EUROPEAN COOPERATIVE SOCIETY, INCOME-REQUIREMENT ARBITRAGE, AND REMOTE SERVICE ACROSS BORDERS

Classification: Socio-Legal Blog Post | Series: Total Institutional Adsorption | Jurisdictions: EU Member States

INTRODUCTION

The Societas Cooperativa Europaea (SCE) —the European Cooperative Society—is the EU’s supranational legal form for cooperatives. Established by Council Regulation (EC) No 1435/2003 and operational since 2006, the SCE was designed to enable cooperatives to operate across borders under a single legal identity, without the fragmentation of separate national entities in each member state. The SCE is, as the European Parliament has noted, “the only social economy legal form available at EU level”.

For the analysis developed in this series, the SCE has a specific structural relevance. The immigration system assumes a binary: employer and employee, sponsor and sponsored. The SCE introduces a third term. It is not a national entity. It is not tied to a single jurisdiction. And its members are not employees in the conventional sense—they are member-owners of a cooperative whose legal identity travels across the European Economic Area.

This post examines the SCE as a potential portable employment bridge for immigrants to the EU, with a particular focus on university graduates and skilled workers. The mechanism is straightforward: an SCE can be established in a member state with a lower income requirement for residence permits, and its workers—whether member-owners or employed through a local establishment—can then provide services remotely to clients in any EU member state or outside the EU. The SCE thus arbitrages the gap between the worker’s residence jurisdiction and the client’s jurisdiction, while the cooperative form provides the governance structure that no conventional employer can replicate.

1. THE SCE ARCHITECTURE: FORMATION AND CROSS-BORDER EMPLOYMENT

1.1 Formation: Minimum Thresholds and the Two-Member-State Rule

An SCE may be formed in five ways under Article 2(1) of the SCE Regulation. The most accessible routes for a new cooperative are:

• Ex novo: by at least five natural persons resident in at least two member states, or by at least five natural persons and companies/legal bodies governed by the law of at least two different member states.
• By merger of cooperatives formed under the law of a member state with registered offices and head offices within the Community, provided at least two are governed by different member states.
• By conversion of a cooperative that has had an establishment or subsidiary in another member state for at least two years.

The minimum subscribed capital is €30,000, and the SCE must be registered in the member state where its head office is located. The number of members and the capital are variable—one of the structural advantages of the cooperative form over the joint-stock company.

For an immigration-focused cooperative, the formation route matters. A cooperative founded ex novo by five individuals from two member states can be established relatively quickly, with the founders drawn from the target immigrant population. A cooperative formed by conversion requires an existing entity with a two-year cross-border presence, which is a higher barrier but provides a more stable base.

1.2 Local Establishments and the Posting of Workers

Once an SCE is established in a member state with a favourable immigration regime, it can establish local offices or establishments in other member states. The SCE’s legal personality allows it to operate across the EEA without requiring a separate legal entity in each jurisdiction.

The employment relationship can be structured in two ways:

Member-owners. The worker becomes a member-owner of the SCE. The relationship is corporate as well as employment-based: the member has voting rights on a one-person-one-vote basis and shares in the surplus. The employer-sovereign relationship is replaced by a democratic membership relationship.

Posted workers. The SCE employs workers through its establishment in the residence jurisdiction and posts them to work in other member states under Directive 96/71/EC. The Posted Workers Directive ensures that posted workers receive the core terms and conditions of the host member state where the work is carried out. The key point is that posting applies irrespective of the worker’s nationality and the directive applies to any employment relationship. A third-country national lawfully residing and working in the sending member state may be posted to another member state without requiring a separate work permit in the host state, provided the posting is genuine and the worker remains affiliated to the sending state’s social security system under Regulation (EC) No 883/2004.

The substantial activities requirement is critical. The SCE must have genuine economic activity in the sending member state to avoid being characterised as a letter-box company. A real local office, a genuine membership structure, and actual cooperative operations satisfy this requirement.

2. THE INCOME-REQUIREMENT ARBITRAGE

2.1 The Disparity in National Income Thresholds

EU member states set widely varying minimum income thresholds for residence permits for employment. According to the European Migration Network’s Ad Hoc Query, 18 EMN member countries have a minimum salary threshold for residence permits for employment. The threshold ranges between €460 and €3,085 per month. The lowest thresholds are in Cyprus, Italy, Croatia, Czechia, Greece, Poland, and Portugal, where less than €800 per month is required. The highest are in Luxembourg and Austria, where more than €2,500 gross per month is required.

The EU Blue Card—the flagship route for highly qualified workers—has its own thresholds, which are often significantly higher. Germany requires €50,700 gross per annum for the general Blue Card and €45,934.20 for shortage occupations. France requires €53,837. Romania offers the lowest Blue Card threshold in the EU at €19,815 per year. Portugal’s threshold is €27,000. Poland’s is €20,500.

The disparity is structural. A skilled worker—a software engineer, a data analyst, a UX designer—who earns €35,000 per year would fail the Blue Card threshold in Germany or France. The same worker would satisfy the threshold in Romania, Portugal, or Poland.

2.2 The SCE as Arbitrage Vehicle

The SCE transforms this disparity from a barrier into a pathway. The structure operates as follows:

The SCE is registered in a member state with a low income requirement for residence permits. The worker is employed by the SCE—or becomes a member-owner—and obtains a residence permit on the basis of that employment. The income requirement is satisfied at the local threshold, not the Blue Card threshold. The SCE then deploys the worker to provide services remotely to clients in other member states or outside the EU.

The worker’s residence right is tied to the SCE’s establishment in the low-threshold jurisdiction. The work itself is not territorially bounded. The worker can serve a client in Germany, France, or the United States from a base in Portugal or Romania, provided the employment relationship is genuine and the posting or remote-work arrangement complies with the applicable rules.

This is income-requirement arbitrage: the worker’s residence jurisdiction and the client’s jurisdiction are decoupled. The SCE is the legal vehicle that makes the decoupling possible.

3. REMOTE SERVICE AND THE CLIENT RELATIONSHIP

3.1 The Client Can Be Anywhere

The SCE’s advantage is that it can serve clients anywhere in the EU or outside it. The cooperative’s legal identity is not tied to the location of its clients. A member-owner based in Portugal can provide consulting services to a German company, design services to a French startup, or software development to a US client—all through the SCE’s contractual framework.

The digital nomad visa provides a parallel model. Spain’s digital nomad visa allows international teleworkers to reside in Spain while working remotely for foreign companies—the residence right is contingent on the remote work activity, not on a Spanish employer’s sponsorship. The applicant must demonstrate that they work for a company outside Spain, and the visa is valid for up to one year if applied from abroad, or three years if applied from within Spain. Italy and Czechia have introduced similar schemes.

The SCE extends this logic. The cooperative is the employing entity; the client is the service recipient. The worker’s residence right is based on their relationship to the cooperative, not on their relationship to the client. The client can change without affecting the worker’s status.

3.2 Social Security Coordination

When a worker is posted from one member state to another, Regulation (EC) No 883/2004 on the coordination of social security systems applies. The general rule for posted workers is that they remain affiliated to the social security system of the member state where their employer normally carries out its activities, provided the posting is not expected to last more than 24 months.

For the SCE, this means that a worker employed by an SCE registered in Portugal and posted to Germany would typically remain in the Portuguese social security system for the duration of the posting. The worker’s right to reside in Germany derives from their posted worker status under EU law, not from a national residence permit with its associated income thresholds. The SCE’s registration jurisdiction determines the social security affiliation; the posting jurisdiction determines the applicable labour law protections.

This creates a dual-layer structure: the worker’s residence and social security are anchored in the SCE’s registration state (low threshold), while their labour rights in the host state are protected by the Posted Workers Directive’s core terms. The worker is not a full participant in the host state’s social security system, but they are not without protection either.

4. THE NECESSITY OF THE SCE MODEL FOR IMMIGRANT EMPLOYMENT

4.1 The Market Gap: Underemployment and Brain Waste

The SCE fills a structural gap that neither the conventional employer-sponsored visa nor the digital nomad visa addresses. The European Commission’s Joint Employment Report 2025 identifies 42 high-demand occupations across ICT, engineering, healthcare, and the green economy, requiring specialised expertise and higher education backgrounds. Yet nearly half of tertiary-educated migrants in Europe are overqualified for their jobs, and they are almost twice as likely to be unemployed compared to natives. The overqualification rate for third-country nationals stood at 39.4% in 2023. This is brain waste: a systemic loss for Europe’s economic and social goals.

The market gap is not a shortage of skilled immigrants. It is a shortage of legitimate pathways for those immigrants to deploy their skills productively. The conventional employer-sponsored visa requires a single employer to sponsor the worker, which creates the dependent relationship analysed throughout this series. The digital nomad visa allows remote work for foreign clients, but it does not provide EU employment or EU social security. The SCE fills the gap by providing EU employment through a cooperative structure that does not depend on a single employer’s sponsorship.

4.2 Why the Immigrant Ought to Be in the EU

The question is not merely legal but substantive. Why should an immigrant work remotely for an EU client from outside the EU, when they could be present in the EU, contributing to its economy, society, and demographic future? The European Commission’s own study finds that removing obstacles to the full labour market integration of migrants can produce considerable positive fiscal benefits for hosting countries. The research on digital isolation is equally clear: excessive reliance on remote work carries the risk of “digital isolation” and weakens employment’s role as a generator of bridging social capital—the social contact and trust between groups with different demographic characteristics. Immigrants who work remotely from outside the EU do not integrate, do not learn the language, do not build local networks, and do not contribute to the tax base.

The SCE model brings the immigrant into the EU. The member-owner resides in a member state, participates in the cooperative’s governance, contributes to its social security system, and builds the local ties that remote-only work precludes. The immigrant is not a distant service provider; they are a member of the European polity.

4.3 The Benefits to Taxpayers, the EU, and the Immigrant

For the taxpayer. The evidence on the fiscal contribution of skilled immigrants is unambiguous. The UK Migration Advisory Committee’s 2025 study estimates that the 2022/23 Skilled Worker cohort will make a net positive contribution of approximately £47 billion to public finances over their lifetimes, with a mean net present value of £689,000 per Skilled Worker visa holder. An increase of immigrants equal to 1% of a country’s population is associated with an increase in GDP per worker of 1.2% within five years and 1.9% over ten years. High-skilled immigration is associated with a 1.5% faster growth of GDP per worker per one percent of the adult population. The SCE model channels these benefits into the EU by bringing skilled immigrants into EU employment and EU tax systems, rather than leaving them as remote service providers outside the fiscal perimeter.

For the EU. The EU faces a persistent shortage of workers and skills in strategic sectors including health, ICT, civil engineering, and education, with 77% of companies reporting that skills shortages are a barrier to long-term investment. Legal migrant workers are essential in filling these gaps given the ageing and shrinking working population of the member states. The SCE provides a structured, scalable pathway for skilled immigrants to enter the EU labour market without the employer-dependency of the conventional visa system. It also supports the cooperative principle of intercooperation and the EU’s social economy objectives, which the European Economic and Social Committee has identified as key vehicles for migrant integration.

For the immigrant. The SCE offers something the conventional visa cannot: ownership. The member-owner has a residual claim on the cooperative’s surplus, a vote in its governance, and a portable legal identity that travels across the EEA. The immigrant is not a dependent of an employer; they are a principal of the cooperative. The income-requirement arbitrage allows them to reside in a jurisdiction where the threshold is accessible, while serving clients in the highest-value markets. The SCE is the institutional form through which the immigrant’s economic agency is structurally recognised.

4.4 Why the SCE Should Primarily Target Immigrants, but Be Open to Locals

The SCE should primarily target immigrants because immigrants face the structural barriers that the cooperative form is designed to overcome. They are disproportionately affected by diploma recognition issues, limited career guidance, and a lack of visibility for prior qualifications. They are twice as likely to be unemployed as natives despite equivalent qualifications. They are more likely to live in overcrowded housing and face a digital divide that remote work can exacerbate. The cooperative provides the employment contract, the social security affiliation, and the governance participation that the conventional labour market denies them.

But the SCE should be open to locals because the cooperative form derives its strength from diversity of membership. A cooperative that is exclusively immigrant is an immigrant enclave; a cooperative that integrates immigrants and locals is a bridging institution. The one-person-one-vote principle ensures that neither group dominates the other. The cooperative’s surplus is shared among all members, aligning their interests. The local member brings language, networks, and institutional knowledge; the immigrant member brings skills, resilience, and global connections. The SCE is strongest when it is both—a cooperative of immigrants and locals, bound by shared ownership rather than by the employer-employee hierarchy.

5. EMPLOYEE INVOLVEMENT: THE COOPERATIVE’S DISTINCTIVE GOVERNANCE

5.1 The Directive 2003/72/EC Framework

The SCE is subject to Council Directive 2003/72/EC, which governs the involvement of employees in the affairs of the cooperative. The Directive establishes that “arrangements for the involvement of employees shall be established in every SCE”. The fundamental principle is that the establishment of an SCE should not entail the disappearance or reduction of practices of employee involvement existing within the entities participating in the establishment.

The Directive requires that the SCE’s establishment be preceded by negotiations with a special negotiating body representing the employees. If no agreement is reached, standard rules apply. The standard rules cover information, consultation, and—where applicable—participation (board-level representation). The concrete procedures are defined primarily by agreement between the parties concerned or, in the absence thereof, by subsidiary rules.

5.2 The Threshold Rules

The German implementation, the SE-Beteiligungsgesetz (SEBG) , provides the operative thresholds. In the case of an SCE established exclusively by natural persons or by a single legal entity and natural persons:

• If the participating persons and the legal entity employ at least 50 employees in at least two member states, the provisions on negotiations and standard rules apply.
• If the SCE employs fewer than 50 employees or employs 50 or more in only one member state, the legal provisions for national cooperatives apply.

For an immigration-focused SCE with a small initial membership—five to thirty members, for example—the national cooperative rules would apply rather than the full SCE employee involvement regime. This reduces the administrative burden significantly. The cooperative can be established and operate with the governance structure of the member state of registration, without the complexity of transnational negotiation with a special negotiating body.

5.3 The Governance Advantage for Immigrant Members

The cooperative form has a structural advantage for immigrant members that no conventional employer can replicate: the members are the owners. The one-person-one-vote principle means that the immigrant worker’s voice is not contingent on their capital contribution or their seniority. The member-owner has a residual claim on the cooperative’s surplus and a constitutional right to participate in its governance.

This is not a marginal benefit. The immigration system treats the sponsored worker as a dependent of the employer. The cooperative treats the member-owner as a principal. The worker’s agency is embedded in the corporate structure itself.

6. THE INTEGRATED MODEL: SCE AS IMMIGRATION BRIDGE

The SCE provides the legal form for a portable employment bridge. The integrated model operates as follows:

Formation. An SCE is established in a member state with a low income requirement for residence permits—Portugal, Romania, Poland, or another jurisdiction where the threshold is below €800 per month. The minimum capital requirement is €30,000, and the formation can be completed ex novo by five members from two member states.

Membership. The SCE recruits university graduates and skilled immigrants as member-owners. The membership structure allows the cooperative to grow without requiring a separate employment contract for each member. The member-owner’s residence permit is based on their corporate relationship with the SCE, not on a conventional employment sponsorship.

Client service. The SCE contracts with clients anywhere in the EU or outside it. The member-owners provide services remotely, using the SCE’s contractual framework. The client relationship is separate from the membership relationship. The client can change without affecting the member’s residence status.

Posting. Where the work requires physical presence in another member state, the SCE posts the member-owner under Directive 96/71/EC. The posting is temporary (up to 24 months) and the worker remains affiliated to the SCE’s social security system.

Governance. The SCE operates under the cooperative governance rules of its registration state. If the membership is below 50 employees in multiple member states, the national cooperative rules apply. The one-person-one-vote principle ensures that every member-owner has an equal voice in the cooperative’s affairs.

The missing element is recognition. No member state currently recognises the SCE as a sponsoring entity for residence permit purposes in the same way it recognises a conventional employer. The SCE’s member-owners are not “employees” in the traditional sense, and the immigration system has not yet developed a category for the member-owner who derives their residence right from their cooperative membership. The Spanish model for associated workers’ cooperatives—which allows cooperatives to sponsor residence and work visas for migrant members—provides the closest existing template. But it is a national model, not an EU-wide one.

The SCE is the legal vehicle through which this model could be generalised across the EU. The question is whether the immigration framework will adapt to recognise it.

THE REGISTERED OFFICE RULE AND FUNCTIONAL DUAL PRESENCE

The SCE’s constitutional architecture rests on a strict unity-of-seat principle. Article 6 of Council Regulation (EC) No 1435/2003 provides that the registered office of an SCE “shall be located within the Community, in the same Member State as its head office,” and permits a Member State to further require that “the head office and the registered office be located in the same place”. The SCE is therefore a single legal person with a single seat, registered in one Member State and governed by the law of that Member State for all matters not covered by the Regulation.

That unity does not prevent the SCE from operating across multiple jurisdictions. Three mechanisms enable a functional dual presence. First, local establishments: Article 12(2) of the Regulation provides that “the national rules adopted pursuant to Directive 89/666/EEC shall apply to branches of an SCE opened in a Member State other than that in which it has its registered office,” meaning an SCE registered in Portugal can open a branch in Germany and operate there under German law. The Eleventh Council Directive 89/666/EEC of 21 December 1989 establishes the disclosure requirements for such branches.

Second, posting of workers: Directive 96/71/EC applies where an undertaking posts workers to the territory of a Member State “on that undertaking’s account and under its direction,” under a contract concluded between the undertaking and the party for whom the services are intended, provided an employment relationship subsists during the posting. A worker employed by the Portuguese SCE can be posted to Germany for up to twenty-four months, remaining subject to Portuguese social security legislation under Article 12(1) of Regulation (EC) No 883/2004, which provides that a posted worker “shall continue to be subject to the legislation of the first Member State, provided that the anticipated duration of such work does not exceed twenty-four months”.

Third, seat transfer: Article 7(1) of the SCE Regulation provides that “the registered office of an SCE may be transferred to another Member State in accordance with paragraphs 2 to 16” and that “such transfer shall not result in the winding-up of the SCE or in the creation of a new legal person”. The transfer procedure requires a transfer proposal and a management report “explaining and justifying the legal and economic aspects as well as the employment effects of the transfer”. The SCE does not hold two seats; it holds one seat that may be relocated.

The limitation follows from the same principle. The SCE cannot be registered simultaneously in Portugal and Germany as a single entity. Two separate SCEs may be formed in the two Member States, but they are distinct legal persons. Functional dual presence is achieved through establishments, posting, and seat transfer—not through dual registration.

REFERENCES

1. Council Regulation (EC) No 1435/2003 on the Statute for a European Cooperative Society (SCE), OJ L 207, 18.8.2003.
2. Council Directive 2003/72/EC supplementing the Statute for a European Cooperative Society with regard to the involvement of employees, OJ L 207, 18.8.2003.
3. Directive 96/71/EC concerning the posting of workers in the framework of the provision of services.
4. Regulation (EC) No 883/2004 on the coordination of social security systems.
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24. Council Regulation (EC) No 1435/2003 on the Statute for a European Cooperative Society (SCE), Art. 6. OJ L 207, 18.8.2003.
25. Council Regulation (EC) No 1435/2003, Art. 12(2). OJ L 207, 18.8.2003.
26. Eleventh Council Directive 89/666/EEC of 21 December 1989 concerning disclosure requirements in respect of branches opened in a Member State by certain types of company governed by the law of another State. OJ L 395, 30.12.1989.
27. Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services, Art. 1(3)(a). OJ L 18, 21.1.1997.
28. Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems, Art. 12(1). OJ L 166, 30.4.2004.
29. Council Regulation (EC) No 1435/2003, Art. 7(1) and Art. 7(3). OJ L 207, 18.8.2003.