by Civil Society representatives and members of the EU legal migration practitioners’ network 56 , the definition of social security (including the export of pensions) is not aligned with the other legal migration Directives 57 , and there are uncertainties as to the distinction with social assistance and social protection;

·Article 11(2) allows Member States to derogate from the principle of equal treatment with regard to family benefits where the family members of the long-term resident reside outside the Member State: this is inconsistent with the regime of the other legal migration Directives, including the Single Permit Directive 58 .

Problem area 3: Barriers to exercise the intra-EU mobility rights

Holders of EU LTR permits face a number of barriers in exercising the right to move and reside in other Member States for work, study, or other reasons. In particular:

·When a long-term resident has an offer for a job in a second Member State, this country may apply a labour market test (hereafter LMT) before accepting his/her application, to check if that job could be filled first by EU nationals 59 ;

·Delays in the assessment of an application in a second Member State can jeopardise the work or study opportunities there 60 . In particular, only 12 Member States allow for the application to be submitted from the first Member State (to embassies or consulates of the second Member State) 61 . Civil society representatives stressed that this might demotivate employers from hiring long-term residents from other Member States or even considering them as job candidates 62 ;

·‘Mobile’ long-term residents face important difficulties in the recognition of their professional qualifications. Members of the European Network of Public Employment Services highlighted this as one of the key barriers preventing third-country nationals from accessing the labour market of other Member States 63 , confirming the responses to the Legal Migration Fitness Check Public Consultation 64 ;

·11 Member States 65 apply restrictions to the labour market access for ‘mobile’ long-term residents, either limiting it to a single employer 66 or a single professional field 67 . In addition, two Member States 68  apply quotas for the admission of ‘mobile’ long-term residents, in line with Article 14(4) of the Directive. In three Member States 69 ‘mobile’ long-term residents may be required to attend language courses. Experts in all nine Member States covered by the FRA study highlighted that such labour market restrictions limit the intra-EU mobility of EU LTR permit holders 70 ;

·‘Mobile’ long-term residents need to reside for five years in the second Member State before being allowed to apply for EU LTR status there. Members of the Informal Expert Group on Economic Migration highlighted that employers would prefer this time to be reduced, in order to lower their administrative burden in terms of having to request permit renewals, etc.

Civil Society representatives 71 and members of the EU legal migration practitioners’ network 72 underlined that the current barriers to intra-EU mobility are one of the key factors decreasing the attractiveness of the EU to migrants with skills required by the European labour market, though there are no reliable data to assume that the ‘attractiveness’ of the EU LTR status is a decisive factor in the ‘attractiveness’ of the EU or some Member States as a migration destination. Some members of the Informal Expert Group on Economic Migration 73  also highlighted that removing these barriers could be an important tool in times of crises and economic recessions. Those might have a very asymmetrical impact on Member States in terms of availability of occupations and employment rates, which has in the past pushed third-country workers and their families to move to other Member States for work. Some representatives considered this likely to happen again, with the crisis and recession triggered by the COVID-19 pandemic 74 .

Drivers

This problem is due to a regulatory failure, as the right of long-term residents to move and reside in other Member States is subject to a number of strict conditions in the current Directive, as well as to the strict implementation of these conditions by the Member States, and to the fact that the competent national administrations are not sufficiently familiar with the mobility procedures 75 . In particular:

·Member States may apply a LMT before accepting applications for intra-EU mobility (Article 4(3));

·‘mobile’ long-term residents are not allowed to start working or studying in the second Member State while the application is being assessed (Article 21(2));

·the deadline to process applications for intra-EU mobility is longer than in the more recent legal migration directives (four months vs. 90 days – Article 19(1)) 76 ;

·‘mobile’ long-term residents do not benefit from the EU regime of recognition of professional qualifications when they apply for a residence permit in a second Member State 77 ;

·Member States may limit the access to the labour market for ‘mobile’ long-term residents and their family members for a period of up to 12 months (Article 21);

·‘mobile’ long-term residents need to reside for five years in the second Member State before being allowed to apply for EU LTR status there (Article 23).

Problem area 4: failure to ensure circular migration of long-term residents

Long-term residents lose their status where they are absent from the territory of the EU for more than one year. This regime does not allow the circular migration for long-term residents, who are discouraged from leaving the territory of the EU for periods longer than one year because of the risk of losing the status. This also has an indirect impact on the countries of origin, who could benefit from circular migration in terms of brain gain.

In the consultations, Civil Society representatives argued to increase the period of allowed absence, as this would facilitate circular migration and promote the possibility for migrants to invest in their countries of origin and share the knowledge and skills acquired during their time in the EU, as well as to return temporarily to their countries for personal and family circumstances 78 .

Drivers

The main driver of this problem is a regulatory failure, as (Article 9(1)(c) of the Directive establishes that long-term residents lose their status where they are absent from the territory of the EU for more than 12 consecutive months 79 , and the concept of absence is not defined in the Directive 80 .

While Article 9(2) of the Directive allows Member States to consider absences exceeding 12 consecutive months for specific or exceptional reasons, only 14 Member States have decided to apply this derogation 81 . Also, Article 9(5) of the Directive introduced a facilitated procedure to reacquire the status in those cases, but this regime leaves a large room for discretion to Member States. Only 15 Member States have it in place 82 and conditions are sometimes excessive 83 .

Problem area 5: risk of abusive acquisition of the EU LTR status through investor schemes

Under the Directive, the EU LTR status is granted to third-country nationals who have resided legally and continuously within the Member States’ territory for five years and thus are deemed to be well integrated. The continuity of presence is normally interrupted by absences of more than six consecutive months, or by an overall absence exceeding ten months within five years. However, there could be situations where, in the absence of an effective monitoring of the continuity of presence in the country or even of a requirement on physical presence, third-country investors could acquire EU LTR status, including intra-EU mobility rights, without fulfilling the actual condition of the continuity of residence for five years. The 2019 Commission Report on “Investor Citizenship and Residence Schemes in the EU” 84 identified this as a potential risk, especially in cases where the continuous physical presence of holders of investor permits is not required or required only for a limited time. There is no available evidence to indicate the scale of this risk, but the Commission has committed in the report to monitor identified risks and take steps, as necessary.

Drivers

The main driver of this problem is due to poor implementation by Member States of the Directive obligation to monitor the actual residence for investors, due to ineffective or non-existing monitoring systems on the residence requirement. The 2019 Commission Report highlighted that investor residence schemes exist to date in 19 Member States under different features (e.g. regarding the nature and amount of the investment) 85 , and that in several Member States the investor residence schemes do not require continuous physical presence or only require the investors’ presence for a very limited time 86 . Given that the Member States concerned are obtaining a financial benefit from granting this type of residence permits, there are insufficient incentives to effectively monitor the continuous residence requirement.

2.2.2.2.    How will the problem evolve?

Without EU action, the problems identified will continue to exist and possibly, in a few areas, exacerbate. More particularly, the EU LTR status will continue to be under-used and, based on trends witnessed over the past 10 years, may further worsen proportionally: while from 2012 – 2015 the share of EU LTR permits on the total LTR permits was around 40%, the shares in the subsequent years have been going down to 29% in 2019. Without making it easier to obtain the EU LTR status, third-country nationals are likely to continue encountering difficulties when applying for the status. As a direct result, they may thus prefer applying for national schemes.

Barriers to intra-EU mobility will also persist, in particular considering that there is no evidence that Member States are willing to remove the LMTs, and/or put in place a truly facilitated procedure for ‘mobile’ long-term residents. In addition, the declining trend in EU LTR permits granted would also imply that the cohort of those who are eligible for intra-EU mobility will gradually decrease in size or stabilise. This in turn means that labour markets cannot fully benefit from mobile long-term residents to address shortages. This will affect the potential contribution of long-term residents to the attainment of the internal market.

Third countries will also continue not being able to fully benefit from the potential economic gain of their nationals being long-term residents in the EU, considering the restrictions in place on the allowed absences without losing the status. Such restrictions are currently hampering circular migration and the extent to which third-country nationals can invest, work or otherwise contribute to the economy in their home countries.

EU long-term residents will continue facing legal uncertainty around their rights and those of their family members, and in some areas they will not be treated equally as EU citizens. Finally, the current risk of abusing investor schemes to obtain the EU LTR status is also expected to persist, in the absence of Member States taking appropriate measures.

As a consequence, the attractiveness of the EU LTR status is likely to reduce or at least not to increase in the coming 10 years. The persisting problems may also have an effect on the integration of long-term residents. As European statistics on the integration of migrants consistently show 87 , third-country nationals living in the EU continue to lag behind nationals and mobile EU citizens in terms of employment rates, being at-risk of poverty and median income. For example, as shown in Figure 1 below, the gap between the median equivalised income of citizens from EU countries and those living in the EU but from third countries is likely to widen somewhat also in the future, when applying extrapolation based on 2011-2019 Eurostat statistics.

Figure 1.Median equivalised annual income in euro, by groups of country of birth

Source: Eurostat statistics on migrant integration (ilc_di16_1_Data)

3.3.    Why should the EU act?

3.1.3.1.    Legal basis

The legal basis for Union action in the area is established in Article 79(2) (a) and (b) of the Treaty on the Functioning of the European Union (TFEU), in connection with Article 79(1) of the same Treaty. These provisions state that the “Union shall develop a common immigration policy aimed at ensuring, at all stages, the efficient management of migration flows, fair treatment of third-country nationals residing legally in Member States, (…)”. For this purpose, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, "shall adopt measures in the following areas: (a) the conditions of entry and residence, and standards on the issue by Member States of long-term visas and residence permits (…)” and “(b) the definition of the rights of third-country nationals residing legally in a Member State, including the conditions governing freedom of movement and of residence in other Member States”. Directive 2003/109/EC was adopted on Article 63(3) and (4) of the Treaty establishing the European Community, the Article corresponding to Article 79(2) (a) and (b) prior to the changes brought by the Treaty of Lisbon.

3.2.3.2.    Subsidiarity: Necessity of EU action

The principle of subsidiarity applies since this is an area of shared competence. In particular, any measure proposed in the area of legal migration “shall not 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, whether employed or self-employed” (Article 79(5) TFEU). The need for a common EU framework on legal migration is linked to the abolition of internal border controls within the EU and the creation of the Schengen area. In this context, the migration policies and decisions of one Member State affect other Member States, so it is deemed necessary to have a set of common EU rules in relation to the conditions and procedures for allowing third-country nationals to enter and reside in the EU, and to lay down their rights following admission 88 .

3.3.3.3.    Subsidiarity: Added value of EU action

The TFEU explicitly empowers the Union to develop a common immigration policy, so this is a clear objective to be pursued at EU level. At the same time, legal migration is an area of shared competence between the EU and the Member States, and the Treaty also reserves explicitly to the Member States the right to set volumes of admission for labour migrants they admit. The Fitness check showed that the legal migration Directives, including the long-term residents Directive, have had a number of positive effects that would not have been realised by Member States acting alone. While positions on specific aspects often vary (e.g. across Member States, Non-Governmental Organisations (NGOs), businesses, individual migrants), all stakeholders, including Member States, confirmed the continued overall added value of the EU legal migration acquis 89 . The main positive effects identified by the Fitness check are: a degree of harmonisation of conditions, procedures and rights, helping to create a level playing field across Member States; simplified administrative procedures; improved legal certainty and predictability for third-country nationals, employers, and administrations; improved recognition of the rights of third-country nationals (namely the right to be treated on an equal basis with nationals in a number of important areas, such as working conditions, access to education and social security benefits, and procedural rights); improved intra-EU mobility. However, despite these positive effects, the Fitness check also concluded that there is clearly room for further harmonisation and simplification at EU level.

The revision of the Long-term residents Directive aims precisely at such further harmonisation and simplification. In particular, improved rights would benefit third-country nationals and facilitated access to EU LTR status would ensure a secure and stable residence status for third-country nationals who would not otherwise satisfy the conditions for acquiring citizenship status.

Finally, efficient rules on intra-EU mobility can be established only at EU level, since no national migration policy has ever provided facilitations for applications from third-country nationals residing in another Member State. Furthermore, the Member States’ prerogative to establish how many economic migrants they admit relates only to third-country workers from outside the EU, and does not apply to intra-EU mobility. Therefore, EU rules have an important influence on the efficient mobility of third-country nationals across the Member States. Improved intra-EU mobility rules for long-term residents would not require any significant additional transfer of competences from Member States to the EU level as easier intra-EU mobility is already envisaged — even if to a limited extent — in the current Directive. Moreover, further-reaching schemes on mobility have already been agreed for Intra-Corporate Transferees, Students and Researchers, and highly qualified workers (EU Blue Card).

4.4.    Objectives: What is to be achieved?

4.1.4.1.    General objectives

Based on the problem analysis, and taking into account the role of the Directive within the overall EU’s legal framework in the field of legal migration as established in the 2019 Fitness Check, the general policy objectives of the initiative are:

1)To ensure the efficient management of migration flows in the EU through the approximation and harmonisation of Member States’ national legislation;

2)To ensure the fair treatment of third-country nationals legally residing in the EU;

3)To strengthen the EU’s competitiveness and economic growth.

4.2.4.2.    Specific objectives

This initiative does not aim to overhaul the objectives of the current Directive, but to address in a targeted way the problems analysed above.

Based on that, the specific policy objectives of the initiative are:

1)To create a more coherent, efficient and fair system to acquire the EU long-term resident status;

2)To facilitate the intra-EU mobility of long-term residents;

3)To improve the rights of long term-residents and their family.

The three specific objectives are all complementary and inter-twined. In particular, there is no trade-off between the objective of integration in the first Member State and the right to move to a second Member State or to exercise circular migration. The acquisition of the EU long-term residence status is the ‘acknowledgement’ that a third-country national is well integrated in the first Member State, and full integration should also entail the right for long-term residents to reside in other Member States or to be absent for the EU for a period of time without losing the status.

In particular, the integration of third-country nationals in one Member State needs to be seen in the overall context of the development of a common EU migration policy, where a third-country national who is integrated in one Member State should be entitled to continue this integration process in other Member States, and therefore able to move across the Union if he/she wishes so.

The table below illustrates the links between the problems and their drivers with the objectives.

5.5.    What are the available policy options? 

5.1.5.1.    What is the baseline from which options are assessed?

The current Directive would continue to be applied without legislative changes. Existing monitoring and enforcement activities of the current legislation would continue, as reported in the Commission implementation report of 2019 90 . Furthermore, it can be expected that there would be additional guidance from the evolving case law of the EU Court of Justice and national courts.

The baseline should also take into account the revision of the Single Permit Directive, which is expected to simplify the first admission for third-country workers and improving their rights. However, as the expected increase in the number of third-country nationals obtaining single permits is expected to be very limited as a result of the revision, it would also not have a significant impact on the number of potential applicants for EU LTR status.

For the assessment of the policy options (PO), the following main baseline assumptions have been made 91 :

·Without EU action, the number of EU LTR status holders (stock and flow) will evolve in a linear way, based on extrapolation using Eurostat statistics from 2015 to 2019, which thus takes into account the gradual decline in the share of EU permits vis-a-vis national permits over the second half of that decade 92 , whilst also considering the continuously growing total number of third-country nationals with long-term residence status.

Source: projections based on Eurostat data 2019 LTR status holders (migr_reslong)

·From the limited statistics available on overall movements of third-country nationals in absolute terms, it seems clear that these remain small when compared to movements of EU citizens across Member States 93 . When processed and extrapolated, this limited data suggests that, compared to the 3-4% of EU citizens who are mobile, 94  only 2% of the long-term residents are estimated to be mobile.

The detailed assumptions used to estimate the costs and the economic impacts of the POs are summarised in section 6, and further explained in Annex 4.

5.2.5.2.    Description of the policy options

Based on the problem definition and objectives described above, four different policy options have been identified, one non-legislative and three legislative. The legislative policy options have been developed by presenting a range of increasingly ambitious policy measures (from PO2 – less ambitious to PO4 – more ambitious). No policy options have been discarded, as all different policy measures emerged from the consultation and impact assessment process have been included in the four options.

Option 1: actions to improve the effectiveness of the Directive (non-legislative option)

This policy option would involve non-legislative actions aimed at enhancing the implementation of the Directive and the promotion of the EU LTR status, without any legislative change. The key measures would be:

1.1.    The Commission enhances the implementation of the Directive through increasing enforcement measures, including infringement procedures, and supports further practical cooperation between Member States. Member States’ experts exchange information on best practices and perceived trends, as well as on possible fraud and abuses of the EU LTR status.

1.2.    EU and Member States increase the visibility of the EU LTR status through information sharing, promotion, and advertisement activities. The Commission issues guidelines and awareness-raising tools addressed to Member States authorities, third-country nationals, and legal practitioners. In particular, training activities are organised for national immigration authorities both on the procedures for the acquisition of EU LTR status and for intra-EU mobility.

Option 2: targeted legislative revision of the Directive

This option envisages a targeted revision of the Directive, which would address the following thematic areas, corresponding to the specific objectives:

1.Acquisition of the EU LTR status

2.Intra-EU mobility rights

3.Rights of long-term residents and their family members

With regard to the acquisition of the EU LTR status, this option would introduce a ‘level-playing field’ mechanism between the EU LTR permit and the national permanent residence permits, so that third-country nationals have a real choice between the two permits. In implementing this mechanism, Member States should ensure that:

2.1.    integration and resources requirements for acquiring the EU status are not stricter than the requirements to acquire the national status;

2.2.    applicants for EU LTR permits pay the same level of fees for the handling of their application as applicants for national permits;

2.3.    holders of EU LTR status do not enjoy a lower level of procedural safeguards and rights than holders of national residence permits;

2.4.    the EU LTR status benefits from the same level of information, promotion and advertising activities as the national residence permits, for example through ensuring adequate information on the national websites on legal migration, information campaigns and training programmes for the migration authorities;

2.5.    holders of national permits who apply for an EU LTR permit have a facilitated procedure (i.e. not presenting evidence already checked for the national permit).

To prevent the risk of fraudulent acquisition of the EU LTR status, this option includes also a measure:

2.6.    encouraging Member States to reinforce checks on the residence requirement with regard to application for EU LTR status on the basis of investor residence schemes.

With regard to intra-EU mobility, this option would facilitate the right of long-term residents to move and reside in other Member States, in particular by:

2.7.    not allowing the second Member State to apply a LMT;

2.8.    allowing long-term residents to start working or studying in a second Member State while their application is being assessed;

2.9.    allowing long-term residents to submit the application while still residing in the first Member State;

2.10.    shortening the deadline for processing the application (from four months to 90 days);

2.11.    granting ‘mobile’ long-term residents equal treatment with Union citizens as regards the recognition of professional qualifications in the second Member State, in accordance with applicable EU and national law;

2.12.    improving the rules on access to the labour market for the ‘mobile’ long-term residents and their family members;

2.13.    shortening the time needed to acquire EU LTR status in the second Member State (three years instead of five years) for those third-country nationals who already have EU LTR status in the first Member State.

With regard to the rights of the long-term residents and of their family members, this option would improve them and address the identified consistency issues with other legal migration Directives, in particular by:

2.14.    introducing derogations from the rules on family reunification of Directive 2003/86/EC to facilitate the family reunification for long-term residents;

2.15.    automatically granting the EU LTR status to children of long-term residents born in the EU;

2.16.    clarifying the access to housing, to include the right to buy immovable property;

2.17.    aligning the definition of social security (and the export of pensions and family benefits) with the other legal migration Directives, and ensuring full equal treatment with regard to access to social assistance and social protection (beyond the concept of ‘core benefits’);

2.18.    prolonging the allowed period of absence outside the EU from 12 to 24 months;

2.19.    regulating in more detail the procedure to reacquire the EU LTR status following absence.

Option 3: wider legislative revision of the Directive (Option 2 + facilitation of conditions to acquire the EU LTR status)

This option would also address the three thematic areas as in options 2, including all the measures of option 2. In addition, with regard to the thematic area concerning the acquisition of the EU LTR status, this option would include additional measures aimed at facilitating the conditions to acquire the EU LTR status, in particular by:

3.1.    Always allowing periods of residence as students to be counted fully;

3.2    Opening the possibility for Member States to lower the required residence period to apply for the EU LTR status from five to three years, but with intra-EU mobility rights only granted after five years;

3.3.    Opening the possibility for Member States to allow cumulating residence periods in different Member States (subject to a residence in the Member State of application of at least two years);

3.4.    Opening the possibility for Member States to include in the scope of the Directive permits issued on temporary grounds; 

3.5.    Clarifying and limiting the discretion of Member States in applying the requirement of stable and regular resources, by codifying the CJEU case law;

3.6.    Clarifying and limiting the discretion of Member States in applying integration conditions, by codifying the CJEU case law.

These measures would be a mix of obligations for Member States (measure 3.1), options (measures 3.2, 3.3, and 3.4), and clarifications of the current rules (measure 3.5 and 3.6). The added value of introducing new options, compared to the current Directive, is that in the current approach Member States are not allowed to facilitate the conditions set out in the Directive even if they wished, while with the proposed optional measures in Option 3, they would be able to facilitate those conditions.

Option 4: major legislative revision of the Directive, creating a single EU permanent residence status

This option would also address the three thematic areas as in options 2 and 3, by including the relevant measures concerning improved rights, and facilitated conditions to acquire the status, plus:

4.1.    There would be a fully harmonised EU permanent residence status, as Member States would not be allowed to keep their national permanent residence schemes;

4.2.    The required residence period to acquire the status would be lowered from five to three years;

4.3.    The EU permanent residence status in one Member State would give an automatic right to move and reside in a second Member State, with conditions similar to the ones applicable to EU citizens exercising their free movement rights.

The table below gives an overview of the various elements in each option.

6.6.    What are the impacts of the policy options?

This section assesses the impact of the policy options (hereafter ‘POs’) described in the previous section against a series of assessment criteria covering specifically effectiveness, efficiency and coherence. The selected impacts are assessed qualitatively and, where possible, quantitatively based on a number of key assumptions (see Annex 4). No significant environmental impact is expected from the initiative and has thus not been assessed further, as the magnitude of intra-EU mobility and mobility related to circular migration is expected to be low. Any pollution resulting for example from the means of transportation used for their move to another Member State is expected to be negligible, especially when compared to other intra-EU travel (e.g. for the purpose of tourism, business and other short-term stays) that causes pollution.

The detailed and individual assessment of each policy measure is presented in Annex 5.

6.1.6.1.    PO 1 – Actions to improve the effectiveness of the Directive (non-legislative option)

6.1.1.6.1.1.    Effectiveness

The effectiveness of this PO would be limited, mainly due to the fact that its measures are not binding. Nevertheless, this PO would have a moderate positive impact on creating a more coherent, efficient and fair system to acquire the EU LTR status, as a result of a better implementation by the Member States of the current rules. For instance, providing training and issuing non-binding guidelines would improve the situation in those Member States without a dedicated information strategy on the EU status, 95 or information tools in place for applicants. 96  The Commission’s compilations and sharing of best practice examples from Member States 97 , and the increased enforcement measures, including infringement procedures, would also contribute to a better implementation of the current rules.

This PO would have no direct effect on facilitating intra-EU mobility, given that application conditions for mobility would remain unchanged, thought the improved information and enforcement activities may have a positive indirect effect.

This PO would also have a minor positive effect on the improvement of rights of long-term residents and their family members, as both them and national authorities would become better aware of these rights through improved implementation of the current rules.

6.1.2.6.1.2.    Expected impacts

Social impacts and impacts on fundamental rights

Third-country nationals would become more aware of the rights and conditions of the EU LTR status, which would have a slightly positive impact, though not possible to quantify, on their integration and possibly also lead to cost savings for third-country nationals who would otherwise consult legal services and pay legal fees for support with their application. The increased information provision on the EU LTR status could lead to a higher demand for the EU LTR status compared to the national ones. This PO is unlikely to lead to a net increase in overall LTR applications for national authorities. This option would not have any specific impact on EU citizens.

This PO would provide more clarity on the functioning of the EU LTR status, and in particular its mobility options, to businesses and employers interested in hiring third-country nationals from other Member States, which could lead to a minor reduction in the administrative burden. In addition, a slight increase in the number of EU LTR permits issued could lead to a lightly larger pool of qualified third-country nationals already residing in the EU, which would potentially help employers fill labour gaps.

This PO would make a slightly positive contribution to the rights to family and professional life (Article 33 of the EU Charter of Fundamental Rights).

Economic impacts 

Some Member States have already developed and invested in portals and other provision of information, and thus, this measure would mainly impact those Member States which currently do not provide sufficient and/or adequate information. Whilst the PO is expected to possibly lead to a minor increase in the number of EU LTR status holders, which may in turn increase intra-EU mobility, it is not possible to estimate the specific economic impacts of such developments, as they are likely to be negligible and influenced by many other factors.

6.1.3.6.1.3.    Efficiency

Administrative and compliance costs

This PO would entail one-off cost for the European Commission estimated in 49 000 euro, resulting from the issuing of guidelines, training material, and information to national authorities. Furthermore, it would lead to costs for national authorities, to provide training, updating websites, and exchange best practices, as well as for the identification of cases of abuse of the EU LTR status (recurring administrative costs amounting to EUR 204 500 per year on average).

Simplification

The PO is expected to lead to cost savings for third-country nationals resulting from better quality information on the EU LTR status. However, these savings cannot be quantified as the measures included are not binding, and may be implemented in varying ways.

6.1.4.6.1.4.    Coherence with other EU policies

As it only aims to strengthen the implementation of the Directive, this PO is not fully coherent with the objective of the New Pact on Migration and Asylum to create a true EU long-term residence status, in particular by strengthening the right of long-term residents to move and work in other Member States.

6.1.5.6.1.5.    Overall assessment

The measure would have a limited positive effect on the creation of a more efficient system to acquire the EU LTR status and the other objectives of this initiative. However, as it is a non-binding measure, its impact would ultimately depend on the willingness of Member States’ authorities to implement and roll-out the guidelines and training provided by the Commission.

6.2.6.2.    PO 2 Legislative option 1 – targeted revision of the Directive

6.2.1.6.2.1.    Effectiveness

Out of the 19 measures included in this PO, the majority would have positive impacts on achieving the policy objective of creating a more coherent, efficient and fair system to acquire the EU LTR status, in particular by introducing a level-playing field between EU and national permits 98 . This concerns not only the specific measures 2.1-2.5, but also the measures aimed at facilitating intra-EU mobility and improving rights, as all these measures would improve the attractiveness of the EU LTR status for third-country nationals. In particular, it is estimated that, 10 years after the implementation of the revised Directive, there would be an increase of 20% in the number of EU LTR permits, compared to the baseline, corresponding to approximately 640 000 additional EU LTR holders.

With measure 2.6, Member States would be encouraged to reinforce checks on the residence requirement set out by Article 4 of the Directive for the acquisition of the EU LTR status and therefore, if implemented, this measure would have a positive impact on having a fairer system for the acquisition of the EU LTR status. This would have an impact in particular on the 14 Member States that do not require continuous physical residence for granting investor residence permits, which could lead investors not actually residing in the EU and not really integrated to acquire the EU LTR status.

This PO would have positive impacts on achieving the objective of facilitating intra-EU mobility, through seven specific measures (2.7 – 2.13). In particular, not allowing the second Member State to apply a LMT would have a significant positive impact on the intra-EU mobility to those 16 Member States which apply such test 99 .

Out of the 19 measures in this PO, more than half would have positive impacts on achieving the policy objective of improving the rights of long-term residents and their family. In particular, the specific measures 2.14-2.17 would ensure long-term residents a fairer treatment in many areas relevant for their integration, including access to housing, social assistance, and better family rights. A particular positive impact would derive from the measure of granting automatic EU LTR status to children of long-term residents born in the EU, as it would significantly increase legal certainty for a category of third-country nationals that at the moment is not covered by EU law 100 .

Furthermore, allowing long-term residents to be absent up to 24 months without losing the status (measure 2.18) and regulating more in detail the procedure to reacquire the status in case of longer absences (measure 2.19) would strongly enhance the right to circular migration, with increased possibilities to study or work in their country of origin or outside the EU.

6.2.2.6.2.2.    Expected impacts

Social impacts and impacts on fundamental rights

All measures of this PO would have positive social impacts, on most target groups. In particular, there would be significant positive impacts for third-country nationals, who: would benefit from the measures introducing a level-playing field by having a real choice between the EU LTR permit and the national LTR permits; would benefit from better intra-EU mobility rights by having more chances to be recruited or accepted for studies in other Member States; would have better rights for them and their family members, to support their full integration in the society; would be able to exercise circular migration without losing their EU LTR status. Nevertheless, as the conditions to acquire the status would remain the same, the acquisition of the EU LTR status would still be difficult for a significant number of third-country nationals.

The measures aimed at improving the rights of long-term residents and their family would also have positive impacts on a number of fundamental rights, and in particular the right to property (Article 17 of the EU Charter of Fundamental Rights), non-discrimination (Article 21), family and professional life (Article 33), social security and social assistance (Article 34).

As the intra-EU mobility of long-term residents in this option would be facilitated (in particular through the abolition of the LMT), it may create some competition towards EU citizens. However, the most important safeguards to avoid pressure on labour conditions, wages and of displacement of EU workers are that the system remains demand-driven (long-term residents would still need a job offer to move to another Member State). Therefore, the potential displacement effect on EU workers is expected to be limited, first because of the proportionally low number of EU LTR holders expected to move over a 10-year period, and second because this number is still dwarfed by the number of vacancies. On the basis of available quarterly data from 2013Q1 until 2021Q2, there are on average approximately 1.75 million unfilled job vacancies every quarter, which is also similar to the annual level of unmet vacancies by EU companies. 101 Mobile EU LTR status holders are therefore very likely to first fill the existing labour shortages, if these offer better conditions. Due to a lack of data and the number of assumptions required, it has however not been possible to quantify any possible displacement effect.

A positive impact is also expected on third countries, as the measures facilitating circular migration would help counter the “brain drain” phenomenon allowing third-country nationals to move and stay longer in their country of origin, for instance for investment or business purposes. Furthermore, the measure enabling third-country nationals to re-acquire their EU LTR status would allow them to maintain a more stable economic situation and ultimately to maintain the level of remittances sent to their country of origin.

This PO would also have impacts on legal practitioners and judiciary, as the simplification introduced by many measures would mean for third-country nationals to require less support as they will make the law more clear, precise, and predictable, which will have the effect of increasing the "legal certainty" attached to the implementation of these rights. Nevertheless, an increasing workload for this group can be expected in particular from the measures facilitating intra-EU mobility. As a consequence of these measures, legal practitioners may be confronted with additional queries for clarification on the new procedures, at least in the first months/year of their introduction.

Finally, this PO would have important impacts on businesses/employers, in particular the measures facilitating intra-EU mobility In particular, removing the requirement to apply a labour market test for mobile long-term residents in 16 Member States would provide an incentive to employers to hire mobile third-country nationals, as they would benefit from a larger pool of qualified and already legally residing third-country nationals.

Economic impacts

Out of the 19 measures included in this PO, five are expected to have a measurable economic impact, whilst the remaining measures, in particular those aimed at improving the use of the EU LTR status, improving the rights of long-term residents and their family members, and facilitating circular migration are also expected to have positive economic benefits, but these could not be quantified 102 . Those economic benefits would derive from that fact that more third-country nationals with an EU LTR status and the enhanced rights attached to it are expected to lead to improved integration, which in return could also lead to better wages, as well as benefits for employers in terms of access to more qualified workforce. Increased circular migration would be expected to result in increased investments in third countries.

The measurable economic impacts concern the measures facilitating intra-EU mobility, as these are all expected to result in an increase of third-country nationals moving to a second Member State, where it is assumed that they would on average increase their wages by 10%, which in turn would lead to higher tax revenue, increased productivity and consumption, and enhanced economic growth. In addition, also as a result of their higher wages, remittances are also assumed to increase as a proportion of their income 103 .

Intra-EU mobility is expected to increase by 1.5 % points 104 , thus from the baseline assumption of 2% to 3.5%, resulting in an increase of just over 70 000 additional mobile long-term residents at the end of a 10-year period, on top of the baseline scenario of around 64 000 mobile long-term residents.

The total collective net economic effects of this increase are, over a 10-year period:

-An increase in tax revenue of EUR 8 million;

-Increased consumption by EUR 70.5 million;

-Remittances increased by EUR 12.6 million (leaving the EU economy and thus subtracted from the total economic benefits).

Adding up to a total economic benefit of EUR 66 million.

Whilst it is not possible to estimate the impact on economic growth (i.e. increase in GDP), it can be assumed that the increased intra-EU mobility of long-term residents would also contribute to a rise in GDP, in particular considering that this group can be assumed to mostly move for (better) work opportunities and integrate easily, as they have already spent a minimum of five years in the EU 105 .

6.2.3.6.2.3.    Efficiency

Administrative compliance costs

Out of 19 measures in this PO, 14 are expected to trigger administrative and compliance costs for national authorities and the European Commission.

For the European Commission, the additional costs will primarily relate to introducing the legislative revisions to the Directive and communicating the changes.

For national authorities, costs include adapting national legislation and relevant procedures, guidance and training, as well as ensuring enforcement and compliance, monitoring and reporting costs to the EU. Other cost categories include preparing information on the changes to disseminate to EU LTR applicants, as well as costs related to a potential increase in application for EU LTR status. However, the extent of the impact of the measures within this PO is varied, and can be grouped in measures that impact almost all Member States, and measures that impact a limited number of them.

In particular, for the following measures additional costs are expected for all/most Member States, as they would need to adapt procedures, invest in additional staff and training, as well as providing information material for both staff and applicants:

·Measure 2.8 allowing third-country nationals to start working/studying in the second Member State while their application is being assessed would impact all Member States and brings additional costs to national authorities that would have to adapt their procedures.

·Measure 2.9 allowing third-country nationals to submit the application while still residing in the first MS would impact 15 MS, bringing additional costs to national authorities that would have to adapt their procedures.

·In the 20 Member States affected by measure 2.12 improving the rules on access to the labour market for long-term residents and their family, the changes would bring additional administrative costs to national authorities that would have to adapt their admission procedures.

·Measure 2.13 shortening the time needed to acquire EU LTR status in the second Member State would impact all Member States and bring some administrative compliance costs, such as through the updating of internal procedures (i.e. updating guidelines).

·Measure 2.14 introducing derogations from rules on family reunification would impact all Member States, resulting in some administrative and compliance costs for national authorities.

·Measure 2.19 regulating the procedure to reacquire the status would result in some compliance costs as 10 Member States would have to introduce a new procedure and 15 Member States would have to adapt their current procedure.

·Measure 2.6 would also result in compliance costs in setting up and running a monitoring mechanism on application for EU LTR status on the basis of investor residence schemes.

The following costs are estimated (totals of the average yearly cost of all measures included in the PO, rounded to the nearest 1,000):

European Commission:

-One-off administrative costs for implementing and communicating the change: 43 000 euro; 

Member States:

-One-off administrative costs for transposition, alignment of procedures, guidance and training, monitoring and reporting: 568 000 euro;

-Recurring administrative costs for transposition, alignment of procedures, guidance and training, monitoring and reporting: 105 000 euro;

-One-off compliance costs to develop and implement new procedures, inform and advise those concerned, etc.: 392 000 euro;

-Recurrent compliance costs to develop and implement new procedures, inform and advise those concerned, etc.: 755 000 euro.

Simplification

Out of 19 measures in this PO, most (13) are expected to have some effects on simplification. Strong simplification effects are expected from the measures facilitating intra-EU mobility and improving the rights of long-term residents and their family. In particular, not allowing the second Member State to apply a labour market test would benefit 16 Member State in terms of administrative simplification, as they would no longer need to apply those tests; and allowing third-country nationals to start working/studying in the second Member State while their application is being assessed would reduce for them the costs induced by lengthy administrative procedures. Employers would also benefit from more efficient procedures for hiring ‘mobile long-term residents’ and reduced costs in the hiring process (e.g. situations of vacancies left unfilled or waiting for an administrative decision). 

The following costs saving are estimated (per average yearly cost):

Member States:

-Recurring cost savings resulting from simplification of current procedures: 24 500 euro,

Third-country nationals:

-Recurring cost savings resulting from simplification: 1 145 000 euro

Employers:

-Recurring cost savings resulting from simplification: 112 700 euro

6.2.4.6.2.4.    Coherence with other EU policies

This PO is expected to contribute to greater coherence between the Long-term residents Directive and other legal migration Directives, and is in line with the New Pact on Migration and Asylum and the EU economic and social policies.

6.2.5.6.2.5.    Overall assessment

Overall, this PO would make a tangible contribution to most objectives and it would have a significant positive effect in terms of social impacts, particularly on third-country nationals and employers. It would lead to some minor administrative and compliance costs for national authorities, with a larger positive impact in terms of simplification. In addition, several measures included in this PO are expected to lead to more significant positive economic impacts. Lastly, most of the measures included under this PO were considered with favour by Member States, except for measure 2.7 - not allowing the second Member State to apply a labour market test, on which some Member States expressed their wish to keep full control over the arrival of third-country nationals in relation to the needs of their labour market.

6.3.6.3.    PO 3: Legislative option 2 – wider legislative revision

6.3.1.6.3.1.    Effectiveness 

Compared to PO2, PO3 includes six additional measures (3.1 – 3.6) that specifically aim to facilitate the conditions to acquire EU LTR status and therefore would contribute further to the objective of having a more efficient and fairer system to acquire the status. In particular, this PO would facilitate the fulfilment of the residence requirement, which numerous consulted stakeholders 106 have noted as posing a significant barrier for the acquisition of the EU LTR status, by requiring Member States to count fully periods of residence as students, and by allowing Member States to lower the residence requirement from five to three years, to cumulate residence periods in different Member States, and to include in the scope of the Directive periods of residence spent solely on temporary grounds. Even though these latter would only be “may clauses” (and therefore not increase the level of harmonisation and the rights of third-country nationals in all Member States), they would still bring a positive impact on those Member States that would choose to implement them. The added value of introducing new options, compared to the current Directive, is that in the current approach Member States are not allowed to facilitate the conditions set out in the Directive even if they wished, while with the proposed optional measures in Option 3, they would be able to facilitate those conditions.

This PO could have a stronger impact than PO2 in particular in those Member States that offer more favourable conditions as part of their national schemes. For instance, in those four Member States 107 where the residence requirement for the national LTR schemes is less than five years, and in those 11 Member States 108 where five years is also the minimum residence requirement for citizenship, the option to issue the EU LTR status after three years, if adopted, would lead to an increase in the use of the EU LTR status. 

It is estimated that, 10 years after the implementation of the revised Directive, there would be an increase of 25% in the number of EU LTR permits 109 , corresponding to approximately additional 800 000 EU LTR holders compared to the baseline.

Allowing the Member States to (optionally) lower the period to acquire EU LTR status from five to three years would have a positive impact also on the integration of third-country nationals (as they would obtain full equal treatment rights faster), in those Member States implementing the option 110 . At the same time, keeping the period of five years to acquire intra-EU mobility rights (also for those Member States choosing this option) would avoid fragmentation in the implementation of the Directive. Furthermore, the concepts of periods of residence spent solely on temporary grounds, regular and stable resources, and integration conditions would be clarified 111 so to limit the discretion of Member States and codify the case law of the CJEU 112 . This would help limit strict practices in certain Member States that pose significant barriers for EU LTR applicants 113 . 

This PO could also have an additional positive impact on intra-EU mobility, in those Member States that would allow cumulating residence periods in different Member States, as this would be an incentive for third-country nationals who have not yet acquired EU LTR status in the first Member State to move to other Member States with the perspective of acquiring sooner the status in the second Member State.

Finally, it is noteworthy that if measures 3.2 and 3.3 would be compulsory for Member States to implement, they would likely face considerable resistance 114 , as many Member States are not in favour of an obligation to lower the required residence period to acquire the status. Nevertheless, this resistance would be avoided by introducing these measures as optional for Member States to implement, which is likely to prove more politically viable even though less effective.

6.3.2.6.3.2.     Expected impacts

Social impacts and impacts on fundamental rights

The additional measures of this PO could have additional positive social impacts on third-country nationals and their integration as, if implemented by the Member States, they would be able to fulfil easier the conditions to acquire the EU LTR status, and therefore an increased number of third-country nationals legally residing in the EU would benefit from its rights, contributing to more social cohesion, which benefits both third-country nationals and EU citizens. For the same reasons, this PO would also have an additional positive impact on the fundamental rights to family and professional life, as well on non-discrimination by limiting Member States’ discretion on assessing the conditions to acquire the EU LTR status.

However, where Member States would opt for lowering the period to acquire EU LTR status from five to three years, this could, in certain cases 115 , place third-country nationals in a better situation than Union citizens (and their third country family members) who are beneficiaries of the Free Movement Directive 116 , as the latter acquire the status of permanent residents, and the rights connected to that status, after having resided legally in the host Member State for a continuous period of five years. 

The positive impacts identified could be also slightly offset by the small additional number of third-country students who are expected to stay in the EU after their studies, and the rather larger share of temporary permit holders who would wish to remain in the EU, as this may contribute to some displacement of EU workers. However, the effect is expected to be moderate as the number of additional students is low, and temporary permit holders are assumed to primarily be low or medium skilled, and potentially contributing to fill labour shortages 117 .

Also businesses/employers would benefit from the additional measures, as more third-country nationals with a permanent status and full access to labour market would help filling vacancies and labour shortages. Finally, third countries may also benefit from an indirect impact, as a facilitated access to EU LTR status for more third-country nationals would result in more stable economic conditions for third-country nationals and higher remittances towards countries of origin.

Economic impacts

The additional measures of this PO aimed at facilitating the conditions to acquire the EU LTR status are expected to have positive economic impacts, which are however impossible to quantify. These impacts would mostly relate to improved integration of the affected groups of third-country nationals, which in return could also lead to better wages and higher tax revenues.

The main additional measurable economic impacts would derive from the expected (limited) higher number of intra-EU mobile long-term residents compared to PO2, due to the expected increase of EU LTR permits issued at the end of the 10 year period (25% increase in this PO compared to 20% increase in PO2).

The total collective economic effects of this increase are, over a 10-year period:

·An increase in tax revenue of 8.5  million euro;

·Increased consumption by  74.2 million euro;

·Remittances increased by 13.2 million euro (leaving the EU and thus deducted from the total economic impact on the EU economy).

Resulting in a total economic benefit to the EU of around 69.4 million euro.

Whilst it is not possible to estimate the impact on economic growth (i.e. increase in GDP), it can be assumed that the increased inflow of third-country nationals will also contribute to a rise in GDP, in particular considering that this cohort is keen to remain and work in the EU and thus likely to integrate relatively easily. Annex 4 provides a hypothetical example of such effect.

Finally, it is important to bear in mind that PO3 also includes the measures of PO2, and the economic effects of the two options should therefore be added up.

6.3.3.6.3.3.    Efficiency

Administrative and compliance costs

This PO would trigger limited administrative and compliance costs in addition to those already foreseen in PO2. These include costs for the European Commission to adapt the text of the directive, and costs for national authorities to transpose and implement it, to ensure compliance and enforcement, and to monitor and report.

The administrative and compliance costs of policy measures 3.2 and 3.3 would differ depending on whether Member States would opt to implement them.

Furthermore, costs would strongly depend on the degree to which a policy measure differs from the status quo. For instance, measure 3.2 does not propose any changes to administrative procedures, but rather a change in the timeline (three rather than five year residence requirement). Therefore, this would just require changes to information to disseminate to third-country nationals, as well as guidelines and training for national authorities in the initial phase. Measures 3.4, 3.5 and 3.6 also foresee minor costs, in that they do not propose large changes from the status quo. In fact, national competent authorities should to some extent already be familiar with the changes foreseen in those measures due to the relevant CJEU rulings.

Measures 3.3 is expected to pose the highest potential administrative and compliance costs, as currently the accumulation of residence periods in different Member States is not possible, and processing proof of residence in different Member States may require slightly more complex application processes.

The average yearly administrative and compliance costs per stakeholder category of this PO are, over a 10-year period (totals of the average yearly cost, rounded to the nearest 1,000): 

European Commission:

-One-off administrative costs for implementing and communicating the change: 57 000 euro;

Member States:

-One-off administrative costs for transposition, alignment of procedures, guidance and training, monitoring and reporting: 781 000 euro;

-Recurring administrative costs for transposition, alignment of procedures, guidance and training, monitoring and reporting: 151 000 euro;

-One-off compliance costs to develop and implement new procedures, inform and advise those concerned, etc.: 452 000 euro;

-Recurrent compliance costs to develop and implement new procedures, inform and advise those concerned, etc.: 900 000 euro.

Simplification

This PO promises some further simplifications across stakeholder categories. Firstly, the main added simplification in addition to PO2 would contribute to creating a uniform understanding among national authorities of different significant terminology used for conditions to acquire EU LTR status. This PO would clarify the concept of residence on ‘temporary grounds’, ‘stable and sufficient resources’ and ‘integration conditions’.

This PO would also bring some simplification for third-country nationals, by addressing complexities within the EU LTR application that acted as a barrier to acquire EU LTR status. As highlighted by stakeholders 118 , these included diverse readings across Member States of which third-country nationals with temporary/formally limited permits are within/out of the scope of the Directive.

The following cost savings are estimated (per average yearly cost):

Member States:

-Recurring cost savings resulting from simplification of current procedures: 24 500 euro.

Third Country Nationals:

-Recurring cost saving resulting from simplification: 1 145 000 euro.

Employers:

-Recurring cost savings resulting from simplification: 112 700 euro.

6.3.4.6.3.4.    Coherence

By facilitating the conditions for a wider group of third-country nationals to acquire EU LTR status, this PO would also bring additional contribution to the objectives of the Commission’s New Pact on Migration and Asylum to support migrants’ integration into local communities and attract (and retain) talent to the EU.

6.3.5.6.3.5.    Overall assessment

Overall, this PO is likely to offer many positive impacts especially with regards to increasing the EU LTR status attractiveness in comparison with national LTR schemes, and most significantly towards facilitating the conditions for a wider group of third-country nationals to acquire the EU LTR status. This PO also presents proportionate administrative and compliance costs and potential simplification for national authorities and third-country nationals.

6.4.6.4.    PO 4: Legislative option 3 – major legislative revision, creating a single EU permanent residence status

6.4.1.6.4.1.    Effectiveness

This PO would by default create a more coherent and efficient system to acquire the EU LTR status, as it would make it the only EU permanent residence status by abolishing national LTR schemes. As a consequence, it is expected that, following the implementation of the revised Directive, all LTR permits issued in the EU-25 would be EU LTR permits.

Furthermore, in all Member States, third-country nationals would be able to apply for the EU LTR status after three years of residence. This PO is also likely to have a significant impact on facilitating intra-EU mobility, as it would grant to long-term residents automatic intra-EU mobility rights resembling EU citizens’ freedom of movement 119 . This PO is likely to have a minor negative effect on enabling circular migration. Indeed, studies found that drivers for migrants to return to their countries are unemployment in the destination country and economic opportunities in their country of origin. 120 Therefore, granting EU LTR holders automatic intra-EU mobility rights would give them the possibility to more swiftly capitalise on employment opportunities across the EU, thus diminishing their incentive to return to the country of origin for other opportunities.

This PO would have a positive effect on improving the right of long-term residents, though the abolition of the national long-term residence statuses would not result in a further improvement in the rights for all potential beneficiaries, as those categories of third-country nationals who benefit from the specific conditions of those national schemes (e.g. bilateral agreements based on shared history with third countries) would have a less facilitated access to permanent residence in the EU.

6.4.2.6.4.2.    Expected impacts

Social impacts and impacts on fundamental rights

The stakeholder group expected to benefit the most from this PO are third-country nationals. This PO would enable a higher number of third-country nationals to have access to EU LTR status and intra-EU mobility rights. This may also mean that with more employment opportunities, remittances are likely to increase, indirectly stimulating the third countries’ economic growth. Nevertheless, the abolition of national schemes would also mean that some categories of third-country nationals who benefit from the specific conditions of those schemes (e.g. bilateral agreements based on shared history with third countries) would have a less facilitated access to permanent residence in the EU 121 . This PO would also have a positive contribution to fundamental rights of long-term residents. 

Assuming that this PO would lead to an increase of intra-EU mobility, employers and businesses would benefit from a larger pool of third-country nationals with facilitated admission into their Member State. This would result in less delays to fill positions and complex bureaucratic procedures to hire an EU LTR holder in another Member State. Indirectly, this may also have an impact on rectifying labour mismatches by facilitating the filling of shortages and alleviating unemployment in certain Member States and thus contribute to economic growth. Nevertheless, as the mobility of long-term residents in this option would be largely similar to that of EU citizens, this would potentially add more competition towards EU workers compared to POs 2 and 3, which could lead to a moderate to significant displacement effect on EU workers. However, this number, spread over 10 years, is still substantially lower than the approximately 1.75 million unfilled job vacancies every quarter, which is also similar to the annual level of unmet vacancies by EU companies. 122 Mobile long-term residents are therefore still likely to rather contribute to filling existing labour shortages, resulting in a low displacement effect of EU workers. Due to a lack of data and the number of assumptions required, it has not been possible to quantify this effect.

As with PO 3, this option could, in certain cases, place third-country nationals in a better situation than Union citizens (and their third-country family members) who are beneficiaries of the Free Movement Directive, as the latter acquire the status of permanent residents, and the rights connected to that status, after having resided legally in the host Member State for a continuous period of five years.

Economic impacts

This PO would entail improved integration of the affected groups of third-country nationals, which in return could also lead to better wages. Measure 4.3, in particular, is anticipated to result in an increase of third-country nationals moving to a second Member State, where it is assumed that they would on average increase their wages by 10%, which in turn would lead to higher tax revenue, increased productivity and consumption, and enhanced economic growth. In addition, also as a result of their higher wages, remittances are also assumed to increase as a proportion of their income.

With measure 4.3, long-term residents are expected to have the same intra-EU mobility rights than EU citizens, and therefore it is assumed that their intra-mobility would increase from the baseline assumption of 2% to 4%, resulting in a net increase of around 645 000 additional mobile long-term residents at the end of a 10-year period.

The total collective economic effects of this increase are, over a 10-year period:

·An increase in tax revenue of 70 million euro;

·Increased consumption by 615 million euro;

·Remittances increased by 110 million euro (leaving the EU and thus subtracted from the total economic benefit);

Resulting in a total economic benefit to the EU of 575 million euro.

Whilst it is not possible to estimate the impact on economic growth (i.e. increase in GDP), it can be assumed that an increased intra-EU mobility of third-country nationals will also contribute to a rise in GDP, in particular considering that this cohort of EU LTR status holders can be assumed to mostly move for (better) work opportunities and integrate easily, as they have already spent a minimum of five years in the EU. Annex 4 provides a hypothetical example of such effect.

6.4.3.6.4.3.    Efficiency

Administrative and compliance costs

The additional measures within this PO pose administrative and compliance costs, in addition to those in PO2 and PO3.

The largest costs foreseen are for national authorities to revise their administrative procedures and ensure the transition of national statuses to EU LTR statuses. The measures within this PO propose many substantial changes from the status quo, and thus would require considerable training and revisions to guidelines. In addition, harmonising administrative procedures for the automatic intra-EU mobility for EU LTR holders would have an impact on several national competent authorities (processing legal migration permits, border management, etc.) and their cooperation with one another.

The average yearly administrative and compliance costs per stakeholder category of this PO are (totals of the average yearly cost of all measures included in the Policy Option, rounded to the nearest 1 000):

European Commission:

-One-off administrative costs for implementing and communicating the change: 68 000 euro;

Member States:

-One-off administrative costs for transposition, alignment of procedures, guidance and training, monitoring and reporting: 928 000 euro;

-Recurring administrative costs for transposition, alignment of procedures, guidance and training, monitoring and reporting: 151 000 euro;

-One-off compliance costs to develop and implement new procedures, inform and advise those concerned, etc.: 401 000 euro;

-Recurrent compliance costs to develop and implement new procedures, inform and advise those concerned, etc.: 1 133 000 euros.

Simplification

This PO is expected to bring simplification for national competent authorities processing LTR applications (in both the first and second Member State), as well as for third-country nationals and EU LTR holders, by ensuring there is one single process to apply for EU LTR status and eliminating the pre-conditions for intra-EU mobility by making it automatic. This would significantly reduce the administrative burden on national authorities and employers. The following cost savings are estimated (per average yearly cost):

Member States:

-Recurring cost savings resulting from simplification of current procedures: 24 500 euro. 

Third-country Nationals:

-Recurring cost saving resulting from simplification: 1 145 000 euro. 

Employers:

-Recurring cost savings resulting from simplification: 112 700 euro.

6.4.4.6.4.4.    Coherence

Overall, this PO is in line with the New Pact on Migration and Asylum. Nonetheless, the measure granting automatic intra-EU mobility would not be coherent with the other legal migration Directives, as Member States would need to allow residence on the basis of residence permits issued by other Member States.

6.4.5.6.4.5.    Overall Assessment

Overall, this PO is expected to have significant positive impacts for third-country nationals and for stimulating intra-EU mobility, as well as ensuring equal treatment of third-country nationals applying for EU LTR status with EU citizens. It foresees potential positive economic impacts due to increased mobility resulting in less labour shortages and improving skills matching. While this PO would be welcomed by the European Parliament 123 , it would likely face major resistance from national authorities, as well as challenges of coherence with other EU legislation and policies, which would seriously hamper its practical and political feasibility. In particular, the abolition of parallel national schemes proved to be politically controversial in the negotiations on the revision of the EU Blue Card Directive 124 , which ended in the final text opting rather for establishing a level-playing field. 125 In addition, the measure granting free movement rights to long-term residents would face significant resistance as it would limit Member States’ control on the number of mobile third-country nationals. This anticipated resistance from the Member States’ side was shared by many stakeholders during the consultations. 126  

7.7.    How do the options compare?

The table below provides an overview of the ratings of the impacts of each Policy Options, on a score from -3 to +3 (-3 indicating the most negative impact, +3 indicating the most positive impact). It should be noted that, while these ratings allow for a comparison between options, the various ratings for a particular option cannot be cumulated since there is no objective basis to weigh one assessment criterion over another.

The effectiveness of the POs was assessed against the three specific policy objectives of the initiative. 

In terms of effectiveness in achieving the objective of creating a more coherent, efficient and fair system to acquire the EU LTR status, the highest scoring POs are PO3 and PO4, followed by PO2. PO1 would be effective mainly in improving the knowledge and awareness of the Directive for both national authorities and potential EU LTR applicants. The increase in visibility and availability of information regarding the EU LTR status as well as the enhanced correct implementation of the Directive foreseen in PO1 would have the effect of clarifying the process of acquiring the EU LTR status but the conditions and requirements for acquiring the status would remain unchanged, and its outcome in terms of improving the actual EU LTR system would be highly dependent on the willingness of Member States to follow the guidelines and de facto change administrative practices. PO2 and PO3 would create a more efficient system by introducing the level-playing field mechanism, with PO3 bringing more substantial facilitations regarding the conditions to acquire the EU LTR status. Finally, PO4 is by default expected to considerably contribute to this objective; however, not allowing Member States to maintain their parallel national schemes is likely to encounter significant resistance, which puts into question a possibility of finding a political agreement on PO4 (see below the analysis on political feasibility). Furthermore, the positive effect of lowering the required residence period from five to three years in all Member States would be counter-balanced by the negative effect of abolishing the more favourable national statuses.

As regard the effectiveness in achieving the objective of facilitating intra-EU mobility, the highest scoring PO is PO4, followed by PO3 and PO2. PO1 would have a very limited effect on this objective besides the expected increase in terms of awareness concerning the intra-EU mobility advantages offered by the EU LTR status. PO2 and PO3 would bring a similar level of facilitations on intra-EU mobility, while PO4 scored higher as it would provide quasi-free movement rights to long-term residents, even if its political feasibility is significantly lower.

Regarding the effectiveness in achieving the objective of improving the rights of LTRs and their family members, all legislative options (PO2, PO3 and PO4) have the same scoring as they include the same measures on improving rights. PO1 would only have a minor effect on this objective as it would only better inform potential EU LTR applicants of the rights and benefits attached to the EU LTR status.

The table below provides an overview of the individual policy measures in terms of effectiveness in achieving the objectives, using a qualitative assessment ranging from ‘no effect’, where the policy measure is not expected to have an impact on the achievement of an objective, to ‘very effective’, where a strong contribution towards the achievement of an objective is expected. It is also mentioned where the policy measure has only an ‘indirect’ effect on the objective.

As regards the social impacts of the POs, different categories of stakeholders were considered in their assessment, namely third-country nationals, EU citizens including EU workers, national authorities, legal practitioners and the judiciary, businesses and employers and third countries. The scoring includes the social impacts of each PO regarding all categories of stakeholders. By including all the improvements foreseen in PO2 in addition to its own policy measures, PO3 appears to be the most favourable in terms of social impacts. Positive social impacts on all categories of stakeholders except for EU workers have been identified also regarding PO1, though the soft nature of its measures and their dependence on the willingness of the Member States to implement them reduce considerably their potential social impacts compared to PO2 and PO3. While PO4 would have significant positive social impacts on third-country nationals by removing national LTR schemes and granting intra-EU mobility rights similar to those enjoyed by EU citizens, potentially also simplifying the work of legal practitioners and the hiring process for businesses and employer, it could lead to a more significant displacement of EU workers compared to the other Policy Options.

None of the POs are expected to have significant environmental impacts.

All legislative options would have a positive impact on fundamental rights, in line with the EU Charter, and in particular, the right to family and professional life (Art. 33), non-discrimination (Art.21), and the rights to have access to social security and social assistance (Art. 34). Building on the positive impacts foreseen under PO2, the most favourable POs in terms of strengthening fundamental rights are PO3 and PO4, the most far-reaching in terms of limiting discretional margins and potential discriminations.

As regards economic impacts, at differing degrees all policy options offer a positive impact. In particular, PO2 would increase intra-EU mobility and improve the integration of long-term residents with the related estimated positive effects on tax revenue, productivity, consumption and economic growth, whilst PO3 would add to this the positive effects caused by an increased share of third-country students and third-country nationals with temporary permits remaining in the EU. Finally, the additional economic impacts of PO4 are granted by the estimated increase in intra-EU mobility of long-term residents.

As regards the coherence, PO3 and PO2 would bring a substantial contribution to the Pact’s goal to attract and retain international skills and talent to the EU, through measures that facilitate the conditions to acquire EU LTR status and facilitate intra-EU mobility. Moreover, PO3 and PO2 would also contribute to closer coherence with other legal migration directives. The most critical challenge to coherence with other legal migration directives is posed by PO4, as Member States would need to allow residence on the basis of a residence permit issued by another Member State.

In terms of administrative and compliance costs, the majority of policy options would have a minor negative contribution. Indeed, the changes foreseen across PO1, PO2 and PO3 would primarily consist in minor changes to administrative processes, guidelines and training of staff, as well as national legislative revision for PO2 and PO3. PO4 promises the highest administrative and compliance costs in that it proposes the largest legislative and administrative changes from the status quo (baseline). For instance, in addition to large revisions of internal administrative procedures and legislation, PO4 would also result in national authorities having to ensure all national LTR holders become EU LTR holders. This may involve complex assessments due to the differing conditions to acquire the national LTR status in comparison the EU LTR in some Member States.

Nevertheless, PO2, PO3 and PO4 also offer significant simplification for Member States’ authorities, third-country nationals and employers/businesses, which for PO2 and PO3 to some extent counterbalances the negative impact brought by administrative and compliance costs.

With regard to principles of subsidiarity and proportionality, the proposed measures in the legislative options PO2 and PO3 would be limited to those aspects that Member States cannot achieve satisfactorily on their own, and the administrative burden on stakeholders would not be disproportionate vis-à-vis the objectives to be achieved, also because those measures would only update or complement the already existing procedures. In particular, the required adaptations in the administrative procedures by Member States are considered proportionate in view of the envisaged improvements in the situation of third-country nationals, more opportunities for employers, and simplification for national administrations. PO4 would, however, raise some issues in terms of proportionality, as in particular the abolition of national schemes and the granting of free movement rights would require more substantial changes on which there is not sufficient evidence they would be justified to reach the objectives of the initiatives.

With regard to the political feasibility, the fact that PO1 would not require legislative amendments would be met with favour by those Member States not wanting further legislation on legal migration 127 , but would contradict the call of the European Parliament to improve the Directive. PO2, PO3 and PO4 would all require legislative amendments and would differ on political feasibility, depending on the foreseen changes. On the basis of the views expressed by Member States 128 on this initiative, it seems that it would be easier under PO2 to get a political agreement as this requires a targeted revision and does not change the conditions to acquire the EU LTR status. It can be expected that the European Parliament would support all elements of this option, while at the same time requesting for more ambition. On the other hand, the measures under PO3 that would facilitate the acquisition of the status, and in particular the obligation to take fully into account student years and the limitation to the national discretion on the resources and integration conditions may not be supported by a number of Member States but is likely to be supported by the European Parliament.

Finally, the measures under PO4 to abolish the national permanent schemes and grant quasi-free movement rights to long-term residents would be supported by the European Parliament but likely face strong resistance from a large majority of Member States. In particular, according to the views expressed by Member States, the removal of parallel national LTR schemes would deprive them from the possibility to have national permits adapted to national specificities (e.g. bilateral agreements based on shared history with third countries) while the freedom of movement would significantly limit national control over admission of third-country nationals to their territory. This resistance was recently made evident during the negotiation on the revision of the EU Blue Card Directive, where a majority of Member States strongly opposed the abolition of parallel national schemes and a substantial simplification of intra-EU mobility, leading to a stagnation of three years in the negotiation of that Directive. A political compromise within the Council could only be achieved by retaining both the national schemes and a number of safeguards on intra-EU mobility of EU Blue Card holders 129 . As the Member States showed opposition with regard to rules concerning a very specific (and limited in number) category of third-country nationals (the highly skilled), it is expected that they would be even more strongly opposed with regard to similar rules concerning a much more numerous and heterogeneous category such as the long-term residents.

8.8.    Preferred option

On the basis of the analysis in the above section, the preferred option is PO3 – wider legislative revision of the Directive.

PO2 contains a large set of policy measures which would address most of the shortcomings identified within the Directive, compared to PO1, which focuses only on the lack of awareness and information, having therefore a very limited impact on all objectives. However, PO2 makes a relatively smaller contribution to the objective of creating a more coherent, efficient and fair system to acquire the EU LTR status, as it does not include changes to the conditions to acquire the status. PO3 as the preferred option would compensate for this gap, as it would include all measures under PO2, in addition to six measures which are expected to make a positive contribution to facilitating the conditions for acquisition of the EU LTR status.

With specific regard to the measure lowering the period to acquire the EU LTR status from five to three years, including it as an obligation (as in PO4) would facilitate the acquisition of the status in all Member States, while it is not possible to assess in advance how many Member States would implement this measure if it were optional (as in PO3). Based on the assessment and on the views of the consulted stakeholders, the arguments in favour of either approach are equally strong. If implemented by all Member States, this measure would allow a significant number of third-country nationals who can prove their integration in the host society already after three years to benefit quicker from all the rights attached to the EU LTR status, which is an outcome that would be welcomed by the European Parliament and different stakeholders (in particular civil society representatives and legal practitioners). At the same time, as the integration process for third-country nationals depends on many factors which are different across Member States, if this measure were optional it would allow Member States to better take into consideration these specific factors, and therefore it is expected that the optional approach would be more welcomed by them. Based on these different but equally valid arguments, it remains an open consideration whether this measure should be included in the preferred option as an obligation or as an option.

Furthermore, and taking into account the recent negotiations on the EU Blue Card Directive, the preferred option does not aim at a ‘full harmonisation’ as PO4, nor it considers the discontinuation of national long-term residence permits as a crucial factor for the successful revision of the Directive. The preferred option manly aims at ensuring that all third-country nationals who have put down roots in the EU have a fair and equal access to the EU status and the rights attached to it, including the right to move more freely within the EU.

Overall, the preferred PO is expected to make an additional positive contribution to all objectives while respecting the principle of proportionality, and to have very positive social and economic impacts. The economic impacts are based on the assumptions that, first, more third-country nationals would have access to the EU LTR status with its attached rights, and, second, an increased share of third-country nationals would be moving to a second Member State. This in turn would lead to higher tax revenue, increased productivity and consumption, and enhanced economic growth. In addition, as a result of likely higher wages, remittances are also assumed to increase as a proportion of long-term residents’ income.

Furthermore, the preferred policy option would result in additional alignment between the Directive and the New Pact on Migration and Asylum, bringing also additional coherence with the case law of the CJEU.

8.1.8.1.    REFIT (simplification and improved efficiency)

(1)amounts presented are the average value of all average annual cost savings across measures included within the preferred option

8.2.8.2.    One-to-one approach 

This section describes the expected impacts of the preferred option on EU businesses and citizens.

§Impacts on EU businesses

EU businesses are expected to benefit from the preferred option and specifically from the measures facilitating intra-EU mobility of long-term residents. In particular, not allowing the second Member State to apply a labour market test would grant employers reduced costs and streamlined administrative procedures in the hiring process of long-term residents from another Member State. The simplified and shorter procedures (allowing the long-term residents to start working at the latest 30 days after submitting their application) could lead to more efficiency to the functioning of the Single market in terms of better job matching and decreased vacancy rate, as well as potential increases in productivity. Also, the simplified procedures for intra-EU labour mobility are expected to benefit SMEs as they are likely to suffer disproportionately from administrative burden when hiring third-country nationals in comparison to large enterprises due to more limited resources and expertise (e.g. legal fees, understanding of immigration law and process, etc.).

The preferred option is not expected to entail any costs or disadvantages for EU businesses vis-à-vis the status quo. Recurring cost savings resulting from simplification are estimated in 112 700 euro.

§Impact on EU citizens

As the intra-EU mobility of long-term residents in the preferred option would be facilitated (in particular through the abolition of the labour market test in the second Member State), it may create some competition towards EU citizens. However, the most important safeguards to avoid pressure on labour conditions, wages and of displacement of EU workers are that the system remains demand-driven (long-term residents in one Member State would still need a job offer to move to another Member State). Therefore, the potential displacement effect on EU workers is expected to be limited, first because of the proportionally low number of EU LTR holders expected to move over a 10-year period, and second because this number is still dwarfed by the number of unfilled vacancies (see above section 6.2.2). Due to a lack of data and the complexity of assumptions required, it has however not been possible to quantify any possible displacement effect. Furthermore, lowering the period to acquire EU LTR status from five to three years, could, in certain cases 130 , place third-country nationals in a better situation than Union citizens (and their third-country family members) who are beneficiaries of the Free Movement Directive, as the latter acquire the status of permanent residents, and the rights connected to that status, after having resided legally in the host Member State for a continuous period of five years.

9.9.    How will actual impacts be monitored and evaluated?

As described throughout the report, the main data sources used to inform the analysis in this impact assessment are European statistics, surveys, research, and consultation with stakeholder groups. The monitoring and evaluation of the revised Directive will need to continue relying on those sources but also explore additional sources, in particular reporting systems at Member State level. The monitoring and evaluation will need to be assured at all stages of the policy cycle (including implementation, application and evaluation), assessing progress and achievements against the following operational objectives:

·To increase awareness of the EU LTR status

·To adapt the conditions to acquire EU long-term residence

·To remove barriers to intra-EU mobility (recognition of qualifications, labour market test)

·To make sure that Member States adopt a facilitated admission procedure for mobile long-term residents

·To clarify and strengthen equal treatment rights under the LTR status

·To facilitate circular migration

·To monitor residence requirements for investor residence schemes

At implementation stage, as for all other recasts and directives, the Commission is expected to organise contact committee meetings with the EU-25 Member States to discuss and clarify any issues that may arise during the transposition phase.

In addition, the Commission will launch a conformity assessment, once the deadline for implementation has passed, to verify that the recast has been transposed correctly into national laws in all EU-25. Following that, the Commission will present a report evaluating the implementation, functioning and impact of the directive approximately two or three years after the transposition deadline, and every three or four years thereafter. These reports will thus also play a key role in the application stage.

During the application stage, the practical implementation and functioning of the recast Directive will be monitored against the operational objectives as listed above, using a series of relevant and measurable outcomes. It will be important to ensure that the indicators can be measured through methods and sources which are easily available and credible. Official European and national statistics published by Eurostat and competent national statistical authorities should be used as much as possible, to monitor the number of EU LTR permits issued (also vis-a-vis national LTR permits) and, where possible, to monitor the number of third-country nationals engaging in intra-EU mobility and in circular migration. Data on the latter two are currently not collected at EU level, but may be recorded by some Member States at national level. In addition, it would be important to make use of existing EU agencies and networks, such as the FRA and the EMN.

To obtain stakeholder views, the Commission could consider launching a Special Barometer or a Public Consultation to obtain both quantitative and qualitative inputs. The Commission will also continue making use of the existing expert groups that contributed to the impact assessment.

The table below provides more detailed suggestions for indicators and for methods of data collection. The timeframe for the monitoring indicators is the first implementation report of the recast Directive.

Annex 1: Procedural information

Lead DG, Decide Planning/CWP references

DG Migration and Home Affairs (DG HOME) is the lead DG. The agenda planning reference is PLAN/2021/11127.

Organisation and timing

The Communication for the New Pact on Migration and Asylum of 23 September 2020 131 announced, among various initiatives, a revision of the Long-term residents Directive, in order to create a true EU long-term residence status and to address the shortcomings identified under the Fitness Check on Legal Migration and its implementation report.

Additionally, the 2021 Commission Work Programme announced on 19 October 2020 that the revision of the Long-term residents Directive is part of the number of measures to be proposed on legal migration 132 . The proposal is included in the Commission Work Programme (Annex II), under the Commission priority “Promoting our European Way of Life”. 133  

The Inception Impact Assessment report was published on 1 December 2020.

The Inter-service Steering Group was set up by the Secretariat-General to assist in the preparation of the initiative. The representatives of the following Directorates General participated in the ISG work: BUDG, EAC, ECHO, EMPL, ESTAT, GROW, INTPA, DIGIT, EEAS, RTD, HR, JRC, NEAR, MOVE, AGRI, JUST, TAXUD, Legal Service.

The ISG met three times on 26 November 2020, 7 May 2021 and 30 August 2021.

Consultation of the RSB

On 22 September 2021, the Directorate-General for Migration and Home Affairs submitted the draft Impact Assessment to the Regulatory Scrutiny Board, which examined the draft Impact Assessment on 20 October 2021. On 25 October 2021, the Board issued a positive opinion with reservations, requesting to rectify a number of aspects. The table below summarises the main recommendations for improvement, and how they have been addressed in this Impact Assessment report.

Evidence, sources and quality

As detailed in Annex 2, the Impact Assessment is based on a series of studies, reports, stakeholders and experts' consultations, of which the most relevant ones are highlighted below.

A wide consultation, including a public consultation, was already conducted in the context of the Fitness Check on EU legislation on legal migration 134 published in 2019, which was supported by a study conducted by an external consultant.

Between 23 September and 30 December 2020, another online public consultation on the future of legal migration was conducted via the Commission’s ‘Have your say’ portal 135 .

Targeted consultations, asking more technical questions on the revision of the Directive, took place in the first half of 2021. Some of these consultations were carried out by the Commission independently and some in the context of a study commissioned to an external contractor.

Replies to the two above-mentioned public consultations came from EU citizens, organisations and third-country nationals (residing inside or outside the EU), business associations and organisations, non-governmental organisations, academic/research institutions, trade unions, ministries, public service entities. Targeted consultations included competent authorities in the Member States, business associations and organisations, non-governmental organisations, academia, think tanks and public service entities. The replies to the consultations gave a very comprehensive overview of the main problems in the functioning and implementation of the Directive.

Taken together, the consultations carried out by external consultant and the Commission independently have generated a good amount of data. However, much of this data is of a general nature, especially with regard to questions of costs/administrative burdens. For this reason, the Impact Assessment relies on a qualitative methodology capable of accommodating quantitative measures and reflecting quantitative estimates from other sources. The cost estimates that are provided in the Impact Assessment are based on a combination of factors, including representative data on costs provided by certain Member States and stakeholders.

The analysis presented here has been partly constrained by the negative impact of the Covid-19 pandemic that caused distortions on the incoming migration flows and the intra-EU mobility. While data on long-term residence permits for 2020 is not yet available, published statistics by the end of July 2021 show changes in trends of migration. For instance, net migration which is the difference between the number of immigrants and the number of emigrants decreased in the EU during 2020 compared to 2019 136 and most Member States for which data is available issued less single residence permits in 2020 than in 2019 137 . Therefore, it was more difficult to estimate and quantify the potential impacts of the policy options and of various factors that influence the attractiveness and labour migration flows, e.g. entry requirements, level of rights and the (real or perceived) "burdens".

Annex 2: Stakeholder consultation

This annex provides a synopsis report of all stakeholder consultation activities undertaken in the context of this Impact Assessment.

1.Consultation strategy 

The overall aim of the consultation activities was to collect the views of the relevant stakeholders on the policy initiatives in the area of legal migration at both national and EU level and to offer them the opportunity to inform the impact assessment and, in particular, the development of policy options addressing the problems identified. The consultations sought to collect inputs pertaining to:

(1)collect objective data, information, and evidence to feed into the Impact Assessments;

(2)collect views on the issues at stake and suggested EU involvement, as well as opinions, ideas and concerns about possible solutions and impacts.

In preparing the initiative, Commission services carried out an initial mapping of primary stakeholders, which include: (i) EU institutions and agencies; (ii) relevant authorities in the EU Member States; (iii) networks of NGOs working at the EU level; (iv) subject-matter experts; (v) economic and social partners; (vi) trade unions; (vii) international organisations and (vii) employers’ associations.

Over the course of the consultation process, Commission services used a variety of methods and forms of consultation, which included:

·Targeted consultations with stakeholders both independently and as part of the study that supported the development of this Impact Assessment.

·An opportunity for all interested parties to provide feedback on the Inception Impact Assessment via the Commission’s ‘Have your say’ platform;

The study was commissioned by the Commission’s Directorate-General for Migration and Home Affairs (DG HOME) and conducted by an external contractor.

More specifically, a wide consultation process, including a public consultation, was already conducted in the context of the Fitness Check on EU legislation on legal migration 138 published in 2019, which was supported by a study conducted by an external consultant. Subsequently, between 23 September and 30 December 2020, another online public consultation on the future of legal migration was conducted via the Commission’s ‘Have your say’ portal 139 . In total, 226 responses were received to the questionnaire and 38 written contributions, from a wide range of actors representing all relevant stakeholders 140 . This public consultation aimed to identify areas where the EU framework on legal migration could be further improved, including through possible new legislation. It included questions relevant for the revision of both the Long-term residents Directive and the Single permit Directive.

The majority of respondents' views to this consultation were aligned that the EU should take both new legislative and practical measures in the area of legal migration. Improving the information on legal pathways (92% or 208 out of 226 total responses), improving systems to recognise professional qualifications and validate professional skills acquired (92% or 207 responses) and the support in the exchange of good practices (87% or 197 responses) were perceived as the most prominent practical measures that the EU should focus its initiatives on.

Concerning improving intra-EU mobility, a large majority of respondents agreed or strongly agreed on the importance of improving intra-EU mobility of third-country workers (72% or 162 respondents), whilst 14% disagreed or strongly disagreed (32 responses), and 24% (32) responded as neutral.

Finally, respondents agreed that the EU should strengthen and promote the long-term residents Directive and make long-term resident status a truly EU-wide residence status, with strengthened intra-EU mobility rights (79% or 178 respondents strongly agreed or agreed). Only 9% (or 21 respondents) either disagreed or strongly disagreed with this statement, with the remaining 12% (or 27 respondents) providing a neutral response.

In light of the consultations already conducted, no dedicated public consultation took place in the framework of this impact assessment.

Targeted consultations were however organised in the first half of 2021, with the purpose to cover more technical questions compared to the ones included in the public consultations. In particular, they helped defining the policy options and assessing their impact.

This synopsis report presents a succinct overview and the conclusions of the consultations undertaken in relation to the impact assessment on the revision of the Directive. The main results are summarised below and, where appropriate, referenced and taken into account in the Impact Assessment report.

2.Overview of the consultations

A number of targeted consultation meetings were held in 2021 as part of the study in support of the Impact assessment on the revision of the Directive.

·1 March: the Portuguese presidency of the Council of the EU held a Working Party on Integration, Migration and Expulsion, to have an exchange of views on the legislative initiatives in the field of legal migration, where the Commission also presented the results of the public consultation.

·2 March: meeting of the newly established Expert Group on the Views of Migrants in the field of Migration, Asylum and Integration.

·10 March: meeting of the European Network of Public Employment Services.

·14 April: meeting of the Commission Informal Expert Group on Economic Migration (EGEM).

·20 April: meeting with representatives of the Civil Society.

·29 April: meeting of the EU Legal Migration Practitioners Network.

·5 May: meeting with Economic and Social Partners.

·18 May: meeting of the Contact Group on Legal Migration.

Ad hoc queries were also launched in the framework of this impact assessment to the members of the European Migration Network 141 .

During all targeted meetings, the Commission presented the LTRD’s main objectives and proposed a discussion on several shortcomings highlighted in the Fitness Check on legal migration and the implementation reports of the LTRD. Topics and areas discussed included:

·The under-use of the LTRD (due to among others a lack of information about the existence and the benefits of the LTRD, and the attractiveness and added-value of the LTRD);

·The conditions to acquire the long-term resident status (among others the requirement for five years of continuous and legal residence, the exclusion of the period spent with temporary permits, language requirements and the condition for stable and regular resources);

·The barriers to exercising intra-EU mobility (among others any disproportionate pre-conditions for intra-EU mobility);

·The lack of clarity and consistency in the rights of long-term residents and their family members; and

·The failure to ensure circular migration of long-term residents.

An overview of the results of and main points raised during the seven targeted consultations can be found in section 2 below.

3.Results

Under-use of the LTRD 142

According to a majority of stakeholders, the under-use of the LTRD is at least in part due to a lack of information or awareness about the LTRD itself or about its benefits. 143 According to representatives of Civil Society, in some Member States, the lack of awareness amongst migrants might be due to poor administrative practices and contentious national policy choices. 144  In particular, it was reported that some national administrations do not have sufficient knowledge of procedures concerning the EU LTR status or find them too complicated compared to the ones concerning the national permits (Representatives of the Civil Society, EU legal migration practitioners’ network).

Various suggestions were made for improving the situation, among which:

ŸA legal obligation for Member States to inform third-country nationals of the possibility to apply for the EU LTR status (Economic and Social Partners), for example when they receive an application for the national LTR status (EU legal migration practitioners network) or during Member States’ integration courses (Commission Expert Group on the Views of Migrants);

ŸTechnical support or training to relevant entities and service workers within Member States (Representatives of the Civil Society, Commission Economic Group on the Views of Migrants);

ŸAwareness-raising campaigns, enhanced communication or guidelines addressed to both Member States and possible EU LTR applicants (Economic and Social Partners, Contact Group on Legal Migration) 145 , among others on the different permits and the possibility to hold both the EU and national statuses (Representatives of the Civil Society);

ŸBetter accessible and understandable information from Member States authorities, for example on their websites (EU legal migration practitioners network, Economic and Social Partners); and

ŸEU legal migration codification that third-country nationals, national authorities and organisations could understand and refer to when it comes to the purpose and procedures of the legal migration Directives (Representatives of the Civil Society).

Besides this, stakeholders also underlined issues with the attractiveness and added value of the LTRD. 146 The European Public Services network suggested extending the validity of the LTR permit (from five years to ten years after renewal), whereas the EU legal migration practitioners network focused on lengthy LTR application processing time compared to other schemes. It also emphasised – together with some within the Contact Group on Legal Migration – that in many Member States, five years of continuous residence are enough to acquire citizenship – in some cases especially for students, for whom only half of the period of residence is counted for the EU LTR status. Finally, the EU legal migration practitioners’ network pointed out that, in some Member States, there is a very large level of discretion left to national authorities when assessing applications for the EU LTR status, as opposed to the national status. On the basis of this, it suggested the triggering of sanctions following the receipt of complaints on Member States who do not implement the LTRD effectively or whose criteria are too difficult to meet.

The Expert Group on Economic Migration (EGEM), as well as some within the Contact Group on Legal Migration, noted that the benefits or differences of the LTR status vis-à-vis a national scheme would have to be clarified better; the EGEM believed it would be useful to ask Member States where the LTRD made a significant positive impact, or what the drivers of a high number of EU LTR permits issued were. When reaching out, the private sector could also be targeted more, as employers can benefit from the effect of the EU LTR status on the stability of the labour force and the ability to retain workers.

Some members of the Working Party on Integration, Migration and Expulsion strongly underlined the need to keep the national schemes. In particular, they expressed the view that the abolition of the national schemes would undermine the Member States’ competencies and would bring no added value, also in those countries where national long-term resident permits are not issued (e.g. Austria).

Conditions to acquire long-term resident status

A number of stakeholders emphasised some issues with the requirement for five years of continuous and legal residence, also in combination with the exclusion of the period spent with temporary permits (mostly pertaining students).

The Commission EG on the Views of Migrants, the European Public Employment Services network, the Economic and Social Partners and the Representatives of Civil Society explicitly noted that five years is too long, especially compared to national schemes. 147 The Economic and Social Partners believe the number of years should be reduced to three. Importantly, however, Representatives of Civil Society also recalled that before the adoption of the LTRD, a large majority of the Member States had a five-year (or more) requirement to obtain their national status. Only three Member States foresaw shorter periods. The Member States might still be reluctant to choose a permanent status arising earlier for the EU than for the national status. Furthermore, the majority of members from the Contact Group on Legal Migration believes the current conditions are appropriate and sufficient, particularly as regards the five-year requirement.

The Commission EG on the Views of Migrants underlined that periods of legal residence spent in two or more Member States cannot currently be cumulatively counted. Some Civil Society Representatives agreed that all periods of residence should be counted whether they are continuous or not. They also noted that there is a need to address the definition of the place of residence, the assessment of which could be difficult, especially in situations of remote work from a different Member State or a third country.

The Commission EG on the Views of Migrants, the Informal EGEM, the Representatives of the Civil Society and the Economic and Social Partners brought up that students’ years of studies should be counted in full, if only to make the EU more attractive to international talent (Civil Society).

Besides this, the Commission Economic Group on the Views of Migrants and the EU legal migration practitioners’ network were of the opinion that language requirements in some Member States are disproportionate.

Finally, the condition for stable and regular resources might be challenging to meet, in particular for low-skilled third-country workers, students, or challenging to prove (Commission EG on the Views of Migrants). The Commission EG suggested to include – as an alternative or additional condition to the resources requirement – a points system to acquire the EU LTR status (giving for example points to consider the impact of social entrepreneurs or the level of studies of the applicant). Besides this, the EU legal migration practitioners’ network pointed out that some Member States interpret this condition very strictly. As a general solution, members of the EU legal migration practitioners network suggested the automatic triggering of sanctions following the receipt of complaints regarding bad implementation (including the implementation of criteria too difficult to meet) of the LTRD by the Member States.

Barriers to exercising intra-EU mobility

Although some members from the Contact Group on Legal Migration did not see the necessity of facilitating intra-EU mobility, others disagreed. In line with this, other stakeholder groups emphasised disproportionate pre-conditions for intra-EU mobility for LTR status holders compared to other EU workers, concerning among others:

ŸLabour market tests (LMT) (EGEM, Representatives of Civil Society, Economic and Social Partners);

ŸThe recognition of qualifications (European Public Employment Services network, EGEM); and

ŸProof of integration (Commission EG on the Views of Migrants).

This is, according to stakeholders (European Public Employment Services network, Informal EGEM, Economic and Social Partners) particularly troublesome for intra-EU mobility for professional purposes, which could increase the dynamism of the European Single Market and resolve shortages, among others. Furthermore, the European Public Employment Services network critically commented on how LMTs are only required for low to medium-skilled Third-country nationals in some Member States, with the Commission EG on the Views of Migrants also highlighting discrimination in the labour market against third-country nationals and additionally pointing towards the right or ability of family members to follow. According to the EGEM and Representatives of the Civil Society, issues with intra-EU mobility in relation to the LTRD defeats the added-value of the LTRD, with Civil Society once again highlighting the special position of beneficiaries of international protection.

Some of the solutions suggested include, among others:

ŸBetter communication to national administrations on LTRD rules and benefits regarding intra-EU mobility (EU legal migration practitioners network);

ŸBetter communication between Member States (EU legal migration practitioners network, Contact Group on Legal Migration);

ŸMutual recognition of professional qualifications among Member States (EGEM, EU legal migration practitioners network, Economic and Social Partners);

ŸSome LTRD provisions being beneficial in recognising professional qualification (for instance applying equal treatments measures) (European Public Employment Services network);

ŸReviewing measures in other and more recent Directives that seem to be more effective (European Public Employment Services network);

ŸReplace LMTs with other good practices (Representatives of Civil Society, EGEM) or make them into a purely administrative process whereby a TCN can work whilst awaiting the application processing (EGEM, Representatives of Civil Society).

Some members of the EGEM noted that increased intra-EU mobility might not make the EU LTR status more attractive, as TCN mobility within the EU is relatively low, at least in part due to the ‘investment’ necessary to acquire LTR status in a Member State. Additionally, the LTR status is almost always acquired by individuals without the support of an employer, who might focus on initial admission and cross-Member State employment. However, other members of the EGEM disagreed with this. They noted that TCN mobility might very well be different in times of crisis (e.g., economic, pandemic) and that the administrative burden of temporary permits might be enough to push employers towards the LTR status for their employees. The Informal EGEM and some of the Economic and Social Partners considered a talent pool or one-stop-shop for candidates to intra-EU mobility. Finally, some members of the Working Party on Integration, Migration and Expulsion argued against the added value of having automatic intra-EU mobility rights for long-term residents, and expressed the need to first implement the existing rules and observe their outcomes before taking further steps.

Lack of clarity and consistency in the rights of long-term residents and their family members

In terms of the rights of long-term residents, Representatives of the Civil Society noted firstly that clauses concerning social security and social assistance should be removed or reduced by a horizontal revision of all legal migration Directives concerned and not by amending only the LTRD.

Besides this, the European Public Employment Services network and the EU legal migration practitioners’ network underlined the problem with (ethnic) discrimination in the recruitment process. The European Public Employment Services network suggested mapping the qualifications and competences of third-country nationals to deploy them at the right level while filling vacancies. Relatedly, the Commission Economic Group on the Views of Migrants wished to see additional data (e.g., on the situation of women, poorly paid jobs and difficulties with meeting LTR conditions; on the intersectionality of discriminations people face at entry-level jobs) to ensure non-discrimination. It further noted that the revised LTRD could be aligned with EU Integration Action Plan and EU Action Plan against Racism to explore the possibility of introducing non-discrimination infringement measures. According to economic and social partners, the Directive could be improved by excluding the possible discrimination in the access to public employment or in the possibility to access certain voting rights.

Other specific issues that were mentioned include the following:

ŸThe reluctance to let third-country nationals purchase immovable property (EU legal migration practitioners’ network, Contact Group on Legal Migration, Representatives of the Civil Society). Linked to this topic, Representatives of Civil Society noted that the clause on equal treatment with regard to housing should not be limited to public housing.

ŸPersons applying for LTR status should have the same procedural safeguards and rights as those who apply for the national LTR permit as some within the EU legal migration practitioners pointed out differences between the two permits in the probability of winning an appeal against a negative decision.

ŸConcerning the transfer of social contributions, there is a lack of clarity on how this can be done in practice when transferring them from one Member State to another (EU legal migration practitioners’ network, Representatives of the Civil Society).

ŸThe fact that the withdrawal of protection status may sometimes lead to the withdrawal of the EU LTR status should be addressed (Economic and Social Partners).

Besides this, some believe there are problems with the rights of family members of long-term residents. The EGEM and the Contact Group on Legal Migration see some issues with family members’ access to the labour market. The Economic and Social Partners advocated for extending the treatment granted to LTR permit holders to their family members, for example in terms of taxes, social security and social protection. The Commission EG on the Views of Migrants believes the family members are entitled to facilitated access to the LTR permit or to a facilitated procedure to extend their visas or permits. In general, the EU legal migration practitioners’ network believes the provisions in the LTRD regarding the treatment of family members are very vague; it (together with some members of the Contact Group on Legal Migration) underlined that preferential treatment could act as an incentive for the use of the LTR status.

Failure to ensure circular migration of long-term residents

According to the Commission EG on the Views of Migrants, the Representatives of the Civil Society, and some within the Contact Group on Legal Migration, 12 months of absence allowing long-term residents to leave the Member State of residence while retaining the LTR status is too short; up to a minimum of two years is suggested as an alternative. Multiple considerations, such as the current sanitary situation restricting return travels (Commission EG on the Views of Migrants) and the possible distribution of knowledge and skills (Representatives of the Civil Society) play a role in this context. Some within the Contact Group on Legal Migration described difficulties with the interpretation of the concept of ‘absence’ as some members witnessed situations where an EU LTR would only come back in the MS for a couple of days to reset the counting of the period of absence while residing elsewhere.

Other

In the context of the COVID-19 pandemic, both Representatives from the Civil Society and the EU legal migration practitioners’ network referred to flexibility allowing for derogations in case of exceptional situations. According to Representatives of the Civil Society, the impact of the pandemic should be considered both for the five-year requirements and for the 12 months of allowed absence while having the LTR status.

4.Direct feedback on the inception impact assessment

No direct feedback received.

5.Conclusion

The findings from the targeted consultation meetings showed several shortcomings that could be addressed in the revised LTRD.

Concerning the under-use of the LTRD, a majority of stakeholders pointed towards a lack of information or awareness about the LTRD itself or about its benefits. Suggestions for improvement ranged from technical support or training, awareness-raising campaigns, enhanced (and accessible, understandable) communication or guidelines, to legal obligations to inform about the LTR status or EU legal migration codification. Stakeholders also underlined issues with the attractiveness and added-value of the LTRD, pointing towards several areas for improvement – touching upon among others the validity of the permit, the processing time or discretion, the added-value and clarification vis-à-vis national schemes.

Concerning the conditions to acquire long-term resident status, four stakeholder groups explicitly noted that the requirement for five years of continuous and legal residence is too long, especially compared to national schemes. This also in combination with the exclusion of the period spent with temporary permits, for example in the case of students. Some suggested the shortening of the period, while others highlighted that Member States might be reluctant to choose a permanent status arising earlier for the EU than for the national status. Further remarks were made on the periods of legal residence and on definitions. Besides this, two stakeholder groups found the language requirement to be disproportionate, and two underlined issues with the condition for stable and regular resources.

Concerning the barriers to exercising intra-EU mobility, stakeholder groups emphasised disproportionate pre-conditions for intra-EU mobility for LTR status holders compared to other EU workers, concerning among others:

ŸVisa requirements in the second Member State despite the LTR status (EGEM, Representatives of Civil Society);

ŸLabour market tests (LMT) (EGEM, Representatives of Civil Society, Economic and Social Partners);

ŸThe recognition of qualifications (European Public Employment Services network, EGEM); and

ŸProof of integration (Commission EG on the Views of Migrants).

This could hinder the dynamism of the European Single Market and the resolving of shortages. Further remarks were made on the position of low to medium-skilled TCNs, among others. According to the EGEM and Representatives of the Civil Society, issues with intra-EU mobility in relation to the LTRD defeats the added-value of the LTRD. Seven potential solutions were suggested by various stakeholder groups, ranging from (once again) solutions involving better communication, to efforts to recognise professional qualifications, and the review of LMTs.

Concerning the lack of clarity and consistency in the rights of long-term residents, one stakeholder group noted firstly that derogations concerning social security and social assistance should be removed or reduced by a horizontal revision of all legal migration Directives concerned and not by amending only the LTRD. Besides this, issues pertaining to ethnic discrimination in the recruitment process, the situation of women, and the purchasing of immovable property came up, among others. A variety of solutions was suggested at different levels of intervention. Concerning the lack of clarity and consistency in the rights of the family members of long-term residents, the following topics were prominent: access to the labour market, the extension of the treatment granted to LTR permit holders to their family members (for example in terms of taxes, social security and social protection), and the entitlement of family members to facilitated access to the LTR permit or to a facilitated procedure to extend their visas or permits. In general, the EU legal migration practitioners network believes the provisions in the LTRD regarding the treatment of family members are very vague; two stakeholder groups underlined that preferential treatment could act as an incentive for the use of the LTR status.

Concerning the failure to ensure circular migration of long-term residents, stakeholders from three stakeholder groups underlined that 12 months of absence allowing long-term residents to leave the Member State of residence while retaining the LTR status is too short; up to a minimum of two years is suggested as an alternative. Stakeholders from two stakeholder groups also referred to a need for more flexibility allowing for derogations in case of exceptional situations, such as the COVID-19 pandemic (impacting for example the five-year requirements and the 12 months of allowed absence).

Annex 3: Who is affected and how?

1.Practical implications of the initiative

The preferred option (PO3) would have positive impacts on most target groups. In particular, there would be significant positive impacts for third-country nationals, who:

-would benefit from the measures introducing a level-playing field by having a real choice between the EU LTR permit and the national LTR permits;

-would be able to fulfil easier the conditions to acquire the EU LTR status, and therefore an increased number of TCNs legally residing in the EU would benefit from its rights, contributing to more social cohesion, which benefits both TCNs and EU citizens; would benefit from better intra-EU mobility rights by having more chances to be recruited or accepted for studies in other Member States;

-would have better rights for them and their family members, to support their full integration in the society;

-would be able to exercise circular migration without losing their EU LTR status.

As the intra-EU mobility of long-term residents in this option would be facilitated (in particular through the abolition of the LMT), it may create some competition towards EU workers. However, the most important safeguards to avoid pressure on labour conditions, wages and of displacement of EU workers are that the system remains demand-driven (long-term residents would still need a job offer to move to another Member State). Therefore, the potential displacement effect on EU workers is expected to be limited,

A positive impact is also expected on third countries, as the measures facilitating circular migration would help counter the “brain drain” phenomenon allowing TCNs to move and stay longer in their country of origin, for instance for investment or business purposes. Furthermore, the measure enabling the TCNs to re-acquire their EU LTR status will be able to maintain a more stable economic situation which would ultimately allow them to maintain the level of remittances sent to their country of origin.

The competent national authorities would need to adapt the existing procedures and ensure compliance with the new rules. In particular, they would have to adapt procedures on LTR applications as a consequence of the level-playing field mechanism and the modified conditions for acquisition of the status, as well as on intra-EU mobility applications and applications to reacquire the status after long absences.

The preferred PO would also have important impacts on businesses/employers, in particular with regards to the measures facilitating intra-EU mobility. As a result of these measures, which is especially positive for SMEs, employers would benefit from a larger pool of qualified third-country nationals already legally residing in the EU.

 Summary of costs and benefits

The tables below present the costs and benefits associated with the preferred Policy Option, PO3. Benefits are mainly in the form of direct costs savings across MS national authorities, TCNs and employers. On the other hand, costs were mainly identified for national authorities and include one-off and recurring costs.

(1) Estimates are relative to the baseline for the preferred option as a whole (i.e. the impact of individual actions/obligations of the preferred option are aggregated together); (2) Please indicate which stakeholder group is the main recipient of the benefit in the comment section;(3) For reductions in regulatory costs, please describe details as to how the saving arises (e.g. reductions in compliance costs, administrative costs, regulatory charges, enforcement costs, etc.; see section 6 of the attached guidance).

(1) 1) Estimates reported the totals of all the average annual costs included in each measure included within the Policy Option, totalled for all cost items associated with each stakeholder group (including costs related to transposition, familiarisation, adaptation, IT systems acquisition/update, information provision, communication).

Annex 4: Analytical methods

This annex presents the overall analytical methods used, and assumptions made, for the quantification of costs (and cost savings) and economic impacts.

The approach used for the cost-assessment is a Standard Cost Model. Costs and, where relevant, cost savings were itemised and quantified to the extent possible across each of the proposed measures. These were then aggregated across measures to estimate the overall average or total costs to all relevant stakeholder groups associated with the proposed Policy Options.

In addition, a theory-based model was used for the estimation of economic benefits to measure the impact of the proposed Policy Options on tax revenue, remittances and consumption. This model uses various equations, the parameters of which are taken from the literature or qualitative evidence such as experts’ advice and validation. No other econometric models were used, as it was not deemed feasible on the basis of the data available.

The steps taken, calculations used, and main assumptions made in this analysis are summarised below.

General

The following main assumption has been made concerning the evolution of the EU long-term residence (EU LTR) permits:

Without EU action, the number of EU LTR status holders (stock and flow) will evolve in a linear way, based on extrapolation using European statistics on LTR status holders for 2015 – 2019 148 , which thus takes account of the gradual decline in the share of EU permits vis-a-vis national permits over the second half of that decade, whilst also considering the continuously growing total number of third-country nationals with long-term residence status. No research was available to suggest any other trend.

The baseline scenario for the number of EU LTR status holders over the period 2020-2030 was achieved by estimating the average annual change in EU LTR status holders over 2015-2019 and using such average to extrapolate the linear trend using as starting point in 2014. Over the last 10 years, trends have been affected by the effects of the financial and economic crisis, which would make 2009-2019 more volatile and less representative. For extrapolation purposes, the period 2015-2019 was chosen considering that those are more representative years, of the way in which the situation would evolve in the foreseeable future.

Based on most recent available data from Eurostat, (  ), in 2020 there was an abrupt fall in the number of first permits (including LTR) issued due to the COVID-19 pandemic and travel restrictions. However, the trend anterior to 2020 was approximately linear since 2016. The linear trend, therefore, is the best approximation of the baseline evolution, if we assume a gradual return to pre-COVID situation. Other trends can be envisaged, but they would be based on speculative assumptions and hypothesis which would be difficult to validate ex-ante, in respect of the linear trend.

Based on retrospective analysis, over the last decade, the increase in the numbers of national permits was much more pronounced than that of EU permits. Therefore, we expect the continuation of the relative decline of the share of EU permits, assuming that Member States will continue to issue their national permits. However, in the case of option 4, the issuance of national permits will no longer be possible, with a European scheme subsuming the total population of permits holders.

In terms of absolute total numbers, the population of long-term residence permit holders is growing continuously since 2012, with the exception of the year 2020 due to COVID-19 pandemic. It seems reasonable to assume that this trend will continue, once the situation will return to conditions that are more normal. https://appsso.eurostat.ec.europa.eu/nui/submitViewTableAction.do

Long Term Residence baseline extrapolated from 2015-2019 period

Analytical methods applied to estimate costs and cost savings

The costs and possible cost-savings of the policy measures have been calculated for three main stakeholder groups, namely 1) national authorities, 2) employers/businesses and 3) third-country nationals, as well as for 4) the European Commission.

It is important to note that there is assumed to be a sub-group within the second group, employers/businesses, which includes small and medium-sized enterprises (SMEs). Whereas this sub-group were not accounted for separately as part of cost and cost savings calculations due to limitations in the availability of data, the cost savings associated with certain measures included within the policy options assessed (in particular, measure 2.6) are likely to affect SMEs to a greater extent. This is because it is reasonable to assume that SMEs would face a higher relative threshold associated with hiring procedures for TCNs, which leads to a disproportionate administrative burden given their more limited resources when compared with larger organisations. As such, cost savings resulting from faster and simpler hiring procedures, the main type of saving associated with employers, would benefit SMEs relatively more. Therefore, it is possible that the figure for Employer cost savings reported is an underestimate.

The overall approach to the estimation of costs and cost savings consisted of the following key steps:

1.Firstly, the cost items associated with each policy measure were assessed, considering the type of cost (i.e. one-off or recurring), the stakeholder group impacted and, in the case of Member States, how many of these were likely to be impacted by the measure/change.

2.For each cost item, estimates for the value of the cost/cost saving were developed. Further details on how each type of cost item was estimated are set out by stakeholder group below. Estimates and assumptions were based on the Study supporting this Impact assessment 149 , including the inputs provided by an expert panel, 150  and the study team members’ experience of conducting similar quantification exercises, in particular on the cost of reporting to the EU, training of staff, familiarisation with EU legislation, transposition, and compliance costs. The approach is similar to the one used most recently for a DG JUST Study on the impacts of a possible revision of the Consumer Credit Directive (CCD) in 2020-2021, and DG HOME Evaluation of the Counter-Terrorism Directive, among others in previous years. For the CCD, the costing approach had in fact been discussed as part of a workshop on policy options and discussed with key study experts. In some cases, estimates of the cost values are based on estimates of the baseline scenario when the LTR was adopted in 2003. These were then used as a reference on which to base assumptions for the costs associated with individual measures, as detailed below.

3.Costs and costs savings for each cost item and policy measure were then aggregated across Member States and over the period between 2021-2030 (excluding 2020 as the baseline year). This enabled aggregate costs across all relevant Member States to account for differences in costs across Member States (e.g. public sector salaries, LTR applicants etc.). In addition, to estimate aggregate costs for the implementation of each measure across all affected Member States, where relevant, the specific costs per Member State were estimated, considering evidence on whether the policy measure would require change in a Member State or not.  

4.Finally, estimated costs and cost savings were aggregated for each policy option. This consisted of:

5.Estimating the average annual costs (total costs across all relevant Member states) of each cost item included within each policy measure.

6.Aggregating cost items into a more ‘streamlined’ list of costs items/categories 151 .

7.For costs, totalling all the average annual costs (across all relevant Member States) of all the measures included within each policy option for each cost item. Costs presented are totals of the average annual costs of all measures included in each policy option for each cost item. These totals do not exclude any costs that are duplicated within each policy option when aggregating all measures (e.g. monitoring and reporting costs, which are included in each measure but would be delivered at the policy option level in practice). This is because, when estimating costs, assumptions were made that took into account the fact that individual measures would be aggregated i.e. assumptions made around the amount of FTE days or effort required for each cost item were relatively conservative for individual measures, since it was assumed that measures would not be implemented in isolation.

8.For cost savings, average figures were used (i.e. the average cost saving of all the average annual total cost savings across all policy measures included within each policy option). This is because several of the cost savings that were thought to be associated to policy measures were not possible to quantify at this stage due to a combination of a lack of available data and further validation required for certain assumptions on values. As such, it was deemed to be more accurate to present average cost saving figures (i.e. the average cost saving across all measures included within the Policy Option) rather than totals that in effect excluded several potential savings. However, this may mean that total cost savings are somewhat underestimated, since figures have not been aggregated across all the measures within each Policy option. It is important to note, on the other hand, that in most cases relatively few policy measures were associated with quantifiable cost savings (6 for national authorities, 2 for TCNs and 1 for employers)..

Details on the specific calculations and assumptions applied to estimate costs for each stakeholder group are set out below, based on the supporting study of this Impact Assessment 152 .

Estimation of costs for the European Commission

The costs for the European Commission were mainly calculated in relation to introducing amendments to the LTRD and issuing guidelines, training material and information as well as ensuring compliance to new measures. These were based on estimates as to the number of days that would be required per type of activity, multiplied by the daily cost of a Commission official level AD10 (i.e. monthly salary estimated based on EU statistics 153 ), assuming an average working month of 22 days, and an average 36.2 hours worked per week (based on figures from Eurostat in 2019 on the average number of hours worked per week, assuming a 7-hour working day 154 ).

Estimation of costs for national authorities

The calculations of administrative/compliance costs for national authorities were largely based on a general formula:

Number of days per FTE * number of FTEs * daily wages

However, where available, calculations of costs were based on estimates of annual FTE time required in the baseline scenario – when the LTR was adopted in 2003, as noted in the above. In these cases, the formula was:

Number of days per FTE in 2003 * proportion of these number of days required per measure (%).

We have assumed that only one national authority would be affected in each case.

Typically, the number of hours and number of FTEs assumed for activities, such as transposition, monitoring, reporting, familiarisation, adaptation, training, communication/ information provision, etc. were based on the study team’s assumptions (in turn based on study team members’ experience of conducting similar quantification exercises). Where baseline estimates were drawn upon, it was assumed that the effort/cost requirement associated to specific measures would be a fraction of that associated to the revision of the entire LTR 155 . Such activities are not dependent on the number of affected applications or permit holders; hence they are not included in the above formula.

The following sources and assumptions were used:

Daily wages for public sector professionals in each member state were sourced from Eurostat (“Average daily wage of Public sector professional [in Euros]”) and increased in line with inflation (inflation statistics derived from Eurostat and OECD 156 ).

As noted above, it is assumed that for each measure, the cost of transposing, monitoring compliance and reporting to the EU to Member States is 30% of the time cost estimated to be required in the baseline figures – when the LTR was adopted in 2003 157 .

In some cases, it was known that costs would affect different Member States to different extents. However, at this stage this variation was not included within the estimation of costs. This is because in some cases it was not known which Member States would be more affected, and in others the extent to which those member states would be additionally affected was unknown and would be challenging to estimate.

Estimation of cost savings for national authorities

The calculation of cost savings were made using the formula below:

Number of days per FTE before the introduction of the measure * proportion of this time spent after the introduction of the measure (where relevant) * number of FTEs * hourly wages.

Typically cost savings for national authorities would be in the form of reduced time spent on certain activities, such as checking LTR status of TCNs or undertaking labour market tests, or simplification/reduction of administrative burden/ procedural steps around LTR and associated restrictions. As above, these reductions were based on the study team’s assumptions (and thus on study team members’ experience including on studies such as the studies cited above, the Study on the impacts of a possible revision of the Consumer Credit Directive and Evaluation of the Counter-Terrorism Directive, as most recent examples of an approach used already on many occasions)..

The following sources and assumptions were used:

Daily wages for public sector professionals in each member state were sourced from Eurostat (“Average daily wage of Public sector professional [in Euros]”) and increased in line with inflation.

Where relevant (e.g. measure 2.5), the above formula was also multiplied by a proportion representing the share of applicable LTR status holders, assuming the amount of time/effort required to perform certain tasks would decrease directly in line with the number of applicants.

In one case, when calculating the cost saving to Member States associated with a simplification of procedures for the family members of EU LTR permit holders applying for family reunification (measure 2.13) , the above formula is multiplied by the number of applications for reunification assumed to be received per country per year, on average. Due to a lack of availability of relevant data, and based on consultation with the expert panel, this was assumed to be 100 applications.

The number of applications is estimated to be low due to the fact that, as highlighted by members of the expert panel, in practice a high number of EU LTR permit holders acquire citizenship after five years and most family reunification takes place rather at this stage, with similar rights to EU citizens and under facilitated conditions. 158

Estimation of costs / cost savings for third-country nationals

Cost savings for third-country nationals were assumed when a policy measure would ensure either a reduction in their direct costs due to the lowering of a fee (policy measure 2.2) or reduced reliance on external counsel (e.g. legal advisors), as calculated under policy measure 2.4 and policy option 1.

To calculate the reduction in fees that would result from policy measure 2.2, the following formula was applied:

[Cost of EU LTR - cost of national LTR = potential cost saving per permit] * number of EU LTR permit holders

However, as only in Portugal a significant difference between the fees for the two types of permits was identified, the cost savings calculated only concern this Member State.

To calculate the estimated reduction in legal fees (policy measure 2.4 and policy option 1), the following formula was applied:

Average cost of legal fees paid by TCNs * % of TCNs applying for LTR that seek legal counsel (assumed to be 10%) * % of cases of TCNs seeking legal counsel assumed to be spared by greater information * number of EU LTR applications projected to be received each year in the Member States.

A few policy measures were also assessed to reduce the time that third-country nationals need to wait for a decision on their application (measure 2.9), to be able to work/study in the second Member State (measures 2.10 and 2.7 respectively), or decrease travel costs (measure 2.8), but as there were too many different factors at play, these cost savings could not be quantified.

The following sources and assumptions were used:

National and EU LTR permit fees were sourced from the Legal Migration Fitness Check (Task II, phase 3), figures in red are taken from EMN 2016 (#1000) AHQ on national residence permits of permanent or unlimited validity (Question 3).

Data on the number of LTR permit holders was sourced from Eurostat, data on long-term residents by citizenship on 31 December of each year [migr_reslong]. Data for the years 2020-2030 was extrapolated based on the 2015-2019 linear trend. For some years and some Member States (a minority), data was missing. Where this was the case data was added, estimated based on figures for the years before/after.

It is assumed that average cost of legal fees paid by each TCN that seeks legal counsel to support with their application is 300 EUR per application. This is based on the team’s expert judgement and experience of projects related to LTR applications.

The percentage of cases of TCNs seeking legal counsel assumed to be spared by greater information is assumed to be 5% for policy option 1 and 10% for measure 2.4. This is because, since the measure in policy option 1 would not be legally binding, it is assumed that fewer cases would be spared, taking into account the variation in ways in which the measure would be applied. For policy option 1, the fact that the measure would not be legally binding also means it would be reasonable to assume that less than half of the Member States would apply it. To account for this, as well as the variation in the way the measure would be applied across member states, the estimated cost saved per person was further reduced by three quarters (i.e. it was assumed to be one quarter of the cost for policy measure 2.4, on top of the reduced percentage of TCNs spared legal counsel fees). This approach was adopted because it would be difficult to estimate which of the Member States would/would not apply the measure.

Estimation of cost savings for employers/businesses

One policy measure was assessed to lead to costs savings for employers as the removal of the labour market test would speed up and simplify their recruitment procedures when hiring third-country nationals (policy measure 2.6). The formula applied was the following:

Time cost associated with labour market tests when hiring one third-country national * average number of third-country nationals (per Member State per year) requiring labour market tests (across the EU) * % of effort required following the introduction of the measure.

The following sources and assumptions were used:

Due to lack of availability of data on employer time costs across member states, data on daily wages for public sector professionals in each member state were used, sourced from Eurostat (“Average daily wage of Public sector professional [in Euros]”) and increased in line with inflation.

As noted above, due to a lack of available data it is assumed that the cost reduction has an equal effect on firms of all sizes, though this is not likely to be realistic.

It was assumed, based on the team’s expert judgement, that on average each member state would receive around 500 applications from third-country nationals that would require labour market tests across the EU.

Economic impacts

Estimating the potential economic impacts of the changes to the LTRD is a difficult exercise, as data are lacking on key points such as the extent to which long-term resident third-country nationals are intra-EU mobile, the drivers of their migration decisions and the drivers behind their choice to apply for the national or EU LTR status. To arrive at some degree of quantification and monetisation, several assumptions had to be made for which no evidence was available from literature or other sources. In the context of the study supporting this Impact Assessment, an Expert Panel made up of five experts from the Odysseus Academic Network for Legal Studies on Immigration and Asylum in Europe, the Migration Policy Institute and Fragomen, a law firm specialised in labour migration, was consulted to review draft assumptions and assessments made.

Wherever it was deemed possible to quantify and monetise, for the estimation of the economic impacts the main assumptions used as part of the assessment of the policy measures are the following.

The policy options overall were expected to lead to increased intra-EU mobility of third-country nationals. Therefore, as part of the baseline, it was assumed that on average 2% of EU LTR status holders would move to a second Member State. This was based on an estimate that 3-4% of EU citizens are resident outside their country of origin 159 and anecdotal evidence that third-country nationals are less mobile overall. 160  This assumption was validated by the expert panel, 161 who shared the view that the removal of barriers to intra-EU mobility could be expected to lead to a moderate increase in the number of mobile EU LTR status holders.

Moreover, national authorities provided evidence for only four Member States (Germany, Poland, Slovenia and Sweden) on the number of EU LTR residence holders from another Member State applying for a residence permit. If the numbers for these four countries are summed and divided by four (sample mean) and this average is extrapolated over 25 Member States, such percentage rate reaches 7%. However, such estimate would significantly overestimate the actual percentage rate because it is based on countries such as Germany and Sweden that are magnets for immigration. In addition, data shows high dispersion (e.g., 22 in Poland compared to 2,284 in Sweden). Therefore, given the lack of data for 21 Member States and the uncertainty in the out-of-sample extrapolation, the 2% represents a more credible value.

In consultation with the expert panel, an estimate was made of the % increase of third-country nationals who would become mobile as a result of the individual policy measures. These estimates ranged from 1.5 percentage points to 2% percentage points on top of the 2% baseline, depending on the option. This share was then applied to the extrapolated baseline of EU LTR status holders. It is noted that these are very cautious estimates, given that many other factors are also expected to influence intra-EU mobility, including educational levels, type of professional qualifications and skills, etc., which are not known for this cohort.

The policy options were also expected to lead to an increase in applications for the EU LTR status by third-country nationals, as the various measures included would make the status more attractive over national LTR statuses. It was assumed that this would increase by 20% and 25% for two of the options compared to the extrapolated value of the baseline over the period 2020-2030. Such assumption is based on the study team’s experience with similar studies in the field of legal migration 162 as well as the views of the expert panel. A final policy option foresees a major increase in permit holders as it is based on the extrapolation of both EU and national LTR status holders. In other words, the national LTR scheme is subsumed by the EU scheme. In addition, for such an option it was assumed 4% would become mobile.

Two important additional general assumptions, again in consultation with the expert panel, where made:

Incremental vs distributional effect. The effects of the policy measures were incremental, i.e. affecting the EU as a whole. Intra-EU mobility means that people move from Member State A to B. In theory, if both countries were identical, the final outcome would be a zero-sum game, namely, what Member State A loses is gained by State B. In such a case, there is no change at EU level but a simple distributional change, which is not of much relevance for an impact assessment. However, in practice, this may not be the case because Member States are heterogeneous. For example, if people move from a low-tax Member State to a high-tax Member State, the net effect is higher tax revenues at EU level. It is extremely difficult to predict the precise net effects of intra-EU mobility in those terms. Hence, it has to be assumed that mobility per se brings certain incremental benefits at the EU level as a whole.

The panel of experts agreed on this overall assumption, as well as with the assumption that a key driver for intra-EU mobility would be the wage differential. The assumed average wage differential for third-country nationals to move to a second Member State is estimated at 10%. There is ample research about the link between migration and wages. Literature assumes that mobile citizens act as rational agents who base their decision to migrate according to benefits and costs. Moving abroad has tangible and intangible costs that must be outweighed by tangible and intangible benefits. The wage differential is considered one of the most important drivers for moving abroad. However, there are other emotional and social factors beyond the economic considerations. 163 The panel of experts considered that a 10% wage differential appeared a reasonable assumption, in the absence of any other supporting evidence.

One policy measure (3.3), included in policy option 3 , was assumed to lead to an increase in the number of third-country nationals coming to the EU for the purpose of studies, who after 5 years will request the EU LTR status. In consultation with the expert panel, it was however concluded that it was too difficult to estimate the % increase with any degree of certainty. It can nonetheless be assumed that these additional students would, once entering the labour market, make an important contribution to tax revenue, economic growth, consumption, productivity and remittances.

It was further assumed that this would increase / accelerate their socio-economic integration, which was expressed as an assumed 10% increase in their wages after completing their study in the EU, as opposed to the counterfactual of them not being able to obtain the EU LTR status within 4 years and potentially not remaining in the EU.

Another policy measure (3.4), included in policy option 3 was expected to lead to an increase in the number of third-country nationals with temporary permits (of less than 6 months) to remain in the EU as they wish to become EU status holders. In consultation with the expert panel, it was again concluded that the % increase in their number was too difficult to estimate, as it also depended on many other factors. They too, however, are also expected to make important contributions in terms of tax revenue, economic growth, consumption, productivity and remittances. The policy option is also expected to increase the potential for their socio-economic integration.

Unless mentioned otherwise, all economic impacts have been calculated over a period of 10 years, with the policy option and policy measure assessments presenting each time the total impact over that period. Details on the specific calculations and assumptions applied to estimate economic impacts are set out below, based on the supporting study of this Impact Assessment 164 .

Estimation of tax revenue

Literature suggest that labour mobility may contribute to an increase in tax revenues, provided this is driven by the prospective of a higher income, which is a reasonable assumption considering the considerable wage differential to overcome all sort of obstacles to mobility. 165   166 For the policy measures anticipating an increase in intra-EU mobility, the increase in tax revenue, has been calculated as follows:

Number of additional mobile EU LTR status holders * (EU average annual median disposable income + 10% wage increase due to the higher anticipated wages offered in the second Member State) * 9.6% which corresponds to the EU average % of taxes paid on gross income.

The panel of experts also considered this a reasonable approach, again considering the lack of any evidence. However, the estimate must be taken with caution because of the dispersion of data (e.g., 6% in Luxembourg compared to 14.7 in Hungary) and the final outcome of tax revenues depends on the pattern of sending/receiving countries. For example, if all the sending countries are close to the lowest (6%) and the opposite for the receiving, then the effect of tax revenues is higher than the average. Moreover, the EU average % of taxes on gross income is 9.6±0.9 (8.8 – 10.4).

For the policy measure which anticipates a higher share of students to come to the EU and a higher share of temporary permit holders to remain in the EU, the same calculation as above is performed, using the additional numbers of these two categories of third-country nationals instead.

The EU average annual median disposable income is taken from Eurostat (ICW_RES_02)

The average EU tax share is calculated based on Eurostat data (ICW_TAX_01)

Formula: [% of taxes paid on gross income] * [EU-average annual median income] * [% increase in income due to higher (new) wages] * [Number of additional TCNs]

Estimation of economic growth

Although difficult to estimate, the impact of higher intra-EU mobility of TCNs is expected to contribute to GDP due to a better functioning of labour markets and more efficient allocation of resources. It is fair to expect that skills mismatch and over-education will be mitigated. 167 For example, a JRC study estimates that the % increase in GDP from migration and mobility of refugees is estimated between 0.2% and 1.4% of GDP growth. Such estimate must be taken with caution in the context of this study because the type of migration under scope differs from the one in the present study. Yet, it offers an approximate idea of the positive nature of the expected economic impact.

Also, the positive effects on tax revenues and consumption produce a multiplier effect on income and GDP. Higher wages contribute to more purchase of goods and services and hence to production; even in the event of a small or modest effect, the impact is positive. Yet, these positive effects might be to some extent offset by remittances, which lead to financial outflows outside the EU.

For illustrative purpose, if growth in GDP is calculated as a one-off effect resulting directly from the increase in intra-EU mobility and/or increase in the number of third-country nationals coming to or staying in the EU, taking the EU-27 GDP based on Eurostat data (NAMA_10_GDP) 168 and a %0.8 increase in GDP resulting from TCNs migration and mobility, the impact on GDP could reach EUR 1.07 billion.

Estimation of productivity

The estimation of productivity remains qualitative given the limitations in data and uncertainty in the dynamics of impacts. The qualitative impact is based on the assumption, reviewed together with the expert panel, that third-country nationals who become intra-EU mobile, or who opt to come or remain in the EU, as per the various policy measures, will become more productive, as:

·Mobile EU LTR holders were previously over-qualified and are moving to the second Member State for a better job with higher wages.

·Third-country students are more attracted to the EU and will better integrate, leading to better jobs with higher wages once they finish studying.

·Third-country nationals with temporary permits will feel more inclined to remain in the EU and will better integrate, leading to better jobs with higher wages.

Estimation of consumption

The increase in consumption is calculated based on the assumption that third-country nationals who become intra-EU mobile, or who opt to come or remain in the EU as a result of the policy measures, will increase their wage by 10%, and that this increase in value will lead to an equivalent increase in their consumption (income elasticity = 1). The additional number of third-country nationals is thus multiplied by the average yearly household consumption in a selected number of Member States (see below) and by the 10% increase in consumption. The assumption that income elasticity of consumption is 1, that is, every additional EUR earned is consumed is based on fair assumption in the literature. 169 It means that as the migrants were coming from lower wages, they tended to consume on 'necessity' goods rather than on 'luxury' goods. As the increase in wages is still moderate (about 10%), it is fair to assume that some repressed consumption due to lower wages before migrating will recover but without changing to higher elasticity.

To estimate the impact on consumption, increase in yearly consumption is made using experimental Eurostat statistics on mean and median economic resources of households by income, consumption and wealth quantiles - experimental statistics [icw_res_02]. The average median household consumption for those countries which are expected to receive most third-country nationals (AT, BE, CY, CZ, DE, FI, FR, IT, LV, LU, MT, NL, PT, RO, SI, and SK) has been calculated.

Formula: [yearly consumption per household] *[Number of additional TCNs] * [% increase in consumption due to higher (new) wages]

Estimation of remittances

The increase in remittances is calculated by multiplying the average share of income which third-country nationals send home, estimated at 15%, with the EU average annual median income, and by the number of additional third-country nationals who become mobile, or come / remain in the EU. This estimate must be taken with caution because it is based on a world-wide sample and the patterns of remittances may vary remarkably across continents and type of migrants.

The share of remittances is taken from a UN online publication, Remittances matter: 8 facts you don’t know about the money migrants send back home. It represents a global, not EU-specific share.

Formula: [proportion of income sent as remittances]*[EU-average annual median income]*[Number of additional TCNs

Annex 5: Detailed assessment of policy measures

This Annex provides the detailed assessment of each policy measures included in the four Policy Options considered for this Impact Assessment. Each policy measure is assessed against the standard criteria for impact assessment (social, economic and environmental impacts and impacts on fundamental rights) and the policy objectives. Where it was feasible, the assessment also includes a quantification and/or description of the costs of each measure, as well as the economic impacts (while the methodology used for the calculation of costs, the assumptions made, and the detailed calculations are presented in annex 4).

0.0Policy option 1 – Actions to improve the effectiveness of the Directive (non-legislative option)

Policy measure 1.1: The Commission enhances the implementation of the Directive and supports further practical cooperation between Member States.

Policy measure 1.2: EU and Member States increase the visibility of the EU LTR status through information sharing, promotion, and advertisement activities.

0.1Policy option 2 – Targeted legislative revision of the Directive

This sub-section presents the assessment of measures foreseen as part of the policy option 2 aiming at a targeted legislative revision of the Directive.

0.1.1Policy Measures relating to introducing a level-playing field

Policy Measure 2.1: Integration and resources requirements for acquiring the EU status are not stricter than the requirements to acquire the national status

Policy Measure 2.2: Applicants for EU LTR permits pay the same level of fees for the handling of their application as applicants for national permits

Policy Measure 2.3: Holders of EU LTR status do not enjoy a lower level of procedural safeguards and rights than holders of national residence permits