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    GMS Flash Alert 2025-005

    European Union – European Commission Takes Legal Action Against U.K. Over Withdrawal Agreement Breach

    GMS Flash Alert 2025-005 | 7 January 2025

    On 15 December 2024, the European Commission (EC) decided to refer the U.K. to the Court of Justice of the European Union (CJEU) for failing to implement provisions on the free movement of EU citizens and their family members at the end of 2020.1

    The specifics of the alleged breaches have not been detailed in public statements, but they are believed to involve issues such as residency rights, social security coordination, and the administrative processes affecting EU citizens in the United Kingdom.2

    For example, the U.K. does not consider that EU citizens have sufficient health insurance when they are only affiliated to the health-care system in the U.K. (NHS) and are entitled to medical treatment provided by the NHS.3  

    WHY THIS MATTERS

    The decision of the EC to take legal action against the U.K. is a significant development in the ongoing post-Brexit landscape where the EU-U.K. Withdrawal Agreement is seen as a key component in protecting the rights of citizens.

    The outcome of this legal action can have significant implications for EU-U.K. relations, where a ruling against the U.K. might necessitate changes in domestic policies.

    EU citizens in the U.K. for whom continued application of EU rights is protected under the EU-U.K. Withdrawal Agreement should monitor developments in this legal proceeding.  There could be opportunities for individuals to seek restitution and eventually claim rights for themselves and for their (extended) family members in the event the ruling goes against the United Kingdom.  Decisions regarding appropriate course of action should be taken in conjunction with qualified legal counsel.  

    Context

    The EU-U.K. Withdrawal Agreement 4 (“the Withdrawal Agreement”) was a pivotal document that outlined the terms of the U.K.’s departure from the European Union.  Among its many provisions, it also included clauses to safeguard the rights of EU citizens residing in the U.K. and vice versa.

    The free movement of people, a fundamental principle of the EU, was a critical aspect of the protections, providing that citizens could live, work, and travel freely across borders.

    Legal Proceedings

    The EC has been in dialogue with the U.K. government for years about its implementation of the Withdrawal Agreement, but the Commission found that shortcomings in the U.K.’s implementation of the free movement provisions continues to affect EU citizens in the United Kingdom.  After carefully assessing the replies by the U.K., the Commission maintains that several elements of the grievances remain unaddressed, including the rights of workers. 5

    By referring the case to the CJEU, the EC underscores the seriousness with which it views the alleged infractions.  The rulings by the CJEU are binding.  Since this dialogue between the parties was initiated before Brexit and it concerns the Agreement that provides for continued application of citizens’ rights under EU law, the ruling will be binding for the U.K. too.  

    Recent Case Law in the Context of the Withdrawal Agreement

    It is reasonable to believe that a part of the motivation behind the EC’s decision to refer the case against the U.K. to the CJEU relates in part to recent case law in the United Kingdom.

    In the very complex case of Batool and others,6 the U.K. legal system addressed, among other things, legal arguments about the interpretation of the Withdrawal Agreement and the extent to which it should influence domestic asylum and immigration policies.

    One of the disputed issues in the case concerns rights to residence for an EU national’s extended family members; such rights are enshrined in the EU Residence Directive7 and the Withdrawal Agreement.  

    KPMG INSIGHTS

    Developments in the case at the CJEU will be closely watched by stakeholders on both sides of the English Channel.8  The situation highlights the complexities and challenges of disentangling decades of integration and the importance of adhering to international agreements.

    The outcome of this case can potentially impact the lives of millions of EU citizens in the U.K. affected by Brexit.  Should the CJEU rule against the U.K., it will be interesting to see if the U.K. will acknowledge and respect such ruling.

    In any case, EU citizens and their family members in the U.K. whose rights of free movement are limited or in some way negatively impacted and who are covered by the Withdrawal Agreement, should monitor this case and, depending on the outcome, consider whether their situation warrants claiming their rights, irrespective of whether the U.K. decides to follow such ruling. 

    Footnotes:

    1  European Commission Press Release,  Commission decides to refer the UNITED KINGDOM to the Court of Justice of the European Union for its implementation of EU law on free movement impacting the Withdrawal Agreement, 15 December 2024.

    2  European Commission, “October infringement package: key decisions,” nr. 5 Justice, 29 October 2020.

    3  See footnote 2.

    4  European Commission, The EU-UK Withdrawal Agreement, 12 November 2019.

    5  See footnote 1.

    6  Upper Tribunal (U.K.): Batool and others, [2022] UKUT 00219 (IAC) 2022 can be found here.   

    7  European Commission, Migration and Home Affairs, “Long-term residents,” 2004.

    8  For related coverage of EU/U.K. legal challenges see the following issues of GMS Flash Alert: 2023-147 (21 July 2023) and 2021-156 (28 May 2021).

    Contacts

    Daida Hadzic
    Daida Hadzic

    Director, Washington National Tax

    KPMG in the U.S.

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    Disclaimer

    * Please note the KPMG International member firm in the United States does not provide immigration or labour law services. However, KPMG Law LLP in Canada can assist clients with U.S. immigration matters.

    The above information is not intended to be "written advice concerning one or more Federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230 as the content of this document is issued for general informational purposes only.

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