The new Harmonisation Directive offers opportunities for social security systems.

The new Insolvency Directive has now entered the implementation phase. More rapidly than anticipated, the Directive on the harmonisation of certain aspects of insolvency law was published in the Official Journal of the European Union on 1 April, just one day after its adoption by the Agriculture and Fisheries Council. The European Parliament had already given its consent on 10 March. The Directive will therefore enter into force on 21 April. For the Member States, this means that, with only limited exceptions, national transposition measures must not only be adopted but also enter into force by 22 January 2029 at the latest.

Stopping financial outflows in insolvency proceedings

The DSV closely followed the conclusion of the legislative process, as the new EU provisions may help to better protect social security contributions in corporate insolvency proceedings. This would constitute a tangible contribution to stabilising the financing of statutory social security systems. Under the current legal framework, social security institutions regularly lose contribution revenue amounting to hundreds of millions of euros due to avoidance actions in insolvency proceedings.

Germany in a comparatively unfavourable position

Unlike in many other Member States – such as France, Spain, Italy and Portugal – social security institutions in Germany are treated on an equal footing with ordinary unsecured creditors. As a result, insolvency practitioners may reclaim contributions already paid and add them to the insolvency estate. Given recovery rates in the low single-digit range – 2.4 per cent in 2020, for example – the vast majority of recovered contributions is effectively lost to the social security system, while benefit entitlements and accrued rights of insured persons must nevertheless continue to be honoured in full.

Preventing the avoidance of contributions

The new EU Directive introduces a pragmatic approach. Article 6(3) recommends that Member States, in accordance with national law, exclude social security contributions from avoidance actions in insolvency proceedings. This creates legal scope to shield contribution revenue from recovery claims by insolvency practitioners. In the view of the DSV, which strongly advocated for this exception, Member States should make full use of this margin of discretion.

Seizing the political momentum

It is well known that the financial situation in Germany – particularly in health and long-term care insurance – is highly strained and requires targeted efforts to ensure sustainability. The obligation to transpose the new EU Insolvency Directive places the treatment of social security contributions in corporate insolvencies back on the political agenda. The Directive offers an opportunity to reassess the issue within a revised legal framework. It would be desirable to put a definitive end to the diversion of social security contributions in insolvency proceedings.