Re: Possibility
I see I am getting downvotes without counter arguments... so I'll bite.
Here are potential breaches of EU directives:
Clear Violation of the Equal Treatment of Temporary Agency Workers (Directive 2008/104/EC):
IR35's treatment of individuals as 'employees' for tax purposes, while denying them equivalent employment rights, directly contravenes this directive's requirement for equal treatment of temporary agency workers. This directive mandates parity in working and employment conditions for temporary workers compared to permanent employees.
Breach of Protection for Self-Employed Workers (Directive 2010/41/EU):
By imposing employee-like tax burdens on self-employed individuals without granting corresponding rights, IR35 violates the principles of this directive, which seeks to ensure equal treatment and social protection for self-employed individuals - focusing on gender quality. For instance, it is perfectly legal to sack deemed employee upon news they got pregnant.
Infringement of the Freedom of Establishment and Freedom to Provide Services (Articles 49 and 56 TFEU):
IR35 creates an imbalanced environment for smaller businesses and independent contractors, undermining their ability to compete and establish themselves in the market. This represents a clear breach of the TFEU principles that guarantee freedom of establishment and freedom to provide services across EU member states.
Breach of EU State Aid Regulations:
EU rules strictly prohibit state actions that create a competitive imbalance by favouring certain companies or sectors. In the case of IR35, the regulation inflicts a substantial tax burden on smaller entities (taxed on revenue), a financial obligation not imposed on larger corporations operating the same business model. This inequitable treatment effectively provides larger companies with a competitive advantage, as they are not subjected to the same tax constraints. Such a scenario aligns with the definition of state aid under EU law, as it offers indirect benefits to larger firms, thereby distorting the market's competitive equilibrium.
Contravention of the Charter of Fundamental Rights of the European Union:
IR35's framework, which results in unequal treatment of certain workers and businesses, contravenes the Charter's provisions on equality before the law (Article 20) and non-discrimination (Article 21).
Disproportionate Impact and Violation of Proportionality Principle:
IR35 disproportionately affects smaller businesses and self-employed individuals, which could be considered a violation of the EU's requirement for laws to be proportional and not excessively burdensome, particularly to smaller market participants.
There is probably more...