European Public Prosecutor’s Office: the tension between supranationalism, sovereignty and legitimacy

 

Jacob Öberg, Professor of EU law, University of Southern Denmark

Photo credit: EPPO

The aim of this blog post is to summarise the key argument of a recent article published by the author in 50(6) 2025 European Law Review titled “The European Public Prosecutor's Office - supranationalism, sovereignty and legitimacy”.

For readers not acquainted with the European Public Prosecutor’s Office (“EPPO”) it could be briefly stated that the EPPO is a centralised European public prosecutor tasked with prosecuting and investigating crimes against the EU’s financial interests (as defined in the PIF Directive) following its mandate in Art 86 TFEU. EPPO which commenced its operation in June 2021, is undoubtedly the pinnacle to date of supranational criminal law in the history of European integration. It represents a significant achievement in terms of its potential for a fundamental system change for EU criminal policy, departing markedly from the conventional Member State-centric view that intergovernmental cooperation should remain the dominating principle of governance in this field (Öberg, 2021).

It is well-known that the EPPO was established in October 2017 through the EPPO Regulation on the basis of the new Art 86 , which provides the Council with a competence to ‘establish a European Public Prosecutor’s Office’ which shall ‘be responsible for investigating, prosecuting, and bringing to judgment … the perpetrators of, and accomplices in, offences against the Union’s financial interests’ and ‘exercise the functions of prosecutor in the competent courts of the Member States in relation to such offences’. The final EPPO Regulation had been preceded by politically protracted negotiations over four years, involving the highest number of official negotiation documents in the Council on criminal law to date (Eurocrim database) and a Yellow Card from national parliaments (Commission Communication, 2013).  Because of far-reaching objections from Member States to the creation of the office, the EPPO Regulation ultimately had to be adopted by means of an enhanced cooperation procedure involving 20 Member States under Art 86(1) 2nd para, TFEU.

In light of this brief account of the genesis of the EPPO, this blog offers a critical analysis of the evolution, structure and functioning of the EPPO on the basis of three theoretical frameworks: the theory of supranationalism, the concept of sovereignty and the critical approach of legitimacy. The first part of the analysis accounts for the current design of the EPPO along the supranational-intergovernmental (Stone Sweet and Sandholtz, 1997) spectrum based on the general literature on EU law and integration (Cappeletti, Seccombe and Weiler, 1986, Pescatore, 1974).  Secondly, the analysis proceeds to examine the governance of the EPPO in attempting to ascertain the extent to which Member States have been capable of maintaining control of its operation. Finally, we consider the EPPO from the perspective of legitimacy, with a specific focus on judicial review of the EPPO’s activities.

First, we reflect on the institutional structure of the EPPO. The key argument here is that the establishment and operationalisation of the EPPO marks a significant transformation from a ‘cooperative’ philosophy in EU criminal justice towards an integrated ‘supranational’ criminal justice system based on formal powers exercised by the EPPO (Monar, 2013). The EPPO Regulation nonetheless captures an intricate compromise between a supranational and intergovernmental conception of the EPPO (Schmeer, 2023). The central feature for the supranational characterisation is the creation of a European prosecutor with binding decision-making powers in respect of criminal investigations and prosecutions in the area of crimes against the EU’s financial interest (Art 86(2) TFEU and Art 13(1) of the EPPO Regulation), with jurisdiction transcending the territorial borders of the EU Member States (Art 23 of the EPPO Regulation). However, the complicated rules in the EPPO Regulation on the exercise of competence (Arts 25-27 of the EPPO Regulation), the removal of exclusive competence and the inclusion of a ‘national link’ in the EPPO’s governance structure (Art 13 of the EPPO Regulation) present limits to the ‘supranationalisation’ of the EPPO. A review of the first years of the EPPO’s activities nonetheless suggests that the body operates de facto as a highly supranational body without being restrained by the legal framework surrounding its operations. The limited evidence available indicates that the EPPO in practice defines its mandate broadly (both in terms of the PIF offences and in respect of ‘ancillary offences’) and that national law enforcement agencies acting on behalf of the EPPO act seemingly in a spirit of loyalty towards the EPPO’s interests (see Recital 69 of the EPPO Regulation). This lends some support to the contention that the EPPO – based on its legal powers and operational practice – is the most ‘supranational’ EU body created to date within the context of EU integration (Öberg, 2021).

The establishment of the EPPO, in conjunction with the adoption of the new PIF Directive, makes a compelling argument for holding that the EU appears to have adopted a ‘federal vision’ of criminal law, at least when it comes to protecting its financial interests (Herlin Karnell and Gomez-Jara, 2013). This development asks more fundamental questions about legitimacy and state sovereignty and if the EPPO stand as a role model for the creation of a ‘European criminal justice system’. It is important to observe that the EPPO exerts significant powers with severe implications for the fundamental freedoms of individuals and that the exercise of those powers also markedly encroaches on ‘core state powers’. Whilst there is a strong normative justification for conferring these enforcement powers to the EPPO (Öberg, 2024, ch 5), these powers need to be accompanied with strong fundamental rights safeguards both at national and EU level.

This brings us to the final observation which relates to the key fundamental rights challenges for a European ‘supranational’ prosecutor. While the establishment of the EPPO is a welcome step towards a ‘federalisation’ of EU criminal justice in this area, the EPPO cannot function effectively without some degree of harmonisation of national criminal procedures and national criminal laws. The recent case law of the Court (G.K. and others, Case C-281/22) highlights the implications of this incomplete centralisation of national criminal procedures which makes it more cumbersome for the EPPO to fulfil its task of combatting crimes against the EU’s financial interests. The ‘output’ (legitimacy) perspective aside, another central tenet of legitimacy for the EPPO is that there should be structures and mechanisms established to hold that body responsible and accountable for its actions. Not only must the legality of the EPPO’s decisions be subject to review by the Court of Justice, as follows from Art 263 TFEU, but national courts must also have the comprehensive ability to request preliminary rulings as per Art 267 TFEU. Therefore, the EPPO Regulation needs to be reformulated to make clear that the Court of Justice’s Treaty-based jurisdiction cannot be restricted by reference to secondary law. Furthermore, stronger common EU measures for protecting the rights of the defendant, along with effective safeguards that form the basis for the exercise of the EPPO’s powers, should be a central feature of a potential future amendment of the EPPO Regulation.

As suggested in the analysis, the Court can have an important role to play in this regard. First, the Court should expand its jurisdiction, following Art 47 of the Charter, to ensure robust judicial review of the actions of the EPPO, and by developing common standards constituting the basis for the EPPO’s operation through the autonomous interpretation of key provisions in the EPPO Regulation. Secondly, the Court can contribute to the development of a system of EU judicial remedies against actions undertaken by the EPPO in its operational activities. As demonstrated by G.K. and Others (Parquet européen) and EPPO v I.R.O. & F.J.L.R. (Case C‑292/23), the CJEU has taken a nuanced approach to judicial remedies, carefully balancing the need for an effective supranational system of criminal enforcement with judicial safeguards for defendants. To conclude, a supranational prosecutor such as the EPPO does not only need to have institutional structures, tools and resources to fight effectively against the EU’s financial interests effectively (output). It also needs a robust legal framework surrounding the EPPO’s operational action, combined with strong legal safeguards for individual defendants, is imperative for ensuring the (throughput) legitimacy of this new unique supranational prosecutor.

 

Protecting EU Funds: The Promise and Pitfalls of the PIF Directive

 

Dr. Krystyna Bakhtina, Luiss University

Photo credit: Kiwiev, via Wikimedia Commons

In mid-July 2025, the European Commission announced a structured reflection process to review the EU Anti-Fraud Architecture, complementing the preparatory work on the next multiannual financial framework. The goal is to ensure a stronger and more efficient protection of the Union’s financial interests. This review comes at a critical moment: transnational fraud schemes are becoming more sophisticated, organised crime continues to target EU funds, and criminal networks increasingly exploit advanced technologies such as AI and cryptocurrencies to misappropriate Union funds.

Examining the Directive (EU) 2017/1371 on the fight against fraud to the Union’s financial interests by means of criminal law (PIF Directive) is therefore highly relevant. Drawing on findings from the BETKONEXT project’s working paper, this blog outlines how PIF Directive has been implemented across several EU Member States. It provides insight into how effectively the EU financial interests are safeguarded, highlighting the main challenges and gaps that persist.

Built on Article 325 TFEU, the Directive establishes common rules to protect EU funds, harmonising definitions of key crimes, such as fraud, corruption, misappropriation, and money laundering, it provides rules on sanctions and limitation periods. Its aim is to close legal loopholes, reduce fragmentation across national frameworks, and enhance the safeguarding of EU funds and taxpayers’ money.

Implementation in Practice: A Comparative Perspective

While the European Commission’s report confirmed that the PIF Directive’s core provisions have been transposed, it also noted certain gaps and shortcomings in national implementation. The comparative research as part of the BETKONEXT project shows that many of these problems remain and, in some cases, reveal deeper systemic shortcomings affecting the Directive’s uniform application and the safeguarding of the EU financial interests.

An examination of four Member States, namely Italy, Poland, Belgium, and Spain, illustrates how these divergences manifest in practice.

Italy demonstrates a generally high degree of compliance; however, recent legislative reforms risk reversing this progress. The repeal of the offence of abuse of office and the introduction of a much narrower offence limited to the improper allocation of money or movable property significantly restrict the intended scope of the Directive. Unlike the Directive, which refers broadly to “funds or assets,” the new offence applies only to money or physical assets and is triggered exclusively when conduct violates specific laws that leave no discretion to public officials. This raises concerns about compliance with Article 4(3) of the Directive, as certain harmful behaviour could escape prosecution under Italian law.

Poland faces some transposition challenges, most notably its failure to criminalise attempts to commit certain offences covered by the Directive, and its reliance on restrictive jurisdictional provisions grounded in the principle of double criminality, contrary to Article 11. Moreover, some forms of misuse of EU funds, such as non-disclosure of relevant information when granting financial support, remain insufficiently addressed.

Belgium presents similar concerns. Its legislation does not criminalise attempts to commit certain offences relevant to the Directive, particularly embezzlement and misuse of company assets. Additionally, Belgian law conditions prosecution of nationals for crimes committed abroad on the filing of a complaint by the victim or foreign authorities - a procedural requirement that conflicts with the Directive.

Spain introduced broad reforms to align its criminal law with the Directive, including lowering the monetary thresholds for fraud offences, expanding the definition of “public official” for bribery and embezzlement cases, and extending corporate criminal liability to embezzlement. These changes closed an important gap in the previous framework and strengthened the overall system of protection for the EU’s financial interests. However, overlapping provisions on fraud remain in force, creating legal uncertainty. Research highlights that this overlap could lead to inconsistent enforcement until the redundant rules are clarified or repealed.

Conclusion

Although the PIF Directive aims to harmonise criminal law and enhance the protection of the EU budget, its potential to fulfil the obligations enshrined in Article 325 TFEU remains only partially achieved. Persistent divergences in national implementation and unresolved gaps undermine uniform application and weaken the level of protection envisioned by the Treaty. To ensure genuine compliance with Article 325 and strengthen the Union’s financial integrity, targeted legislative reforms and closer coordination among Member States and key Union institutions are essential. At the same time, preventive systems—such as internal controls, audits, and compliance measures—play a complementary role and should be reinforced where criminal sanctions are limited.

 

The Italian Job: the CJEU strengthens criminal law protection of the EU’s finances

Steve Peers

The stereotype of fraud against the EU budget is a sleazy EU official in Brussels receiving manila envelopes stuffed full of bribe money, spending his ill-gotten gains to ensure that his lavish lifestyle becomes ever more decadent. But according to the EU’s annual reports on such fraud, the typical offender is actually rather different: it’s an individual or company who finds ways to get hands on EU money being spent by the Member States, since they are largely in charge of the day-to-day management of EU spending. Furthermore, not all the breaches concern EU spending: some concern the reduction of EU income, for instance by avoiding the customs duties which apply to many goods coming from third countries. 

Agreeing and enforcing EU-wide rules for such behaviour has long been a challenge. But in its recent judgment in Taricco, the Court of Justice has made a major effort to strengthen the law in this field.

Background

The CJEU ruled back in the 1980s (in the Greek maize judgment) that Member States could not simply ignore fraud against the EU budget, but had to take effective measures to stop it. This rule was later added to the Treaties, and now forms Article 325 TFEU, which reads in part as follows:

1.      The Union and the Member States shall counter fraud and any other illegal activities affecting the financial interests of the Union through measures to be taken in accordance with this Article, which shall act as a deterrent and be such as to afford effective protection in the Member States, and in all the Union’s institutions, bodies, offices and agencies.

2.      Member States shall take the same measures to counter fraud affecting the financial interests of the Union as they take to counter fraud affecting their own financial interests.

As regards criminal law, the current legal rules on the topic date back to 1995, and were adopted in the form of an international Convention (the ‘PFI Convention’) between the Member States, which came into force in 2002. This treaty applies to all Member States except for Croatia (although the Commission has just proposed its application to that State), and the UK – which was initially a party but no longer has legal obligations to apply the Convention since it opted out of many pre-Lisbon criminal law measures as from 1 December 2014 (on that process, see further here). Among other things, the PFI Convention obliges all Member States to impose criminal sanctions for serious cases of fraud against the EU budget.

The Commission proposed a Directive to replace the Convention in 2012, and this is currently in the late stages of negotiation between the Council and the European Parliament (for an update, see here; on the legal basis, see here). It’s evident that one of the main issues remaining in the negotiations is whether the proposed Directive should apply to VAT fraud, given that a small amount of VAT revenue goes to the EU budget. The Commission and the European Parliament argue that it should, while the Council argues against, presumably because the far larger part of the losses from VAT fraud affects national budgets, not the EU budget. There are other issues in the proposed legislation, such as a more precise possible penalty for fraud, and a rule on ‘prescription’ periods (ie the time limit after which a prosecution can no longer be brought or continued).

The proposed Directive is closely connected to another piece of proposed EU legislation: the Regulation establishing the European Public Prosecutor’s Office (EPPO). That’s because the EPPO will have jurisdiction only over EU fraud, and so it’s necessary to have a definition of that concept. (On the defence rights aspects of the EPPO proposal, see discussion here); for an update on negotiations, see here). And the EPPO Regulation is in turn linked to a third legislative proposal: the Regulation refounding Eurojust, the EU’s agency for coordinating national prosecutions. That’s because there will be close links between Eurojust and the EPPO, and so the Eurojust Regulation can’t be finalized before the EPPO Regulation is agreed. (The Council has agreed all of the Eurojust Regulation except for the bits relating to EPPO links: see the agreed text here. This will still have to be negotiated with the European Parliament, however).

Judgment

The recent CJEU judgment in Taricco concerns alleged VAT fraud against a national budget, and in particular the question of prescription periods. Italian rules on the breaks in prescription periods mean few cases involving VAT fraud are ever seen through to completion, since time simply runs out during the proceedings.  A frustrated Italian court therefore asked the CJEU whether these national rules infringed the economic law of the EU: namely the rules on competition, state aids, economic and monetary union and the main VAT Directive.

According to the CJEU, the national law does not infringe EU competition law, because inadequate enforcement of criminal law does not as such promote cartels. It does not infringe state aid law, because the Italian government was not waiving tax obligations as such. Furthermore, it does not infringe monetary union rules, since it was not closely enough linked to the obligation to maintain sound public finances.

That left the VAT Directive. In fact, that Directive sets out the scope of VAT (ie which goods and services have to be taxed), but does not include any rules on criminal law issues. The Court therefore assumed that the national court was asking it questions about EU law more generally, and proceeded to interpret Article 325 TFEU and the PFI Convention. According to the Court, building on the previous case law such as Fransson, there was not only an obligation pursuant to the VAT Directive and Article 325 TFEU to take effective measures in general against VAT fraud to defend the EU budget, there was also a specific obligation to criminalise such activity, where it was ‘essential to combat certain serious cases of VAT evasion in an effective and dissuasive manner’. This was consistent with obligations under the PFI Convention; the Court confirmed that the Convention applied to VAT fraud, despite the absence of express provisions to this effect under the Convention. Given the size of the alleged fraud in this case (several million euros), it had to be considered serious.

Furthermore, the Court ruled that the operation of the limitation periods in Italian law infringed Article 325 TFEU. A limitation period was not objectionable as such, but national law made it effectively impossible to prosecute offences because the way in which it calculated breaks in the prosecution. Also, the national law infringed the principle of equality set out in Article 325, since other national laws on similar types of economic crime did not contain the same problematic rules on calculation of breaks.

The Court then ruled on the consequences of this breach of EU law. In the Court’s view, the national court has to disapply the relevant national law. This obligation was based on Article 325 TFEU, which sets out precise and unconditional rules on effective and equal protection of the EU’s financial interests. So the ‘precedence’ (ie, primacy or supremacy) of EU law required national law to be disapplied.

Finally, the CJEU dismissed a human rights objection to its ruling. While Article 49 of the EU Charter of Fundamental Rights does ban the retroactive application of more stringent criminal penalties than those in force when a crime was committed, the CJEU ruled (following the case law of the European Court of Human Rights on the equivalent Article 7 ECHR) that a limitation period was distinct from a substantive criminal offence. The acts which the defendants were accused of committing were undoubtedly criminal offences in national law at the time of their alleged commission, so there was no retroactivity of criminal law in the sense prohibited by the Charter.

Comments

“You were only supposed to blow the bloody doors off!” This classic quote from The Italian Job aptly summarises the CJEU’s approach to the relationship between national law and EU law in this judgment. Asked only to rule on the interpretation of EU economic law, the Court decided instead to strengthen the constitutional foundations of EU law in the criminal field.

Substantively, the Court’s judgment is significant because it extends EU criminal law obligations to VAT fraud. This is, in the Court’s view, a pre-existing obligation not only in the PFI Convention, but also in the TFEU itself. To overturn it, Member States would therefore have to amend the Treaty, not just the Convention (in the form of the proposed Directive). Also, Member States’ obligations extend not only to criminalisation of serious cases of VAT fraud, but to prescription (and so potentially other procedural issues) as well.  So if Member States (in the Council) do insist on excluding VAT from the scope of the EU fraud Directive, that would have limited impact. Indeed, the Council Presidency has already asked Member States if there is any point maintaining their opposition on this point after the Taricco judgment.

Presumably the Court’s rulings on prescription and criminalisation apply to other forms of EU fraud too. This means that including prescription rules in the Directive (as all of the EU institutions are willing to do) simply confirms the status quo – although the final Directive will likely be more precise on this issue than the CJEU’s ruling. Furthermore, since the Taricco judgment could help to unblock talks on the PFI Directive, this could have a knock-on effect on the negotiations on the EPPO and Eurojust.

Moreover, the Court’s ruling limits the effect of various opt-outs. Ireland and Denmark have opted out of the proposed Directive, but will remain bound by the PFI Convention; the UK has opted out of both. But they remain bound by the Court’s interpretation of the Convention (for Ireland and Denmark) and the Treaty (for all three Member States). This has limited practical impact, as long as national law remains compliant (assuming that it is already compliant) with these measures as interpreted by the Court. While the UK is no longer free to decriminalise fraud against the EU budget, it was never likely to use that ‘freedom’ anyway, particularly as regards VAT fraud, where the main loss would be to the British government’s revenue, not the EU’s.

More fundamentally, the Taricco judgment strengthens the constitutional foundations of criminal law obligations in the EU legal order. While this may only be relevant for EU fraud cases, the Court has already broadened that concept to include VAT fraud. In such cases, there is an obligation for national courts to disapply incompatible national law as regards the procedural aspects of criminal proceedings. Conversely, there is no obligation to disapply incompatible substantive national criminal law, since this would lead to a breach of Article 49 of the Charter.

The ruling is based on the legal effect of the Treaties – the Court does not rule on the legal effect of the ‘third pillar’ Convention. It sets out a test for primacy similar to the test for direct effect (the Court refers to the precise and unconditional nature of the rules in Article 325 TFEU). It is not clear how this rule fits into the EU’s overall constitutional architecture – as a clarification of the general rules or as a special rule relating to protection of the EU’s financial interests. But in any event, the Taricco judgment is a significant contribution toward strengthening the EU’s role in this particular field. 

  

Barnard & Peers: chapter 25, chapter 6

Photo credit: dailymail.co.uk