EUROPEAN COMMISSION

Strasbourg, 12.12.2023

SWD(2023) 663 final

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT REPORT

Accompanying the document

Proposal for a Directive of the European Parliament and of the Council

establishing harmonised requirements in the internal market on transparency of interest representation carried out on behalf of third countries and amending Directive (EU) 2019/1937





and





Proposal for a Regulation of the European Parliament and of the Council





amending Regulations (EU) No 1024/2012 and (EU) 2018/1724 as regards certain requirements laid down by Directive (EU) XXXX/XXXX

{COM(2023) 637 final} - {SEC(2023) 637 final} - {SWD(2023) 660 final} - {SWD(2023) 664 final}

Table of content

1.Introduction: Political and legal context

2.What is the problem and why it is a problem?

2.1.What are the problems?

2.1.1.Obstacles to the internal market for interest representation activities carried out on behalf of third countries.

2.1.2.Unknown magnitude, trends and actors of interest representation activities carried out on behalf of third countries.

2.2.Magnitude of the problems

2.3.How will the problems evolve?

3.Why should the EU act?

3.1.Legal basis

3.2.Subsidiarity: Necessity and added value of the EU action

4.Objectives: What is to be achieved?

4.1.General objectives

4.2.Specific objectives

5.What are the available policy options?

5.1.What is the baseline from which policy options are assessed?

5.2.Scope of the policy intervention

5.2.1.Option A3

5.2.2.Option B

5.2.3.Option C

5.2.4.Other possible scope

5.2.4.1.Interest representation carried out on behalf of any government or entity

5.2.4.2.Exclusion of some entities from the scope

5.3.Description of the policy options

5.3.1.Policy Option 1: Non-legislative measures

5.3.2.Policy Option 2: Legislative intervention

5.3.2.1.Policy Option 2.1: Targeted requirements

5.3.2.2.Policy Option 2.2: Extended requirement

6.What are the impacts of the policy options?

6.1.The baseline scenario

6.2.Assessment of the options

6.2.1.Economic impacts

6.2.1.1.Functioning of the internal market

6.2.1.2.Competitiveness

6.2.1.3.Costs and administrative burdens for economic actors (+SMEs)

6.2.1.4.Costs for public authorities of measures addressed to economic actors.

6.2.2.Social impacts

6.2.2.1.Transparency of interest representation activities carried out on behalf of third countries.

6.2.2.2.Improve knowledge about the magnitude, trends and actors of interest representation activities carried out on behalf of third countries.

6.2.2.3.Enforcement and supervision by authorities

6.2.3.Fundamental rights impacts

6.2.3.1.Right to private life and to the protection of personal data

6.2.3.2.Freedom of association

6.2.3.3.Freedom of the arts and sciences

6.2.3.4.Freedom of expression and information

6.2.3.5.Freedom to conduct a business

6.2.4.Geopolitical implications

6.2.5.Digital by default principle

7.How do the options compare?

7.1.Effectiveness

7.2.Efficiency

7.3.Coherence with other EU initiatives

7.4.Proportionality60

7.5.Comparison of options

8.Preferred option

8.1.Description of the preferred option

8.2.The choice of instrument

8.3.Application of the “one in, one out” approach

9.How will actual impacts be monitored and evaluated?

Annex 1: Procedural information

Annex 2: Stakeholder consultations

Annex 3: Who is affected and how?

Annex 4: Analytical methods

Annex 5: Competitiveness check

Annex 6: Evidence of current and potential future fragmentation in the regulation of interest representation activities across the internal market

Annex 7: Analysis of administrative fines and thresholds for information requests

Annex 8: Fundamental rights impact

Annex 9: The baseline

Glossary and acronyms

1.Introduction: Political and legal context 

Together with the rule of law and fundamental rights, democracy is a founding value of the European Union. For democracy to function well, citizens must be able to express their preferences and elect their representatives freely.

One important characteristic of democratic systems is that stakeholders, citizens and civil society organisations (CSOs), are consulted and involved in the preparation of laws and policies on the basis of transparent processes, at European, national, regional and local levels. The space for public debate in Europe is and must remain open, also to ideas from across the world 6 .

There is a growing concern that the openness of European societies is being exploited for covert interference 7  from foreign governments to manipulate decision-making processes and public opinion in the EU. The European Parliament 8 and the Council 9  have underlined the importance of addressing the threat to democracy posed by such covert foreign interference. Governments 10 , citizens 11 and civil society organisations 12 are concerned by the impact of such external interference on European democracies and the public sphere. For example, a recent Flash Eurobarometer survey on Citizenship and Democracy found that about 8 in 10 Europeans agree that foreign interference in European democratic systems is a serious problem that should be addressed 13 . Concerns have intensified after Russia’s war of aggression against Ukraine and the so-called “Qatar-gate”, a corruption scandal involving Members of the European Parliament and EU staff. The Union witnessed numerous instances of some third countries seeking to covertly influence in its politics and decision-making 14 . While the full scale of this phenomenon is unknown, reports of such activities exist 15 .

‘A new push for European democracy’ is a headline priority of the Commission and many initiatives have been adopted over recent years, including in the framework of the European Democracy Action Plan 16 presented in 2020, that put forward a comprehensive approach to ‘empower citizens and build more resilient democracies across the EU’. Existing policy interventions include updating rules governing European political parties and foundations 17 , regulating various aspects of online platforms 18 , addressing disinformation 19 , detecting, analysing and countering foreign information manipulation and interference (FIMI) 20 , regulating political advertising including on social media 21 , supporting free, fair and inclusive elections, supporting free and plural media 22 , addressing questions of investments by third countries in electoral infrastructure 23 , cybersecurity 24 , anti-money laundering and corruption 25 .

Instead of relying on traditional and formal diplomatic channels and processes, foreign governments increasingly rely on lobbyists and other forms of influence to promote their policy objectives 26 . Typically, states have resources that private actors might not have and pursue different aims. As noted by the Organisation for Economic Co-operation and Development (OECD), foreign governments “can have a transformative impact on the political life of a country, not only on domestic policies but also on its foreign policy, its election system, economic interests and its ability to protect its national interests and national security” 27 and the risks involved in lobbying and influence activities of foreign government are higher than the risks posed by purely domestic lobbying and influence activities 28 .

Several democratic countries outside the Union have already adopted measures including to enhance transparency of interest representation activities carried out on behalf of third countries and support democratic accountability. These include Australia and the US, while other democracies, like the UK and Canada are considering adopting similar measures. 29 International organisations and fora such as the Organization for Security and Co-operation in Europe (OSCE), OECD and G7 have also been working on the issue.

In the internal market, a wide range of cross-border activities which seeks to influence decision-making processes is conducted on behalf of third countries. Such activities involve different types of EU-based commercial and non-commercial entities such as think tanks, lobbying firms, CSOs, or law firms. Interest representation involves direct contact with decision-makers, communication and other efforts to represent a particular interest and influence decision-makers and the wider debate. While these activities can be conducted transparently, this is not always the case, and national measures intended to ensure the transparency and accountability of such activities are not always effective in isolation at the national level.

Where they are regulated, interest representation activities carried out on behalf of third countries are regulated together with other interest representation activities. Currently, 15 Member States 30 have a transparency register on interest representation activities, albeit only at sub-national level for some 31 . In those Member States, where such a regulatory framework exists, it is highly fragmented across the EU 32 . The scope of the entities and activities covered differ widely 33 . There are different definitions of interest representation activities, thresholds on the size of entities or level of activities triggering transparency or registration requirements, as well as record-keeping 34 . Moreover, the existence, powers, structures and independence of supervisory authorities differ greatly across the EU. The same goes for the nature of sanctions, and amounts of pecuniary fines, where they exist 35 . 12 Member States do not regulate the transparency of interest representation activities 36 .

The internal market, already fragmented by existing rules, risks being further fragmented. Member States have expressed increasing concerns about covert influence by third countries in democratic processes in the EU. Some Member States are thinking to adopt measures to protect their democratic sphere. Member States generally agree that EU action is needed against the background of the need to address foreign interference.

In its Work Programme for 2023, the Commission announced that it would present a “Defence of Democracy” package to increase transparency and accountability, thus promoting “institutional trust and democratic values in the EU” and protecting “the EU democratic sphere from covert interference in democratic processes”.

The package builds upon and is complementary to the European Democracy Action Plan and fully aligned with its logic 37 . The initiative related to interest representation activities is a key component of the Defence of Democracy package. The package will also include non-legislative measures aiming to promote high standards for elections to the European Parliament and elections and referenda at national level and to foster an enabling civic space and promote the inclusive and effective participation of citizens and civil society organisations in the public policy-making processes.

The main aim behind this initiative is to introduce common transparency and accountability standards in the internal market for interest representation activities carried out on behalf of third countries. By providing common transparency requirements for such activities, the initiative will improve the functioning of the internal market for such activities, by creating a level playing field, reducing unnecessary cost for entities that seek to carry out interest representation activities on behalf of third countries across borders and prevent regulatory arbitrage.

This intervention would also enhance the integrity of, and public trust in, the EU and Member State democratic institutions by ensuring the transparency of interest representation activities carried out on behalf of third countries on the basis of proportionate standards, and by improving the knowledge of the magnitude, trends and actors of interest representation activities carried out on behalf of third countries. The initiative would ensure full respect of fundamental rights and democratic values; strong safeguards should mitigate the potential negative impacts on concerned entities.

This initiative will provide for common transparency standards in the context of legal and legitimate interest representation activities carried out in the interests of third countries in the internal market. While interest representation activities carried out covertly on behalf of third countries could amount to foreign interference, foreign interference encompasses a wide range of activities that are carried out by or on behalf of a foreign state or a state actor, and which are coercive, deceptive or corrupting and are contrary to the sovereignty, values and interests of the Union and its Member States. This can for example include disinformation, corruption of officials or cyber-attacks on the IT infrastructure supporting elections. This initiative does not aim to exhaustively address all foreign interference activities.

The legislative initiative complements existing measures at EU level that contribute to enhancing transparency and addressing certain activities carried out by or on behalf of third countries. As regards activities impacting the democratic sphere, this includes the proposal for a Regulation on the transparency and targeting of political advertising, the proposal for European Media Freedom Act 38  (EMFA), the Digital Services Act 39 (DSA), the Regulation on European political parties and European political foundations and the proposal to amend it 40 and non-legislative measures for combating disinformation and other forms of foreign interference, including the Foreign Information Manipulation and Interference Toolbox. It also complements and is coherent with other legislative proposals, legislation and initiatives beyond the European Democracy Action Plan which enhance the transparency of activities affecting democratic processes, such as the Anti-Money Laundering Directive and the Whistle-blower Directive.

The transparency achieved by these EU instruments and initiatives leaves an important part uncovered which this initiative aims to address – interest representation carried out on behalf of third countries.

2.What is the problem and why is it a problem?

2.1.What are the problems?

2.1.1.Obstacles to the internal market for interest representation activities carried out on behalf of third countries.

In Member States where it is regulated, interest representation activities carried out on behalf of third countries are regulated together with other interest representation activities.

At present, 15 Member States 41 regulate the transparency of interest representation activities and have a transparency register on interest representation activities, albeit only at sub-national level for some 42 . In those Member States, where such a regulatory framework exists, it is highly fragmented across the EU 43 , and only 9 of those Member States impose a specific legal obligation to register before carrying out interest representation activities 44 . Conversely, 12 Member States do not regulate the transparency of interest representation activities 45 .

This fragmentation causes several obstacles in the internal market for interest representation activities carried out on behalf of third countries that undermine the proper functioning of the internal market.

First, there is an uneven playing field. Geographically, the transparency of interest representation activities is regulated differently in different Member States. This regulatory fragmentation results in a landscape in which interest representation activities are costly and complex to perform in some Member States and not, or not to the same extent, in others. Among providers of interest representation activities, diverging requirements at Member State level impact different types of stakeholders in different ways, making them subject to more stringent requirements than others although they would be performing the same activities 59 .

Second, there are unnecessary costs for entities that wish to operate across borders in the internal market. At present, the process of entering a new market in another Member State than the state of establishment is made difficult by the costs of complying with fragmented rules.

This situation also leads to one main consequence. The uneven playing field directs cross-border interest representation activities away from more regulated Member States towards less regulated ones or where enforcement is limited. In other words, there is a risk of forum shopping and regulatory arbitrage by entities seeking to evade regulation in certain Member States. This risk is especially high in those Member States that have a regulatory regime for the transparency of interest representation, but do not make registration compulsory or lack monitoring or enforcement mechanisms. Beyond the internal market-related consequences described here, this phenomenon of regulatory arbitrage could also present an opportunity for third-country actors to evade transparency requirements and covertly influence decision-making in the EU.

2.1.2.Unknown magnitude, trends and actors of interest representation activities carried out on behalf of third countries

The scale of interest representation activities carried out on behalf of third countries in the Member states is largely unknown.

There are indications that the broader phenomenon of foreign interference exists and is increasing. Some stakeholders have indicated that third country governments provide funding with clear objectives which aim at legal or policy changes 76 . There are also numerous media reports of foreign interference from third countries whereby interest representation activities are being carried out on behalf of third countries covertly to influence decision-making processes, sow distrust and undermine the EU’s democratic processes 77 . 

Interest representation activities can take very different forms such as direct lobbying of decision-makers, organising or participating in meetings, conferences or events, contributing to or participating in consultations or parliamentary hearings, organising communication or advertising campaigns, organising networks and grassroots initiatives, preparing policy and position papers, legislative amendments, opinion polls, surveys or open letters, or activities in the context of research and education, where they are specifically carried out with that objective. They can be conducted both at European, national, and sub-national level and they can have a harmful and disruptive impact on decision-making processes. However, Member States do not consistently collect or systematically share information on interest representation carried out on behalf of third countries and there is no reliable and consistent data on these activities. This results in difficulties to identify and map interest representation activities carried out on behalf of third countries and do so in a coordinated and efficient way across the EU. This makes the situation prone to foreign interference operations, as third countries may seek to exploit the information asymmetry among authorities. In turn, it has an effect on wider perceptions about the integrity of public decision-making.

The lack of transparency and inconsistency of regulation and oversight, the many different ways in which interest representation activities on behalf of third countries are carried out and the difficulty of measuring them, do not allow to monitor these activities accurately, especially with quantitative data. It also risks conflating legitimate interest representation by third countries with covert activities which may not pursue such ends.

The lack of transparency undermines democratic processes and impacts EU citizens’ trust in related processes and/or decision-makers and their ability to exercise their rights and responsibilities.

Citizens are concerned about the impacts of foreign government meddling with decision-making processes in the EU. A recent Eurobarometer on Citizenship and Democracy showed that about 8 in 10 Europeans agree that foreign interference in European democratic systems is a serious problem that should be addressed 92 . According to the Online Public Consultation 84.5% of respondents considered that lobbying or public relations activities remunerated by or controlled by third countries triggered a high risk of covert foreign interference. 65% of them considered that the activities of think tanks remunerated by third countries triggered such a risk. A survey conducted by Friedrich-Ebert-Stiftung on European sovereignty in 8 EU Member States 93 found that 93% of respondents considered that it is essential or important to have common tools to combat foreign interference for Europe to be sovereign 94 . Due to the lack of information on the magnitude, trends and actors of interest representation carried out on behalf of third countries, it is difficult to assess the reality and the risks caused by this phenomenon and establish the data needed to develop evidence-based policy.

This problem is a European one. Interest representation activities carried out on behalf of third countries is a transnational issue with cross-border implications that can affect the policy decisions and political processes of other countries. This is because third countries often engage in activities aimed at influencing policy decisions and political processes in Member States, which can have an impact beyond each Member States’ borders. It is not necessary to exercise influence at the European level to impact EU decision-making.

Figure 1. Problem tree:

2.2.Magnitude of the problems

As presented in detail in Annexes 3 and 4, the estimates place the number of players in the internal market for interest representation activities carried out on behalf of third countries (the population of enterprises that would be subject to requirements under the proposed policy options) at between 712-1,068 enterprises 95 . The number of market actors does not prejudge the influence of such activities on the democratic sphere (see section 2.1.2).

Currently, there is no comprehensive data available on the size of the market for interest representation across the EU, or the specific market for interest representation activities carried out on behalf of third countries. Furthermore, even if interest representation activities carried out on behalf of third countries are a transnational issue, there is also a lack of data on the cross-border activities of these entities carrying out interest representation activities on behalf of third countries.

The current legal fragmentation described in the previous section contributes to explain this lack of information. Data collection across Member States is not unified and cannot provide a sufficient basis to highlight how much of the interest representation activities taking place in the internal market happen across borders nor to estimate the size of the market. This issue is further compounded by the lack of transparency generally characterising the market for interest representation activities.

The fragmentation of the internal market for interest representation activities carried out on behalf of third countries is presented in section 2.1.1. Annex 6 presents the regulatory situation in the Member States.

As explained in Section 2.1.2 comprehensive information on the magnitude, trends and actors of interest representation activities carried out on behalf of third countries is lacking.

2.3.How will the problems evolve?

Regarding the first problem, obstacles in the internal market, the issues related to the uneven playing field, the risk of regulatory arbitrage and the unnecessary costs for entities carrying out interest representation activities that wish to operate across Member States are bound to increase.

This problem is driven in a large part by the fragmentation of the internal market which is itself likely to increase. The consultations carried out during the preparation of the initiative, in particular in the context of focus group meetings and contributions provided by Member State authorities showed an increasing risk awareness in Member States about the issue of interest representation carried out on behalf of third countries, and an increase in national plans for regulatory interventions to address this issue. For example, in countries like Poland and the Netherlands 96 , draft laws have been put forward which would impact foreign funding, which could affect entities carrying out interest representation on behalf of third countries. In both cases, stakeholders expressed concerns, which were also reflected in the 2022 Rule of Law Report 97 . Some Member States, such as France, have indicated their interest in regulating in particular interest representation carried out on behalf of third countries 98 . Furthermore, draft laws regulating interest representation in general are either under discussion or planned in 12 Member States 99 . Furthermore, the fact that Member States do not consistently collect or systematically share information on interest representation carried out on behalf of third countries leads to different levels of awareness of the issue that could result in Member States responding divergently to this phenomenon. Such fragmentation would exacerbate the obstacles faced by entities carrying out interest representation on behalf of third countries in the internal market.

The second problem, the unknown magnitude, trend and actors of covert interest representation activities carried out on behalf of third countries, will not be solved over time within the current baseline scenario. Both the issues of the lack of transparency in the market for interest representation activities carried out on behalf of third countries and the willingness of third countries to covertly influence decision-making in the EU are likely to remain or increase. While it is in the interest of many actors in this market to operate transparently to preserve the reputation of their industry and of their other clients, the market for interest representation activities cannot by itself promote more transparency without regulatory interventions.

In addition, an increase in reports of interference operations carried out via interest representation activities would lead to more distrust from citizens in decision-making processes and decision-makers. The Commission’s 2021 Strategic Foresight Report indicates that pressure on democratic models of governance and values is likely to persist in the coming decades due to rising geopolitical tensions, and that “the long-term performance of democratic systems hinges on their capacities to adapt to new realities and to remain resilient to internal and external challenges” 100 . As reported by the OECD, foreign governments increasingly rely on lobbyists and other forms of influence to promote their policy objectives 101 .

3.Why should the EU act?

3.1.Legal basis

Article 114 of the Treaty on the Functioning of the European Union (TFEU) allows for the adoption of measures which have as their object the establishment or functioning of the internal market and which are considered necessary for the approximation of the provisions laid down by law, regulation or administrative action in the Member States. In accordance with Article 288 TFEU, these measures may take the form of regulations, directives, decisions, recommendations, and opinions.

The Court of Justice has confirmed that recourse to Article 114 TFEU as a legal basis is possible if the aim is to prevent the emergence of future obstacles to trade as a result of divergences in national laws, where the emergence of such obstacles is likely and the measure in question is designed to prevent them 102 .

Article 114 TFEU does not presuppose the existence of a link with the free movement of services in every situation covered by the measures founded on that basis 103 . It permits additional objectives to be pursued 104 . Measures based on Article 114 TFEU may touch upon many different areas, because the economic and the non-economic aspects of national provisions pursuing an objective in the public interest are many times closely intertwined. As confirmed by the Court, the EU legislature cannot be prevented from relying on that legal basis on the ground that the protection of other policy objectives is a decisive factor in the choices to be made 105 . What is relevant is that the measures adopted on that basis be actually intended to improve the conditions for the establishment and functioning of the internal market 106 .The Court focuses on the fulfilment of the conditions for the use of Article 114 TFEU, i.e., that the measure in question effectively pursues the internal market objective.

Currently, Member States have divergent approaches to defining and regulating interest representation activities carried out on behalf of third countries in the internal market. These differences restrict the freedom to provide services 107 and therefore have a direct effect on the functioning of the internal market 108 . In the absence of EU action, some Member States are likely to implement national legislation. Draft laws regulating interest representation in general are either under discussion or planned in 12 Member States 109 . Poland, the Netherlands and France are considering legislations which would affect in particular entities carrying out interest representation on behalf of third countries.

In light of the existing fragmentation (see section 2.1.1), which is likely to increase, it is necessary to provide for harmonised transparency measures to create an even playing field, reduce existing compliance costs and regulatory arbitrage as well as the emergence of additional obstacles in the internal market for interest representation activities carried out on behalf of third countries, resulting from an inconsistent development of national laws.

The objective of this intervention is to ensure the proper functioning of the internal market for interest representation activities carried out on behalf of third countries through harmonisation of regulatory approaches regarding the transparency of such activities.

Even though Article 114(3) TFEU does not mention the resilience of EU democracies and decision-making processes (unlike, for example, a high level of health protection, environmental protection or consumer protection), it is inherent to the purpose of Article 114 TFEU that the objectives of the national rules which are to be approximated through harmonisation should be taken into account. The objective of ensuring the transparency of activities affecting public decision-making and the functioning of democratic institutions is a legitimate public goal. It therefore follows from the purpose of Article 114 TFEU that EU rules harmonising national rules adopted to regulate an activity in the pursuit of these goals may themselves pursue the same ends. In this regard, this intervention also aims to enhance the integrity of, and public trust in, the EU and Member State democratic institutions by ensuring the transparency of interest representation activities carried out on behalf of third countries.

Furthermore, in Article 2 of the Treaty on European Union (TEU) democracy is recognised as one of the essential values on which the Union is founded. The Court has ruled on 16 February 2022 on the rule of law conditionality regulation that “the EU must be able to defend those values, within the limits of its powers as laid down by the Treaties” 110 . This case law indicates that the EU legislature is empowered to ensure the protection of the values mentioned in Article 2 TEU and of other fundamental rights (such as the right to receive information) where it has an appropriate legal basis for taking legislative action.

EU action focusing on transparency is needed to prevent obstacles to the provision of interest representation activities carried out on behalf of third country entities, ensuring the establishment and functioning of the internal market. It will also contribute to improve the knowledge on the magnitude, trends and actors of interest representation activities carried out on behalf of third countries. Importantly, the intervention does not aim to restrict the provision of interest representation activities carried out on behalf of third countries in the internal market.

3.2.Subsidiarity: Necessity and added value of the EU action

According to the principle of subsidiarity (Article 5(3) TEU), action at EU level should be taken only when the aims envisaged cannot be achieved sufficiently by Member States alone and can therefore, by reason of the scale or effects, be better achieved by the EU.

As Member States’ rules affecting interest representation on behalf of third countries diverge in their scope, content and effect, a patchy framework of national rules is appearing and risks to increase, especially when it comes to interest representation activities carried out on behalf of third countries. It undermines the internal market by creating an uneven playing field and unnecessary costs for entities that seek to carry out cross-border interest representation activities on behalf of third countries. It invites regulatory arbitrage to avoid transparency measures which in turn impacts the citizens’ confidence and trust in the effectiveness of regulation.

Only intervention at EU level can solve these problems, as regulation at national level already results in the creation of obstacles to cross-border interest representation activities in the internal market. In contrast, the effects of any action taken under national law would be limited to a single Member State and risks being circumvented or be difficult to oversee in relation to entities carrying out interest representation on behalf of third countries from other Member States. Furthermore, some Member States are currently considering legislative initiatives in the field of foreign influence that might not align with the proportionate and targeted approach of this initiative and that might not provide with a comprehensive system of safeguards. Only action at EU level can address this consistently across the internal market. Introducing common and proportionate standards for transparency of interest representation carried out on behalf of third countries at EU level is essential to ensure that such measures are established consistently across all Member States with respect to all fundamental rights and in particular subject to comprehensive safeguards including access to the courts.

Finally, interest representation activities carried out on behalf of third countries is a transnational issue with cross-border implications that need to be addressed at EU level. Influencing policy decisions and political processes in one Member State can have an impact beyond that Member State’s borders, in another Member State or at the European level. The absence of EU-level action may result in some Member States being less knowledgeable than others about interest representation activities carried out on behalf of third countries, and it seems unlikely that Member States would converge on aligned standards on how to collect comparable data on interest representation activities carried out on behalf of third countries, or establish a systematic EU wide cooperation mechanism to exchange information with each other and the Commission.

Figure 2. Intervention logic:

4.Objectives: What is to be achieved?

4.1.General objectives 

There are 2 general objectives:

·Ensure the proper functioning of the internal market for interest representation activities carried out on behalf of third countries.

·To contribute to the transparency, integrity of, and public trust in, EU and Member State decision-making processes, with regard to the influence of third countries.

4.2.Specific objectives 

In line with the general objectives, the following are the specific objectives:

·Facilitate cross-border interest representation activities carried out on behalf of third countries when done transparently.

·Improve knowledge about the magnitude, trends and actors of interest representation carried out on behalf of third countries.

There may be trade-offs between facilitating cross-border interest representation activities and imposing common transparency standards on entities carrying out interest representation on behalf of third countries.

5.What are the available policy options?

5.1.What is the baseline from which policy options are assessed?

The baseline is formed by Member States’ fragmented regulatory frameworks or its absence, which has been illustrated in the previous sections. There is currently no EU action that directly address the obstacles encountered in the internal market for interest representation activities carried out on behalf of third countries.

The EU has, however, an existing toolbox of measures that aim at addressing issues in certain areas, potentially exploited by some third countries, and that continue to evolve (dynamically). An overview of those current and planned measures is presented in Annex 9. They include updating rules governing European political parties and foundations 111 , regulating various aspects of online platforms, addressing disinformation, detecting, analysing and countering foreign information manipulation and interference (FIMI) 112 , regulating political advertising including on social media 113 , supporting free, fair and inclusive elections, supporting free and plural media 114 , addressing questions of investments by third countries in electoral infrastructure 115 , cybersecurity 116 , anti-money laundering and corruption 117 . These instruments are relevant for defining the broader environment in which a potential EU initiative under consideration will insert itself and evaluate its complementarity, coherence, added value.

5.2.Scope of the policy intervention

Specific options have been discarded on the basis of the following analysis.

The scope of the intervention could be modulated on the basis of i) the geographical location and ii) the nature of the entity on whose behalf the interest representation activity is carried out.

When it comes to the geographical location, the available possibilities would be to cover either:

·some third countries: this option would seek to include in the scope only activities on behalf of specific third countries identified based on objective criteria. In its resolution on foreign interference in all democratic processes, the European Parliament expressed the preference for a risk-based approach based on some criteria which includes: “engagement in activities of foreign interference, an intellectual property theft programme directed against the EU and its Member States, legislation that forces national non-state actors to participate in intelligence activities, consistent violation of human rights, revisionist policy towards the existing international legal order, enforcement of authoritarian ideology extraterritorially” 118 . Similarly, to the Anti-Money laundering Directive 119 , a list of such countries would be established by the Commission through delegated acts. EEA Member States would not be included; or

·all third countries (with additional requirements for some countries based on a risk-based approach): this option would include activities on behalf of entities in all third countries, but specific requirements could be imposed when an entity carries out interest representation activities on behalf of a third country that has spent a significant amount on interest representation in a Member State or the EU as a whole 120 (risk-based approach). EEA Member States would not be included.

The scope of the legislative intervention would also change on the basis of the type of entity on whose behalf the interest representation would be carried out:

·governments and affiliated entities (that is, governments and entities whose action can be attributed to them): it would cover i) the central government and public authorities at all other levels of a third country (except EEA) as well as, to avoid circumvention, ii) public or private entities, including EU citizens and legal persons established in the EU, whose actions can ultimately be attributed 121 to a central government or public authorities of a country. It would cover situations where a government is behind the decision of another entity to have interest representation activities carried out on its behalf, in particular by giving instructions or directives to that entity 122 . It would also cover entities that are controlled 123 by the government or a public authority. In terms of actors covered, all public or private entities, including EU citizens and legal persons, i.e. for example commercial entities, CSOs, cultural or research organisations, law firms etc., could fall under the scope given that their actions can ultimately be attributed to a central government or public authorities of a country.

·all entities established in the designated countries. This would include activities on behalf of governments and affiliated – as defined above –, but also cases where they are carried out on behalf of other entities, including private actors or other organisations such as or international organisations (e.g., lobbying on behalf of a company)

Table 1: possible approaches to scope of the measures

5.2.1.Option A 

This policy option requires to establish a list of third countries that have attempted to conduct foreign interference. This option faces 4 types of operational difficulty.

Firstly, assessing whether a third country meets the criteria mentioned by the European Parliament (in particular: consistent violation of human rights, revisionist policy towards the existing international legal order, enforcement of authoritarian ideology extraterritorially) might prove challenging as the criteria are subject to interpretation. This lack of objective criteria might lead to a political decision instead of an objective technical one 124 .

Secondly, the management of the list will be very difficult. In light of the subjective nature of the criteria, agreeing on common criteria could prove difficult, making it likely that only a limited number of third countries would be included, limiting the effectiveness of the instrument. Furthermore, if a third country targets only 1 or 2 Member States, it might be politically difficult to include such third country on a common list, thereby limiting the possibility of the concerned Member States to provide for transparency for such activities. Establishing a list at Member State level may lead to an even more uneven playing field within the single market. In addition, the list of third countries would need to be constantly reviewed and adapted on the basis of the evolving political situation in the concerned third countries.

Thirdly, because the scope would only focus on third countries specifically identified, the entities that would fall into scope would be subject to significant risks of stigmatisation, a key concern of expressed by CSOs in the consultation process.

Similarly, the geopolitical implications concerning the identified third countries could be more severe.

This option has therefore been discarded.

5.2.2.Option B 

This policy option may be discarded in light of the elements underlined in A and C

5.2.3.Option C 

Policy Option C would cover interest representation activities seeking to influence decision-making in the EU carried out on behalf of any entities established in a third country. Such scope would be designed, not based on a genuine link with the risk of covert influence by third countries administrations but on an overshooting presumption made on the principle that any interest representation activity on behalf of a natural or legal person established in a third country could be source of covert influence by said third country government. Such a broad scope would not be targeted enough in view of the pursued aim of the initiative and therefore be disproportionate 125 . Option C has therefore been discarded.

5.2.4.Other possible scope

5.2.4.1.Interest representation carried out on behalf of any government or entity 

It could be considered to enlarge the scope of the initiative to cover 1) interest representation carried out on behalf of any governments (including EU Member States and EEA countries) or 2) to cover interest representation carried out on behalf of any entity.

As highlighted in sections 2 and 4, the intervention covered by this initiative focuses on interest representation carried out on behalf of third countries. Taking into account the geopolitical context, an increasing number of Member States are considering specific measures related to interest representation activities carried out on behalf of foreign governments (see section 2.3). The targeted scope of the intervention logic seeks to remove obstacles in the market of interest representation activities by establishing common transparency standards for activities influencing decision-making processes in the EU carried out on behalf of third countries. Covering interest representation carried out on behalf of any entity would further harmonise requirements in the internal market, but it would require moving away from the issue of foreign interference.

As reported by the OECD, instead of relying on traditional and formal diplomatic channels and processes, foreign governments increasingly rely on lobbyists and other forms of influence to promote their policy objectives 126 . Third country governments may engage in lobbying, including by contracting public relations firms to conduct lobbying on their behalf. They may also fund other entities to produce evidence supporting their goals, including by providing benefits in kind such as material gifts. This type of influence activities by third country governments, if done covertly, is concerning as it undermines the principles of transparency and accountability when trying to influence public decision-making processes in the EU.

The impact of such influence is increasingly acknowledged in international fora. The OECD considers that foreign governments “can have a transformative impact on the political life of a country, not only on domestic policies but also on its foreign policy, its election system, economic interests and its ability to protect its national interests and national security 127 ” and the risks involved in lobbying and influence activities of foreign government are higher than the risks posed by purely domestic lobbying and influence activities 128 . Covert foreign funding seeking to influence a decision making process is by definition difficult to demonstrate due to its secret nature.

Covering interest representation carried out on behalf of any entity would benefit economic actors as it would remove obstacles to the internal market for other interest representation activities. 1 CSO also argues that it could limit stigmatisation. A wider scope covering interest representation on behalf of any entities would also be disproportionate to achieve the targeted objectives of this initiative. An intervention covering all types of interest representation would affect around 3.5 million entities in the EU 129 , when it can be estimated that only around 700 to 1100 entities provide interest representation on behalf of third country governments in the EU 130 . In addition, since 2020, the Commission monitors with specific recommendations, under the anti-corruption pillar of the Rule of Law Report, the regulation of all interest representation in Member States, within the framework of existing European and international standard 131 .

Covering interest representation activities carried out by other Member States/EEA countries would not be aligned with the second objective aiming to contribute to the transparency, integrity of, and public trust in, EU and Member State decision-making processes, with regard to the influence of third countries. This is coherent with the principle of mutual trust, which is a general principle of Union law whose fundamental importance has been recognized by the European Court of Justice (see e.g. Case C‑34/17). There is also no specific concern being expressed regarding the conduct of influence activities by EU Member States and no corresponding anticipated national legislation to address this.

Finally, it should be underlined that a broader scope would not mean that exactly the same measures would be provided for all interest representation activities as different situations may justify different types of measures to adapt to different needs.

5.2.4.2.Exclusion of some entities from the scope

As proposed by 4 out of 11 CSOs consulted, it could be considered to exclude from the scope some non-profit organisations carrying out interest representation (for example through a threshold), in light of their specific role in a democratic society as part of the system of checks and balances. This position is not shared by all CSOs consulted.

It can be understood from existing transparency registers, that CSOs form a large portion of the entities carrying out interest representation activities (Non-governmental organisations (NGO), think tanks, trade associations etc.) 132 . Excluding CSOs carrying out interest representation activities in the internal market from the scope would in addition create an uneven playing field between the actors in the interest representation market (see section 2.1.1). It would also create a risk of circumvention with some entities in a position of covertly influencing decision-making on behalf of third countries in the EU while other entities carrying out similar activities would be subject to transparency requirements.

As this option would not be coherent with the internal market objective of this initiative and would severely limit the effectiveness of the measure seeking to enhance transparency of interest representation activities carried out on behalf of third countries, it should be discarded.

5.3.Description of the policy options

The proposed intervention would concern interest representation activities. It would cover a broad range of activities conducted with the objective of influencing the development, formulation or implementation of policy or legislation, or public decision-making processes in the EU 134 .

·It would include activities that aim to influence public decision-making both directly (e.g. direct engagements with public officials) and indirectly 135  (e.g. the dissemination of research outputs 136 , the organisation of and participation in conferences/events, and the provision of education, training and cultural engagement, when performed with the same objective). It would cover activities carried out online and offline.

·It would cover only interest representation that seeks to influence decision-making in the EU, regardless at which level (EU, national, regional or local level). It would not cover activities carried out in the EU or in a third country that seeks to influence decision-making in a third country.

·It would not cover activities that are connected with the exercise of official authority, including activities related to the exercise of diplomatic relations between States or international relations, nor would it cover the provision of legal and other professional advice in the course of legal proceedings 137 or ancillary activities, which are activities that support the provision of an interest representation activity but have no direct influence on its content (e.g. a caterer supplying a lobbying event or intermediary service provided by an online platform).

In line with the Article 114 TFEU legal basis, the legislative instrument would approximate laws regulating the market for interest representation activities carried out on behalf of third countries. The initiative does not prohibit the conduct of such activities but could deter them as it provides common transparency (disclosure) standards. Illegal activities would remain governed by other rules, for instance rules on corruption 138 . 

The legislative instrument would cover:

·Interest representation service provided to a third country entity. This would cover interest representation activities normally provided for remuneration. Where remuneration is provided, it would cover a large spectrum of different types of consideration, such as loans, capital injection, debt forgiveness, fiscal incentives or tax exemptions. Remuneration would also cover benefits in kind, such as the provision of office space.

·The essential characteristic of remuneration lies in the fact that it constitutes consideration (‘contra-prestation’) for the services in question 139 . Contributions to the core funding of an organisation or similar financial support, for example provided under a third country donor grant scheme, would not be considered as remuneration for an interest representation service where they are unrelated to an interest representation activity, that is, where the entity would receive such funding regardless of whether it carries out the specific interest representation activity at issue. Such contributions would not be covered by this intervention. In line with the case law (and to prevent circumvention), anything received in return for an interest representation service should be considered as remuneration for the purposes of this legislative intervention. This could cover financial contributions, such as loans, debt forgiveness etc., received in return for an interest representation activity. Remuneration could also include benefits in kind, such as the provision of office space 140 .

·It will be for national authorities to monitor whether the contributions to the ‘core funding’ of an entity aim to circumvent the rules applicable to interest representation activities. The advisory group of competent national authorities to be established would be tasked with sharing best practices on relevant criteria and indicators to assess circumvention. The Commission could also facilitate exchanges and sharing of information and best practices. A specific provision will require Member States to prohibit and sanction the circumvention of the obligations of the initiative.

·Interest representation activities provided by an entity whose conduct can be attributed to a third country government, and which is of a commercial or economic nature and comparable to an interest representation service provided to a third country entity.

·Establishing specific safeguards: to avoid circumvention and ensure a level playing field between actors, the following options would cover any natural or legal person carrying out interest representation on behalf of third country entities. They would cover different types of commercial entities (e.g. consulting firms, law firms, individual businesses) and non-commercial entities (e.g. think tanks, education, research, cultural and academic institutions, business, trade or professional associations, or CSOs). To limit risks of gold plating and frame Member States’ action in this field, the legislative intervention would provide for a full harmonisation. Supervision would be entrusted to independent supervisory authorities with clearly established powers and national authorities would need to ensure that no adverse consequences, such as stigmatisation, arise from the mere fact that an entity falls within the scope of the legislative instrument. For example, Member States would be prevented from requiring the entities that fall within the scope of the initiative to register ‘as an organisation in receipt of support from abroad’ or indicate on their internet site and in their publications and other press material the information that they are organisations in receipt of support from abroad. The right to judicial redress would also be guaranteed.

·Furthermore, strong safeguards would be included to address potential risks for specific actors. To limit, among other, negative implications for entities active in third countries, entities would be able to request that all or part of the information gathered for the purpose of the transparency requirement is not made public based on an overriding interest.

All the options would recommend or require Member States to provide for similar requirements on transparency of interest representation carried out on behalf of third countries and address SO1 (facilitate cross-border interest representation activities carried out on behalf of third countries done transparently).

All the options would recommend or require Member States to provide for comparable and publicly available information on the entities carrying out interest representation activities, the activities conducted and the entities on whose behalf the activity is conducted 141 and would thus address SO2 (improve knowledge about the magnitude, trends and actors of interest representation carried out on behalf of third countries).

Activities that are currently illegal or even criminalised in Member States, such as corruption, would not be affected by this initiative. The harmonised transparency requirements could however support the detection and prosecution of such illegal behaviours by relevant competent authorities, including the circumvention of sanctions where interest representation activities are carried out for or on behalf of an entity subject to restrictive measures.

5.3.1.Policy Option 1: Non-legislative measures

The first option considered takes the form of a non-legislative intervention 142 . 

This policy option would consist of recommending to Member States a set of measures to be applied to interest representation activities carried out on behalf of third countries. Member States would be encouraged to provide for similar and proportionate transparency measures aimed at facilitating accountability and oversight and addressing the challenges for democratic processes associated with such activities. This could include, for example, a recommendation to Member States with lobbying registers to request interest representatives to provide, on a voluntary basis, an indication in their lobbying registry of whether the interest represented is that of a third country, and to other Member States to establish, on a voluntary basis, registers covering activities affecting decision-making processes funded by third countries. The recommendations would also include references to safeguards that Member States should establish, including to prevent stigmatisation of the registered entities.

This policy option would build upon and be complementary to the recommendations that have been issued by the Commission in the context of its annual Rule of Law Reports regularly inviting Member States to introduce or improve rules on lobbying and interest representation.

Additionally, this policy option would go beyond these recommendations as it provides for a list of specific standards related to record-keeping, registration and transparency (1), a detailed but voluntary reporting on the application of the specific standards (2) and a monitoring of the implementation of the recommendation (3). It would also include references to safeguards that Member States should establish, including to prevent stigmatisation of the registered entities.

Due to the non-binding nature of the initiative, Member States could rely on the EU Recommendation while not being bound by law regarding the necessary safeguards when implementing the recommended standards. Hence, there is a risk of gold-plating.

Appropriate monitoring of implementation of the Recommendations would be conducted. A report would assess the effects of the Recommendation and consider other measures including possible future legislation.

Use would be made of existing expert groups as governance structures. The Commission would be able to rely on exchanges on the implementation of the voluntary measures to support their take up in existing networks, such as the European Cooperation Network on Elections or the membership of the Rule of Law contact group and on the reporting by the Commission on the follow-up given to the Recommendation.

5.3.2.Policy Option 2: Legislative intervention 

The second policy option takes the form of a legislative intervention harmonising the requirements 143 in the internal market, based on Article 114 TFEU. It would not seek to directly prevent interest representation activities carried out on behalf of third countries but would provide transparency requirements for entities carrying out such activities. With regard to the transparency and related obligations, two options are possible: targeted requirements (PO2.1) or extended requirements (PO2.2).  

5.3.2.1.Policy Option 2.1: Targeted requirements 144

Entities carrying out interest representation activities on behalf of third country entities would be required to register and keep certain records. In addition, interest representation service providers would have the possibility to take measures to identify the recipients of the services.

§Record-keeping: Entities would be required to keep, for a reasonable period, information on the identity of the entity on whose behalf the activity is carried out, a description of the purpose of the interest representation activity, contracts and key exchanges with the entity to the extent that they are essential to understand the nature and purpose of the interest representation carried out, as well as information or material constituting key components of the interest representation activity.

§Registration: Entities would be required to register in a national register and provide information 145 on themselves, the activities conducted, and the entities they conduct the activities on behalf of. 

-On the entity: information could include name, contact details, category of organisation (e.g. law firm, consultancy, think tank etc.), address of the place of establishment, etc.

-On the activity: information could include the type of activity provided, the Member States in which it will be carried out (the Member State of registration should notify the Member State where the activity is performed), the policy sought to influence, the remuneration received covering all the tasks carried out with the objective of influencing the development, formulation or implementation of the same proposal, policy or initiative, where relevant, the name of the service provider entrusted with the publication or dissemination of information to the public (such as a newspaper).

-On the entity on whose behalf the activity is carried out: information could include their name, contact details and the third country on whose behalf the entity is acting.

Upon registration, the entity would receive a registration number that could be used throughout the internal market, which would serve as a mean to facilitate the identification across the Union of entities registered pursuant to the legislative initiative. The format of such number could be specified in the legislative initiative (e.g. in an Annex), and should include a country code. Existing registration numbers that may be issued by Member States regulating interest representation would still be maintained for those activities falling outside the scope of the legislative initiative. Entities would need to include such national registration numbers as part of their registration.

Information necessary for the enforcement, such as the name and address of the entity, would need to be updated regularly. Other information would need to be updated at least annually.

The information necessary to ensure public accountability would be made public. Information that would not be necessary to ensure public accountability, such as certain type of personal data, would only be accessible to supervisory authorities to facilitate enforcement.

§Transparency: Entities carrying out interest representation as well as their subcontractors would have to provide their registration number when in direct contact with public officials.

Member States would be required to ensure that publicly available national registers are in place and that they cover the information and reporting requirements included in the intervention. They would need to designate or set up supervisory authorities ensuring proper implementation. Member State authorities could also be required to participate in the established governance and information sharing structures. Where available, Member States should be able to make use of existing transparency registers. Depending on their organisation, they should be able to establish one or multiple registers.

To facilitate coordination and access to the registers, where an entity carries out activity in a Member State other than that of registration, the Member State of registration should notify the Member State where the activity is performed of the name of the concerned entity, its registration number and the link to the national registers where the registration took place. That Member State should include in its own register the information laid down in that notification.

§Reporting: In order to increase transparency and accountability of the magnitude, trends and actors of interest representation activities carried out on behalf of third countries, Member States would need to publish an annual report based on the data entered in the register 146 . This annual report could include aggregated data on the annual amounts per third country and per category of organisation for each third country in the preceding financial year. 

A risk-based approach: To enable Member States to monitor interest representation activities that are particularly likely to have a significant influence on public life and public debate, supervisory authority should be able to request the records kept by entities carrying out interest representation activities on behalf of third countries if: (i) these entities receive more than EUR 1 000 000 from a single third country entity in the preceding financial year or (ii) when they carry out interest representation activities for a third country entity whose action can be attributed to a third country that has spent a EUR 1 500 000 on interest representation in a Member State or EUR 8 500 000 in the EU as a whole in one of the last 5 years. Entities that receive, in the preceding financial year, an aggregate remuneration of less than EUR 25 000 147 would not be covered by this risk-based approach.

Governance, supervision and sanctions: At national level, Member States would be required to establish or designate one or more authorities responsible for national registers and one or more independent supervisory authorities 150 responsible for the supervision and enforcement of the Directive. They could also designate the same authority for both tasks and they could rely on existing authorities, as long as the requirements of the initiative are complied with. The policy option would also include appropriate monitoring and enforcement mechanisms, for instance where a supervisory authority has reliable information of possible non-compliance by an entity it may ask that entity to provide the records kept necessary to investigate the possible non-compliance. Reports of breaches or attempts to circumvent the obligations by whistle-blowers would be possible. The initiative would provide for cross-border cooperation and information sharing mechanisms among supervisory authorities from different Member States. The Internal Market Information System (‘IMI system’) Regulation would support the administrative cooperation and the exchange of information using existing IT tools. At the EU level, a governance cooperation mechanism (e.g. an advisory group chaired by the Commission) would be established to facilitate exchanges and cooperation between the Member States supervisory authorities and ensure interoperability of the data collected. Among other things, they would exchange best practices on the technical arrangements for the national registers. The advisory group would also assist the Commission on possible guidance on the implementation of the Directive. The initiative would not envisage a direct enforcement role for the Commission. The Commission would be responsible for publishing a summary of the data received from the Member States and a list of third countries in the context of the risk-based approach. However, to efficiently monitor the implementation of the legislative initiative and improve the knowledge on the size and distribution of the overall interest representation activities that are carried out on behalf of third countries in the Union; the Commission will be able to request data from Member States. 

Sanctions would be fully harmonised administrative fines which would represent a maximum of 1% of the entities’ annual worldwide turnover. Sanctions would take into account the nature, recurrence and duration of the infringement in view of the public interest at stake, the scope and kind of activities carried out, and the economic capacity of the entity carrying out interest representation activities.

The sanctions regime shall in each individual case be effective, proportionate and dissuasive, with due respect for fundamental rights including freedom of expression, association, academic freedom and freedom of scientific research, safeguards and access to effective remedies, including the right to be heard. This option would ensure that entities would not be exposed to the threat of criminal penalties or dissolution.

A detailed explanation on the reasoning around the maximum sanctions amount of 1% of the entities’ worldwide turnover is provided in Annex 7. In essence, this was determined by analogy with the Digital Services Act’s Article 52(3) 151 which similarly relates to issues with information disclosures.

5.3.2.2.Policy Option 2.2: Extended requirement 

Entities carrying out interest representation activities on behalf of third country entities would face the same requirement as in PO2.1, they would also face some additional requirements.

§Record-keeping: In addition to the elements included in PO2.1, these entities would be required to keep records of all contracts and exchanges (written and oral) with the entity on whose behalf the activity is carried out as well as all information or material on the interest representation activity.

§Prior authorisation / licencing: 152 For each new interest representation activity above a certain financial threshold, these entities would have to apply to the competent national authority for a licence to conduct said activity.

-The request would require submitting the same information as those provided under the registration of PO2.1. 

-Licences would be refused only where in light of the information provided and of the entity(ies) the interest representation is carried out for (taking into account, where applicable the risk-based approach) the activity is likely to seriously affect public security 153 .

-To support the decision-making process regarding the refusal of a license and ensure consistency in the EU, the legislative instrument would create a cooperation mechanism 154 whereby, the competent authority in the Member State assessing the application would notify the other Member States’ authorities and the Commission. Other Member States would be able to submit comments if the activity is likely to seriously affect public security in their Member States. The Commission may issue an opinion if, based on the information transmitted by the concerned Member States, the activity is likely to seriously affect public policy in a Member State.

-Where a licence is granted despite comments submitted by a Member State or an opinion from the Commission, a publicly available flag would be added in the registration of the said entity.

-Entities would receive a licence number that could be used throughout the internal market. In the same condition as in PO2.1, upon obtaining the licence, the information provided by the entities would be published in national transparency registers.

-The failure to abide by these requirements would lead to significant penalties.

§Transparency: As in PO2.1, these entities as well as their subcontractors would have to provide their licence number when in direct contact with public officials.

Risk-based approach: Entities carrying out interest representation activities on behalf of third countries would be required to automatically share all the records when they fulfil the conditions of the risk-based approach set out in PO2.1.

Governance, supervision and sanctions: building on PO2.1, this option would require Member State authorities to set up a prior authorisation/licencing system.

6.What are the impacts of the policy options?

6.1.The baseline scenario

The dynamic baseline scenario is already presented under the section dedicated to the problem definition and its evolution (see sections 2 and 3.2), while Annex 9 provides a detailed description of the measures currently in place or proposed in this area.

Even existing initiatives and legislation at EU level (from the European Democracy Action Plan and beyond) would continue to ensure transparency of certain attempts of foreign influence, such transparency would leave an important part uncovered – the role of interest representatives or lobbyists. Interest representation activities would not be effectively covered by the following instruments:

-the Political Advertising Regulation would not cover interest representation activities which do not also qualify as ‘political advertising’ (e.g. lobbying);

-the European Media Freedom Act would not ensure transparency of instances where a third country obtains interest representation activities from a media service provider; 

-the Digital Services Act would not cover providers of interest representation activities covered by the initiative as they are not ‘intermediary services’;

The EU’s toolbox to tackle Foreign Information Manipulation and Interference (FIMI Toolbox) would continue to inventory the EU’s approach to FIMI and disinformation. However, in the absence of an initiative on interest representation, it would not benefit from the data obtained through this initiative, which could support developing an overview of such activities when used to manipulate or interfere.

In a nutshell, other initiatives would not address the objective of reducing the fragmentation in the regulation of cross-border interest representation activities carried out on behalf of third countries in the internal market (which is expected to increase). As regards the objective of improving knowledge about the magnitude, trends and actors of interest representation carried out on behalf of third countries, the existing initiatives at EU level do not address the lack of an overall understanding of the phenomenon and the specific collection of data.

Furthermore, any interventions at Member State level would not necessarily be equipped with the robust safeguards envisaged by the initiative and may result disproportionate.

6.2.Assessment of the options

The policy options were evaluated for the following economic, social, fundamental rights and geopolitical impacts. The assessment of impacts did not identify any relevant environmental impacts. The options will therefore respect the “do no significant harm” principle and is consistent with the climate neutrality objective, its intermediate targets and the adaptation objectives as set out in the European Climate Law 156 .

6.2.1.Economic impacts

6.2.1.1.Functioning of the internal market

All 3 options would have a positive effect on the functioning of the internal market.

The 2 legislative options (PO2.1and PO2.2), and, assuming that its recommendations are followed, the non-legislative option (PO1), would result in similar transparency requirements in all Member States, thereby levelling the playing field and limiting the risks of regulatory arbitrage. However, unlike the legislative measures in Option 2.1 and Option 2.2, Option 1 would not provide entities with a registration number that could be used throughout the internal market; entities carrying out interest representation on behalf of third countries cross border would still need to comply with different rules, including registration requirements, in the different Member States in which they operate.

The legislative measures PO2.1 and PO 2.2), by providing fully harmonised transparency requirements, would reduce the costs resulting from legal fragmentation and uncertainty for economic actors, thereby facilitating the offering of interest representation activities on behalf of third country entities across borders. In addition, these harmonised requirements would add legal predictability for interest representation activities carried out on behalf of third country entities in several Member States. In particular, the possibility to obtain a registration number that could be used throughout the internal market would remove the need for multiple registrations 157 . This would imply that for each Member State (outside the Member State of main establishment where a registration is currently required) in which an entity carries out interest representation on behalf of third countries, that entity would be able to obtain some savings due to synergies permitted by similar registration and information disclosures requirements 158 .

By providing the same level of transparency and supporting coordination among competent authorities, both of these options contribute to improving the regulatory outcome with regard to interest representation activities carried out on behalf of third country entities.

The licensing/prior authorisation system set out in the legislative option PO2.2, could lead to a limited regulatory arbitrage as economic actors might seek to obtain said licence in more lenient jurisdiction 159 .

6.2.1.2.Competitiveness

All 3 options are expected to have a positive impact on the competitiveness, innovation and investment in cross-border interest representation activities carried out on behalf of third countries. By levelling the playing field and reducing the compliance costs linked to cross border activities, they will enable existing national enterprises to scale up. By increasing transparency, they would decrease popular distrust in these activities, strengthening the attractiveness of entry to this market.

In particular, the legislative measures (PO2.1 and PO2.2), by fully removing the obstacles resulting from legal uncertainty and fragmentation, as well as reducing the need for multiple registration would help create a stable market to enable SMEs to scale up their operations and stimulate the development of new services offered at EU level.

All 3 policy options would only provide for transparency requirements and would thus have no impact on the capacity to innovate of the entities falling within their scope.

6.2.1.3.Costs and administrative burdens for economic actors (+SMEs)

All 3 options would add compliance costs for economic actors providing activities which are in scope. These are expected to be compensated by the efficiencies realised from the removal of legal fragmentation that facilitate the cross-border provision of interest representation activities on behalf of third countries, in particular with regard to the legislative policy options (see section 6.2.1.1).

In light of the removal for the need for multiple registrations, the net expected result is a cost reduction against the baseline for the legislative policy options.

The extended requirements of PO2.2 introduce a prior authorisation/licencing system over the other options and the baseline. By having the possibility to refuse to authorise an interest representation activity that is likely to seriously affect public security, this option would create a positive reputational impact for economic actors that have been granted a licence, which could be leveraged for commercial gains. 160

Annex 4 details the methodology used to determine the costs for economic actors.

Table 3: Estimates of costs for obligations addressed to economic actors.

(*) For the purpose of this table, it is assumed that Member States enact legislation to adopt the transparency measures recommended in Option 1. Further analysis is provided in Annex 4.

SME test

It is not possible to fully exempt SMEs from the transparency requirements as they are important actors in the market for interest representation activities carried out on behalf of third countries 169 . Legal fragmentation in the internal market for entities carrying out interest representation activities on behalf of a third country is a significant barrier for SMEs, amounting to prohibitive legal and financial obstacles to such enterprises. SMEs are also more affected by policies established by some Member States which require entities carrying out interest representation to registered in that Member State.

The obligation to maintain updated registration included in all 3 options involve an ongoing compliance cost. While the ongoing costs depend on the number of interest representation activities carried out on behalf of third countries, the described cost affect SMEs proportionately more than other actors.

The legislative options (PO2.1 and PO2.2) offer more opportunities for such costs to be offset by savings resulting from simplification of the rules and the elimination of the need for multiple registration when offering activities across borders. This would increase cross-border activity in particular for SMEs, which could offer their activities to clients outside their Member State of establishment and would have the opportunity to scale up to operate at EU level. Support to compliance to transparency requirements would be offered by competent national authority, notably on the notion of third country entity or on the scope.

To limit administrative burden, in particular for SMEs, an obligation would be introduced to make information on the registration obligations and formalities established by the legislative options available via the Single Digital Gateway 170 which, through the Your Europe web portal, sets up a one-stop-shop that provides businesses and citizens with information about rules and procedures in the Single Market, at all levels of government and direct, centralised, and guided access to assistance and problem-solving services as well as to a wide range of fully digitised administrative procedures. In addition, the procedure for registration is fully online and organised in accordance with the ‘once only’ principle to facilitate the reuse of data.

Finally, the risk-based approach and, in PO2.2, the prior authorisation/licencing would be subject to a de minims, to avoid imposing excessive burden on SMEs.

6.2.1.4.Costs for public authorities of measures addressed to economic actors.

The 2 legislative options (PO2.1 and PO2.2) would aim to streamline oversight, providing better access to needed information, more opportunities for coordinated action and resource-sharing and clarity about the responsible authority. This would result in more effective regulatory outcomes. It also provides support to Member State authorities to request information and facilitate cross-border oversight via the Internal Market Information System 171 , while focusing on entities whose main establishment lie in their jurisdiction.

As detailed in Annex 4, it could result in some costs for national authorities: one-off familiarisation costs, 15 Members States that have a publicly accessible transparency register 172 would have a one-off cost to amend their regime, while the 12 other Member States 173 would need to establish such register. All Member States would need to maintain the registers and maintain appropriate management, monitoring and enforcement mechanisms 174 . These costs are expected to be partialy offset against the efficiency savings expected from the harmonised obligations and streamlined and strengthened oversight process.

If fully implemented, PO1 would lead to the same costs as the targeted requirements in Option 2.1without the benefits stemming from the streamlined oversight and cooperation systems.

Should the recommendation under PO1 not be implemented fully, the costs under a scenario of 50% take up by Member States has also been assessed, which would lead to lower costs for Member States authorities 175 .

In addition to the costs and benefit of the PO2.1, the extended requirements of PO2.2 introduce some additional specific obligations over the other options and the baseline which would imply additional costs.

6.2.2.Social impacts

6.2.2.1.Transparency of interest representation activities carried out on behalf of third countries

The 2 legislative options (PO2.1 and PO2.1), and assuming that its recommendations are followed, the non-legislative option (PO1) enhance the transparency of interest representation activities carried out on behalf of third countries. As voters, citizens are important decision-makers in their own right, and as such, they can be the target for certain interest representation activities. By revealing the information on the interest representation activity conducted and the entity on whose behalf the activity is carried out, all 3 options would enable citizens and public officials to easily recognise influence campaigns by third countries thereby contributing to the integrity of, and public trust in, EU and Member State decision-making processes. It would support oversight by competent authorities as well as scrutiny from interested actors (including CSOs, political actors, researchers, elections observes or journalist) to monitor interest representation activities carried out on behalf of third countries. The strengthening of the quality of information available would help enrich the political debate.

The 2 legislative options (PO2.1 and PO2.2) could have limited impacts on the confidentiality of the registered entity. However, no derogation to confidentiality requirements will be sought. If such requirements apply, entities will be able to refer to them in order to not have their data published in the register or to have only a limited set of data published. Furthermore, financial amounts would be published in ranges, since publicity on the granularity of the specific amounts paid is not strictly needed for the objective of public accountability.

The 2 legislative options (PO2.1 and PO2.2) would require entities carrying out interest representation on behalf of third country entities to provide their registration number when in direct contact with public officials.

Neither of these two policy options would regulate the transparency or ethical requirements that Member States may imposed on public officials. Except when carrying out interest representation activities on behalf of third country entities, concerned entities would be free to interact with public official without additional requirements under EU law. The requirement would be limited to providing the registration number and would ensure that decision-makers can easily access the information on the interest represented, and thus critically analyse the content to which they are exposed and make informed choices. It would not unduly restrict access to public officials.

By providing for similar transparency requirements in each Member States, and thus limiting forum shopping, the 3 options would ensure that entities do not carry out interest representation on behalf of third countries covertly.

6.2.2.2.Improve knowledge about the magnitude, trends and actors of interest representation activities carried out on behalf of third countries

The 2 legislative options (PO2.1 and PO2.2), and assuming that its recommendations are followed PO1, would improve knowledge about the magnitude, trends and actors of interest representation activities carried out on behalf of third countries, by providing for publicly available data on such activities. In particular, Members States would be able to establish aggregate data on the interest representation activities being carried out, the decision-making processes targeted, the amounts spent by each third country. They will enable journalists, CSOs, researchers as well and national or European authorities to map the entities carrying out interest representation on behalf of each third country as well as the means, such as a newspaper or online platform disseminating ads, by which the content of an interest representation is being disseminated to the public. They will be able to assess the evolution of that market over the years. The publication of some of these aggregate amounts and the establishment of machine-readable 176 register would strengthen of the quality of information available on this subject, help enrich the political debate and inform future policy-making. This information could also serve to build capacity and help citizens and policy-makers understand and, where relevant, react to influence campaign of third countries.

The 2 legislative options (PO2.1 and PO2.2), would greatly facilitate comparison between Member States and establishing trends at EU level, by providing identical information to be provided upon registration, and promoting harmonized publication standards of aggregated data through their respective governance cooperation mechanism. These legislative options also provide for a flexible and evolutive approach to this data collection by enabling to adapt the information requested upon registration as well as the aggregate data to be made public through for delegated act.

By providing for an early assessment of the information provided, the prior authorisation system in PO2.2 would ensure that the information provided in the register is correct and complete and would further the knowledge on the magnitude, trends and actors of interest representation activities carried out on behalf of third countries.

6.2.2.3.Enforcement and supervision by authorities

By limiting the risk of forum shopping (see section 6.2.1.1 above), PO1 would be a limited improvement compared to the baseline, as interest representatives are less likely to direct their operations towards less regulated Member States, enabling Member States to better monitor interest representation activities carried out on behalf of third countries in their jurisdiction.

The 2 legislative options (PO2.1 and PO2.2), entail further improvement by strengthening regulatory coordination among competent authorities especially via the establishment of a governance cooperation mechanism such as an advisory group, and information sharing structures. This would ensure that oversight on a common set of transparency requirements is better coordinated among national authorities 177 . 

In addition, both legislative options provide for gradual enforcement mechanism thanks to a risk-based approach. In PO2.1, supervisory authorities would be able to request, without any justification, the records kept by entities fulfilling the risk-based approach criteria. In PO2.2, entities in the scope of the instrument would also be required to keep records of all contracts and exchanges with the third country entity, if they fall within the scope of the risk-based approach, and these entities would be required to automatically share all of these records. These provisions will facilitate the enforcement of the transparency requirements with regard to entities that carry out interest representation activities that are particularly likely to have a significant influence on public life and public debate. It will also enable authorities to have access to contracts and key exchanges enabling them to better understand and supervise interest representation activities carried out on behalf of third countries. The risk-based approach would be flexible and evolutive, as the threshold could be modified via a delegated act using the data collected over time.

By conditioning interest representation to the respect of transparency requirements, all 3 policy options (assuming that the recommendations in PO1 are implemented through legislation) would ensure that interest representatives do not carry out interest representation activities on behalf of third countries covertly. In the 2 legislative options (PO2.1 and PO2.2), the risk of circumvention would be limited thanks to the broad notion of third country entity. This notion would include public or private entities, including EU citizens and legal persons established in the EU, whose actions can ultimately be attributed to a central government or public authorities of a third country 178 . Guidance could be offered by competent national authorities, to help concerned entities apply this concept. Where a supervisory authority has reliable information of possible non-compliance, e.g. a private entity registered in the EU trying to cover up its work on behalf of third countries, it may ask that entity to provide the records kept necessary to investigate the possible non-compliance. These 2 policy options would also enable reports of breaches or attempts to circumvent the obligations by whistle-blowers 179 .

By having the possibility to refuse to authorise an interest representation activity that is likely to seriously affect public security, the legislative option PO2.2 would enable supervisory authorities to prevent activities that could pose a threat to the functioning of the institutions and essential public services, as well as the risk of a serious disturbance to foreign relations or to peaceful coexistence of nations.

6.2.3.Fundamental rights impacts 

6.2.3.1.Right to private life and to the protection of personal data 180

All 3 policy options impose limited restrictions on the right to private life (Article 7 of the Charter of Fundamental Rights, hereinafter ‘the Charter’ 181 ) and the right to the protection of personal data (Article 8 of the Charter), insofar as they require that entities keep and provide certain information to the national authorities and provide access for the public to a part of that information which might include personal data. The legislative policy options (PO2.1and PO2.2) provide in addition for the exchange of such information among competent national authorities.

As voters, citizens are important decision-makers in their own right, and as such, they can be the target for certain interest representation activities. All 3 policy options enhance the integrity of, and public trust in, the EU’s and Member States’ democratic institutions by ensuring the transparency of interest representation activities carried out on behalf of third countries, and by improving the knowledge about the magnitude, trends and actors of interest representation activities carried out on behalf of third countries (see sections 6.2.2.1 and 6.2.2.2) 182 . The CJEU has recognised that the objective consisting in increasing transparency is an overriding reason in the public interest 183 . The aim pursued by the 3 policy options therefore constitutes an objective of general interest that is capable of justifying interferences with the fundamental rights enshrined in Articles 7 and 8 of the Charter in line with Article 52 thereof.

All 3 policy options provide for public access to a proportionate, clearly defined and limited set of information, which excludes information that is not absolutely needed to reach the purposes pursued. The limitations on the right to private life and the right to the protection of personal data respect the essence of those rights, genuinely meet a general interest recognised by the EU, and are proportionate and limited to the minimum necessary.

In particular, in the legislative policy options (PO2.1 and PO2.2), the set of data to be made available to the public is limited to what is necessary to improve knowledge about the magnitude, trends, and actors of interest representation carried out on behalf of third countries 184 . It is clearly and exhaustively defined and fully harmonised throughout the EU. Most of the information contained in the register would not consist of personal data. The data minimisation principle contained in the GDPR would be uphold in this context by limiting personal data made publicly available to the minimum required for citizens to be informed about the entity carrying out interest representation and the activity carried out on behalf of third country entities. Information of relevance only to the competent national authorities, supervising and monitoring compliance with those options, would not be made publicly available, to safeguard against the risks of abuse of the information provided.

In addition, the legislative policy options (PO2.1 and PO2.2), beyond fully harmonising the set of data to be made public, provide for additional and specific safeguards by enabling entities to request that all or part of the information gathered for the purpose of the transparency requirement is not made public based on an overriding interest. The requirement in PO2.2 that entities falling within the scope of the risk-based approach are required to automatically share all of their records with the supervisory authorities could go beyond what is necessary to ensure the transparency of interest representation activities carried out on behalf of third countries.

6.2.3.2.Freedom of association 185

The right to freedom of association is guaranteed under Article 12 of the Charter, it applies to associations, including CSOs, interest groups, trade unions and political parties.

Careful consideration is being given to the potential spill over effect of the measures and unintended negative consequences for the operation of CSOs, which are operating in a shrinking civic space 186 .

Freedom of association constitutes one of the essential pillars of a democratic and pluralistic society, in as much as it allows citizens to act collectively in fields of mutual interest and to contribute to the proper functioning of public life 187 . Associations must be able to pursue their activities, operate without unjustified interference, and obtain resources to support their operations. The Court considers that legislation which renders significantly more difficult the action or operations of associations, whether by strengthening the requirements in relation to their registration, by limiting their capacity to receive financial resources, by imposing obligations of declaration and publications such as to create a negative image of them or by exposing them to the threat of penalties, in particular of dissolution, is to be classified as a limitation to the freedom of association 188 .

The examined policy options are limited to ensuring transparency regarding interest representation activities carried out on behalf of third country entities and seeking to influence decision-making processes in the EU. They do not affect as such the possibility for entities to carry out these activities (with the exception of PO2.2). However, transparency requirements could have a spill over effect on other activities of CSOs for instance their advocacy work.

All 3 policy options enhance the integrity of, and public trust in, the EU’s and Member States’ democratic institutions by ensuring the transparency of interest representation activities carried out on behalf of third countries, and by improving the knowledge about the magnitude, trends and actors of interest representation activities carried out on behalf of third countries (see sections 6.2.2.1 and 6.2.2.2) 189 . The CJEU has recognised that the objective consisting in increasing transparency is an overriding reason in the public interest 190 . As such, it is possible to justify the limited and proportionate impact on freedom of association resulting from the initiative – in as much as the requested organisations would have to comply with the registration and reporting obligations and pay the related costs. 

The limited transparency obligations would, furthermore, not affect the essence of the right to freedom of association. In particular, while imposing transparency obligations, the proposed measures do not restrict the right to seek for funding and resources as none of the policy options ban foreign funding.

All 3 policy options thus meet the objective of general interest, in light of the principles of openness and transparency, which must guide the democratic life of the EU in accordance with the second paragraph of Article 1 and Article 10(3) TEU and in conformity with the democratic values shared by the EU and its Member States pursuant to Article 2 TEU.

With regard to the proportionality of the limitation, all 3 options apply indiscriminately to any entity receiving financial support from abroad by reason of the type of activity they carry out. In particular, the legislative policy options (PO2.1 and PO2.2) would not cover any funding given by a third country entity 191 , but only the funding which is related to an interest representation activity (structural grants, donations, etc. are therefore excluded). These legislative options only focus on the activities that are genuinely likely to have a significant influence on public life and public debate. Secondly, none of the policy options target specifically CSOs or other associations, significantly reducing the risk of stigmatisation. They regulate a specific type of activity – interest representation activities carried out on behalf of third country governments – regardless of the natural or legal person carrying it out.

The legislative policy options (PO2.1 and PO2.2) contain specific safeguards to avoid stigmatisation. Firstly, the national public registers would have to be presented in a neutral manner and in such a way that it does not lead to stigmatisation of the entities included in the register (e.g. Member States would be prevented from requiring the entities that fall within the scope of the initiative to register ‘as an organisation in receipt of support from abroad’ or indicate on their internet site and in their publications and other press material the information that they are organisations in receipt of support from abroad). In particular, the publication should not be presented with or be accompanied by statements or provisions that could create a climate of distrust with regard to the registered entities, apt to deter natural or legal persons from Member States or third countries from engaging with them or providing them with financial support.

Secondly, Member States should ensure that when carrying out their tasks, the national authorities ensure that no adverse consequences arise from the mere fact that an entity is registered.

Thirdly, the registered entities would be able to request that all or part of the information is not made publicly available where there are overriding legitimate interests preventing publication. By imposing a full harmonisation of the transparency requirements, these 2 options ensure that registered entities may not be required to present themselves to the general public in a manner liable to stigmatise them 192 .

Additionally, the full harmonisation responds to the concerns of CSOs that the legislative instrument could be “misused by Member States in expansive transposition”. This would not be possible as Member States would be prohibited from exceeding the limits imposed by the legislation and could not lay down more stringent protective measures on the grounds of transparency.

Furthermore, the reporting obligations would be fully harmonised. The reports available to the public would present the amounts in an aggregated data and per type of entity registered (i.e., no amounts spent by specific entities would be provided). When it comes to the information available in the registers, the ranges in which the amounts should be public would be fully harmonised.

The legislative policy options (PO2.1 and PO2.2) also include proportionate sanctions and a comprehensive system of safeguards, including effective judicial review 193 . These options would ensure that CSOs and other associations would not be exposed to the threat of criminal penalties or dissolution.

The targeted requirements included in PO2.1 are proportionate and will not overburden concerned entities, also not those run by smaller teams or by volunteers. (i) In terms of record-keeping, the concerned entities would be required to keep, for a limited period, a clearly defined set of information 194 . (ii) In terms of registration, the concerned entities would only be required to provide limited information on themselves, the activities conducted, and the third country entities they conduct the activities for. The registration would include an approximation 195 of the remuneration received. Only the information necessary for the application and oversight of the legislative initiative would need to be updated regularly. Other information would only need to be updated annually. (iii) Apart from where it is necessary to examine non-compliance with the registration requirements, registered entities can only be requested to share their records with the supervisory authority as part of a risk-based approach where, based on objective factors, they are particularly likely to have a significant influence on public life and public debate. (iv) As illustrated in section 6.2.1.3 and Annexes 3 and 4, the costs for private entities are not likely to render significantly more difficult the action or operations of associations and are limited to what is necessary to ensure transparency.

The extended requirements included in PO2.2 impose additional burdens on the concerned entities as compared to the targeted requirements included in PO2.1 196 . These additional provisions enhance the restrictions on the right to freedom of association. Member States would be able to refuse granting a licence on the ground that the activity is likely to seriously affect public security. While such measure would be suitable to address threats to internal and external security, it would still place de facto prior authorisation obligations on the mechanisms by which associations use certain remunerations from third countries. Such measures could have a disproportionate impact in the light of the objective that it seeks to achieve 197 . Furthermore, this system of prior authorisation would give Member States a certain leeway which could create a risk of arbitrariness in the decisions to grant said licence. Finally, the fact that a publicly available flag would be added in the registration of the entity who received a licence despite comments submitted by a Member State or the Commission, could lead to stigmatisation of the said entity.

The non-legislative option (PO1) would not provide for the extended requirements of the PO2.2. However, it would only provide for recommendations, leaving Member States a large room of manoeuvre to implement transparency requirements and would not ensure the implementation of the safeguards provided by the legislative options. In the questionnaire that was sent to Member States, CSOs, and industry representatives, 6 out of 11 CSOs have expressed concerns that such recommendations could be misused.

6.2.3.3.Freedom of the arts and sciences 

The freedom of the arts and sciences is guaranteed under Article 13 of the Charter. Among other 198 , Article 13 of the Charter protects the freedom of researchers to express their opinion without being disadvantaged by the institution or system in which they work or by governmental or institutional censorship.

In the recent decades, research, innovation and higher education have increasingly expanded beyond national borders to become fully internationalised. While generally a welcome development, this also creates challenges as some third countries may seek to influence scientific research or shape educational activities to further their own goals and influence decision-making in the EU. 199 By ensuring the transparency of interest representation activities carried out on behalf of third countries via education, research and academic institutions, all 3 policy options would shed light on potential cases of foreign interference in this field.

None of the policy options regulate the freedom to define research questions, nor the right to disseminate and publish the results. None of the policy options would include a general ban on international collaboration (only the extended requirements included in the PO2.2 would limit an interest representation on an individual basis, in the specific situation where the activity is likely to seriously affect public security). The policy options would only introduce common transparency standards in the internal market for interest representation activities carried out on behalf of third countries. They would not affect the institutional autonomy of EU Higher Education Institutions to set their own organisations, recruit independently, set the structure of content or degrees or to borrow money or set tuition fees.

With regard to the risks of stigmatisation or obstacles to academic freedom, the analysis provided with regard to the freedom of association is applicable mutatis mutandis (see section 6.2.3.2).

6.2.3.4.Freedom of expression and information 

With regard to the freedom of expression and information (Article 11 of the Charter), both policy options would positively contribute to the right of individuals to receive and impart information and ideas without interference by public authority.

Citizens would gain better access to information on interest representation activities carried out on behalf of third countries affecting public decision-making. This would strengthen their understanding of such activities, reinforce their confidence in the integrity of public decision-making processes and deter manipulative foreign interference. At the same time, safeguards ensure that the right to the protection of personal data of natural persons providing information to national registries is guaranteed. In addition, in specific situations where organisations registered justify an overriding interest, the publication of information may exceptionally be withheld.

In this regard, the legislative measures in the proposal would improve the transparency and accountability of entities that carry out interest representation activities on behalf of third countries and enhance the knowledge about the magnitude, trends and actors of such activities. The fundamental right to receive information would be reinforced as citizens would gain useful information to exercise their democratic rights and hold their public officials accountable.

None of the policy options regulate the content of the interest representation activities.

None of the policy options require transparency in terms of funding of operating expenditure, which are unrelated to an interest representation activity like structural grants or donations. This implies that the freedom of CSOs and other concerned entities, to express an opinion on their own behalf, would a priori not be affected by the different policy options.

The provision of transparency measures could have a chilling effect on the decision to carry out interest representation activities and could restrict the freedom of expression of entities whose action can be attributed to a third country government (such as a private entity controlled by a third country) 201 . These measures pursue an objective in the general interest capable of justifying interference with this freedom (see section 6.2.3.2 ). Furthermore, the specific requirements imposed by PO1 and the targeted requirements in PO2.1 are not more far-reaching than would be required to achieve this objective (see section 6.2.3.2 ).

The system of prior authorisation in the extended requirements included in the PO2.2 imposes additional restrictions on the freedom of expression of entities whose actions can be attributed to a third country government. Member States would be able to refuse granting a licence on the ground that the activity is likely to seriously affect public security. Such measure could have a disproportionate impact at the light of the objective that it seeks to achieve (see section 6.2.3.2).

6.2.3.5.Freedom to conduct a business

Article 16 of the Charter recognises the freedom to conduct a business in accordance with EU law and national laws and practices. The harmonised requirements would facilitate and reduce the obstacles for the cross-border provision of services by entities carrying out interest representation activities on behalf of third countries, which would support such entities in the exercise of their freedom to conduct a business.

The freedom to conduct a business differs from the wording of the other fundamental freedoms laid down in Title II of the Charter, such as the freedom of association, the freedom of expression and information and the freedom of the arts and sciences (see sections 6.2.3.2 , 6.2.3.3 and 6.2.3.4 ), and may be subject to a broad range of interventions on the part of public authorities which may limit the exercise of economic activity in the public interest 202 .

All 3 options impose limited restrictions on economic activities, insofar as they impose on the entities the obligation to comply with certain requirements when carrying out interest representation on behalf of third countries.

The transparency measures for interest representation activities carried out on behalf of third countries are measures which pursue an objective in the general interest capable of justifying interference with this freedom. Furthermore, the specific requirements imposed by PO1 and the targeted requirements in PO2.1 are not more far-reaching than would be required to achieve this objective.

The system of prior authorisation in the extended requirements included in PO2.2 imposes additional restrictions on economic activities. Member States would be able to refuse granting a licence on the ground that the activity is likely to seriously affect public security. Such measure would seek to address threats to internal and external security which pursue an objective in the general interest capable of justifying interference with this freedom. Such measure would apply in limited individual cases and would need to be justified and would not impede concerned entities to carry out other interest representation activities for which a licence has been granted. This additional requirement would thus not be more far-reaching than would be required to achieve this objective.

6.2.4.Geopolitical implications

The Union is committed to supporting democracy and human rights in its external relations, in accordance with its founding principles of freedom, respect to human dignity, democracy and respect for human rights, fundamental freedoms and the rule of law 203 . The Union has a large set of tools to support and protect democracy and human rights worldwide 204 . With its Member States, it is the world’s largest provider of democracy support and human rights assistance, financing programmes with both state and non-state actors in the vast majority of third countries. All operations are guided by the Human Rights Based Approach, encompassing principles of respect for human rights, participation, inclusion, transparency and accountability.

The Union consistently condemns any undue limitation on fundamental freedoms and restrictions on civic and political space in violation of international human rights law, including so-called “foreign agent laws” 205 . These laws often include measures that unduly limit the civic space and restrict human rights that are key pillars of a democratic society. For example, the Russian Regulation of the Activities of Non-profit Organisations Performing the Functions of a Foreign Agent, adopted in 2012 and amended in 2022 has been used to “stigmatise […] and seriously hamper” 206  the activities of individuals from different groups of society, including CSOs, unregistered public associations, media outlets, journalists, activists and human rights defenders. Other attempts to enact laws aiming to scrutinize the work of CSOs receiving support from abroad include the Georgian draft law on transparency of foreign influence and the Republika Srpska’s draft law on the Special Register and Transparency of the Work of the non-profit organisations 207 . 

In contrast to so-called ‘foreign agent laws’, which take a restrictive starting point, none of the policy options seek to regulate CSOs in particular nor negatively label their activities, nor restrict fundamental freedoms and civic space. Instead, the policy options are designed to provide transparency requirements and more democratic accountability to citizens on interest representation activities carried out on behalf of third country entities. None of the policy options ban foreign funding or require transparency in terms of funding of operating expenditure of CSOs (such as structural grants or donations) 208 .

Risk of retaliatory measures by third countries

Following the targeted questionnaire, a few Member States expressed views that measures addressing interest representation could have an impact on diplomatic relations with third countries unless exceptions are provided for diplomatic work and international organisations. A number of foreign influence laws have been introduced worldwide. There does not seem to be a clear causal relationship or direct temporal link between the introduction of, on the one hand, foreign influence laws, such as the US Foreign Agents Registration Act (‘FARA’, in force since 1938) or the Australian Foreign Influence Transparency Scheme Act (‘FITSA’, in force since 2018), and, on the other hand any of the foreign agent laws as they exist in Russia (in force since 2012), Nicaragua (in force since 2020), El Salvador (proposed in 2021), Georgia (proposed in 2023), or Bosnia and Herzegovina’s Republika Srpska (adopted in 2023). The increasing number of proposed and/or adopted foreign agent laws in recent times shows that these laws come into force independently of EU action, and rather illustrates the broader trend of direct and indirect restrictions on civic and political space.

However, given the prominent role and stance of the Union regarding the defence and promotion of democracy and human rights, EU legislative initiatives, due to their visibility, present a significant risk of manipulation and misuse. This can happen in two ways. First, regardless of factual differences, third country governments might attempt to justify their foreign agent laws with reference to the EU’s legislation. This has been the case for the US FARA since both the governments of Russia and Georgia have explicitly referred to the act when introducing their legislation. 209 Second, accusations of hypocrisy or ‘double standards’ could be expected, especially from those actors who will try to spin it for their own justification but also more widely if the differences between legislations are not clearly communicated and understood, regardless of factual differences. The geopolitical impacts of the policy options will vary from third country to third country and may be difficult to assess in advance.

For all 3 policy options, such consequences could be mitigated by diplomatic exchanges and information activities that will be conducted to present and explain in details the targeted aims and the proportionality of the measures as well as the strong safeguards. This will imply to explain in details the important and manifest differences between the selected policy option and the so-called “foreign agents laws” 210 , managing false narratives and potential unfounded assimilations through adapted explanations of the content of the EU initiative.

Clarity on the differences will be crucial. These include: the focus of the EU proposal on interest representation activities impacting decision-making processes in the European Union rather than individual organisations, the exclusion of operating grants for CSOs or private donors from the scope, the absence of any regulations that might be used to hinder the work of CSOs and the absence of criminal sanctions and other restrictive measures. Furthermore, the proposed measures include important safeguards like the possibility of judicial redress as well as the possibility to request that some of the information gathered will not be made public based on an overriding interest which differentiate them from other measures.

The proposed measures also do not cover any activities related to the exercise of diplomatic relations between states or international relations.

Additionally, all 3 policy options take into account the feedback related to US FARA and the Australian FITSA. These two legislations are fundamentally different from foreign agent laws in place or proposed in other third countries. Some CSOs and academics consider that the US FARA is too broad and vague in its definitions and scope, and expressed concerns regarding criminal sanctions. 211  

Taking into account this feedback, all policy options define interest representation on behalf of third countries in very clear terms and none of the proposed measures uses wordings such as “foreign agent” 212 or “foreign principal” 213 .

Providing for criminal penalties would be disproportionate, creating an atmosphere of distress for concerned entities. PO2.1 and PO2.2 envisage exclusively administrative fines for non-compliance with the proposed measures.

All policy options would provide for coherent transparency measures for all third countries. As raised by 3 Member States (out of 15) in the targeted consultation, a targeted approach towards only some third countries would be more likely to lead to retaliatory measures or create diplomatic tensions 214 . The risk-based approach as proposed in the legislative policy options (PO2.1 and PO2.2) is based on an objective set of indicators and would not be arbitrarily singling out one or several countries. The risk of retaliatory measures would thus be limited.

Due to the non-binding nature of the policy recommendations set out in PO1, their geopolitical impacts would depend on their implementation by Member States. Such a recommendation could potentially have a beneficial geopolitical impact as it would clarify the EU standard in this area, and it would prevent it from being used as a carte blanche by certain third countries to introduce legislation not in line with international human rights law and standards. In comparison, the current fragmented approach by Member States is more likely to be damaging to the EU’s reputation as it lacks consistency and coherence.

The geopolitical impact of the targeted requirements in PO2.1 is likely to be more important compared to PO1, as a coordinated legislative proposal would have greater geopolitical visibility. Compared to the non-legislative option, this PO further limits the risk of gold-plating by introducing fully harmonised measures and allows the Commission to monitor its implementation in Member States and react to any breaches, including of fundamental rights. Furthermore, an EU coherent and proportionate approach focusing on transparency and democratic accountability to address the challenges posed by interest representation on behalf of third country entities, could serve to set standards.

The geopolitical impact of the extended requirements of PO2.2 is likely to be more negative than that of PO2.1 since it includes the requirement for organisations to obtain a license before they are allowed to engage in any interest representation activities. There is a possibility for pushback from third countries currently engaging in influence activities in the Union if their activities would not be approved. Similarly, to the extent this option may include disproportionate restrictions to the right to freedom of association, the EU’s reputation could also be negatively impacted, and the EU might be perceived as setting a precedent for far-reaching legislation on covert foreign influence.

Risk to entities covered by the policy options

Concerning the work of covered entities in third countries, there is a risk that certain third countries might use EU legislation as a pretext to apply foreign agent legislation against them, 215  or otherwise restrict their activities.

To address this point, the legislative policy options (PO2.1 and PO2.2) provide for additional and specific safeguards by enabling entities to request that all or part of the information gathered for the purpose of the transparency requirement is not made public based on an overriding interest. Due to its non-binding nature, PO1 would not ensure the implementation of the safeguards provided by the legislative options.

Even if consultations with stakeholders did not suggest that similar legislation like the US FARA or the Australian FITSA have led to a relevant decrease of foreign donations for American or Australian CSOs, 6 CSOs (out of 11) voiced concerns that the proposed measures may impact funding from international donors. The impacts of the policy options on the freedom of association are analysed in section 6.2.3.2.

Lastly, because the policy options cover any entity (established within or outside the EU) that carries out interest representation activity on behalf of third counties to influence decision-making processes in the EU, none of them will impact the competitive position of EU firms with regard to non-EU competitors.

6.2.5.Digital by default principle 

Under PO1, Member States would be invited to use digital tools. To the extent that these recommendations are followed, PO1 would be in line with the Digital by default principle. Under the legislative policy options (PO2.1 and PO2.2), the transparency registers would have to be supported by publicly accessible IT tools in line with the 2030 Digital Compass Communication 216  and the need to promote “digital by default” policy-making in EU legislation 217 . Exchanges between authorities would also be supported by existing IT tools.

Table 5: Summary of the impacts for each of option considered (compared to the baseline)

The table should be read in vertical: ‘+++’ means positive impact of very high magnitude compared to the baseline, ‘++’ means positive impact of high magnitude compared to the baseline, ‘+’ means positive impact of moderate magnitude compared to the baseline, ‘0’ means neutral impact compared to the baseline, ‘-’ means negative impact of moderate magnitude compared to the baseline, ‘- -’ means negative impact of high magnitude compared to the baseline, ‘- - -’ means negative impact of very high magnitude compared to the baseline, ‘n.a’ means not applicable.

7.How do the options compare?

The options were compared on the basis of the criteria of Effectiveness 218 , Efficiency 219 , Coherence with existing and planned EU initiatives and Proportionality 220 . Methodology is explained in Annex 4.

7.1.Effectiveness

1.Facilitate cross-border interest representation activities carried out on behalf of third countries when done transparently.

All 3 options would provide for similar transparency requirements in all Member States, thereby levelling the playing field compliance cost and limiting the risks of regulatory arbitrage. However, the non-binding nature of the proposed non-legislative measures, PO1 makes it difficult to determine if and how Member States would implement the proposed transparency standards and further fragmentation will a priori not be preventable.

The legislative options (PO2.1 and PO2.2) would increase legal certainty and reduce the scope for divergent legislation, they would also provide for the recognition, throughout the internal market, of the registration in 1 Member State thereby facilitating cross-border interest representation activities on behalf of third countries entities.

Divergence in implementation of the prior authorisation/licensing system in the PO2.2 could reintroduce limited regulatory arbitrage.

2.Improve knowledge about the magnitude and trends of interest representation activities carried out on behalf of third countries.

All 3 options would improve knowledge about the magnitude and trends of interest representation activities carried out on behalf of third countries. The 2 legislative options (PO2.1 and PO2.2), would be more effective, as by providing a fully harmonized set of data to be collected and definition, they would greatly facilitate comparison between Member States and the establishment of trends at EU level. Transparency of interest representation carried out on behalf of third countries would be decisively enhanced as citizens could access a public register on all interest representation activities carried out on behalf of third countries in the EU. Researchers, CSOs and journalists could also use the information in order to better understand how foreign influence unfolds, who is targeted, and what impacts it has on decision-making processes. Given that this knowledge is communicated to a broader public and to decision-makers, the harmonisation of transparency requirements would present an important added value for democratic decision-making.

Furthermore, the flexible and evolutive approach to this data collection would enable to easily adapt the data collection to the trends observed. Finally, the gradual and coordinated approach to supervision, as well as the measures included to limit circumvention (see section 6.2.2.3) would help ensure that the data collected is correct.

Due to its non-binding nature, PO1is unable to ensure a comparable collection of data and the supervision of activities would remain inconsistent.

7.2.Efficiency

The efficiency of the options weighs the qualitative cost-benefit analysis described in Annexes 3 and 4, as well as in the description of the impacts in section 6 above.

In all 3 options, entities carrying out interest representation on behalf of third countries would face some compliance costs to comply with the transparency requirements.

The non-legislative measures in PO1 and the targeted requirements in PO2.1 would impose similar cost, however PO1 would not give the same benefits in terms of faciliating cross-border interest representation activities on behalf of third countries, nor, for public authorities, efficency gains in terms of cooperation between authorites with regard to enforcement and supervision.

The extended requirements in PO2.2 would imply additional compliance costs for national administration.

7.3.Coherence with other EU initiatives

Issues with coherence were not detected for any of the three policy options.

PO1 would build upon and be complementary to the recommendations issued by the Commission in the context of the Rule of law reports 221 , in terms of scope and content. Additionally, this policy option would go beyond these recommendations as it provides for a list of specific standards related to record-keeping, registration and transparency (1), a detailed but voluntary reporting on the application of the specific standards (2) and a monitoring of the implementation of the recommendation (3). It would also include references to safeguards that Member States should establish, including to prevent stigmatisation of the registered entities.

As the scope of legislative measures in PO2.1 and PO2.2 are the same they will be assessed together in relation to other EU initiatives.

The two legislative policy options will complement the proposal for a Regulation on the transparency and targeting of political advertising 222 . The proposal on political advertising seeks to provide a high level of transparency for political advertising services in the Union regardless of the medium used, and to provide additional safeguards applicable to the targeting of political advertising based on the processing of personal data. This initiative has a different scope from the proposal on political advertising: it covers interest representation activities carried out on behalf of a third country entity. This includes interest representation activities consisting of the organisation of communication or advertising campaigns, which could also be considered as political advertising. However, interest representation mainly covers activities which are not also ‘political advertising’ (e.g. lobbying individuals directly). Also, the political advertising regulation covers activities within its scope regardless whether they are provided on behalf of a third country entity.

Under the proposal on political advertising, transparency is ensured in particular by making available to individuals certain information with each political advertisement. In addition, political advertising publishers that are very large online platforms within the meaning of Regulation (EU) 2022/2065 (‘the Digital Service Act’) would have to make the information contained in the transparency notice available through the repositories of advertisements published, pursuant to Article 39 of that Regulation. The current initiative complements this by providing public access to complementary information in the national registers of the Member States related to the providers of the interest representation activities, in particular a clear indication as to the third country on behalf of which the interest representation activity is carried out, the Member States where the interest representation will be carried out, and the legislative proposals, policies or initiatives targeted by the interest representation activity.

The proposed Directive on combating corruption 226  seeks to protect democracy as well as society from the impact of corruption and proposes updating the Union criminal legal framework to include beyond the offences of bribery and misappropriation, also trading in influence, abuse of functions, obstruction of justice, and enrichment from corruption. When the offender committed these offences for the benefit of a third country, the proposed Directive wants Member States to consider this an aggravating circumstance. The policy options would complement this proposal as the transparency of interest representation activities on behalf of third country entities is likewise expected to make a positive contribution to the prevention and detection of corruption.

These policy options are coherent with the annual Rule of Law Reports 227 of the Commission which, since 2020, monitor, under their anti-corruption pillar, the regulation of interest representation and lobbying in all Member States, within the framework of existing European and international standards. It is recommended to Member States to have in place a footprint of rules for lobbying, and to secure a thorough and consistent application of similar rules to different types of lobbyists and lobbying activities 228 . 

These policy options are coherent with the proposal for a revision of the Regulation on the funding of European political parties and European political foundations (EUPP/F) 229 which are in ongoing negotiations. Depending on the outcome of the negotiations, the Regulation could ban all contributions from third countries to European political parties except limited contributions from certain third countries with a high level of transparency concerning the financing of political parties 230 . 

These policy options will have a link to the proposal for a Directive on cross-border activities of associations (ECBAs) 234 . While the ECBA proposal envisages measures to coordinate the conditions for establishing and operating European cross-border associations (ECBAs) and thereby simplifying the cross-border activities of associations, including soliciting and receiving funding, the policy options create transparency standards for their interest representation activities carried out on behalf of third countries. They do not cover funding given by a third country entity (such as a structural grant, donations, etc.) that is unrelated to an interest representation activity. In practice, ECBAs will have to comply with the targeted transparency requirements under these two policy options only if they carry out interest representation activities on behalf of third country entities. 

These policy options would not affect the prerogatives of the Commission to initiate and conduct investigations into distortive foreign subsidies under the Foreign Subsidies Regulation 235 or to issue opinions under the EU Regulation on Foreign Direct Investment (FDI) Screening 236 . 

Finally, the policy options affect the target of reducing burdens associated with reporting requirements, set in the Commission’s long-term competitiveness Communication 237 . Reducing administrative burdens is crucial to maintaining the competitiveness of European businesses. In some cases, entities carrying out interest representation on behalf of third countries could fall under the scope of the Directive on corporate sustainability reporting (CSRD) 238 . These cases would be limited and restricted to the situation were the actions of a large company would be attributed to a third country 239 . In that case, the large company will have to register according to the requirement of the policy options and apply the CSRD requirements. The CSRD, reporting obligations are to be done annually and include reporting obligations on political influence and lobbying activities.

The transparency registered established under these two policy options would be separate instruments than the EU transparency register 240 .

This initiative would contribute to the available legal and policy instruments presented in the Foreign Information Manipulation and Interference (FIMI) Toolbox, which frames and inventories the EU’s comprehensive approach to tackle FIMI and disinformation. In instances where interest representation activities can be linked to FIMI incidents, this will help efforts initiated through the toolbox to develop a common analytical framework and methodology to collect systematic evidence of FIMI incidents, improve the understanding of tactics, techniques and procedures used to manipulate, and contribute to an interoperable methodology aimed at supporting a whole-of-society approach to tackling FIMI. In this sense, it could also support different measures of the Common Foreign and Security Policy where interest representation activities can be linked to FIMI activities.

7.4.Proportionality 

PO1 and the targeted requirements in PO2.1 are proportionate to the objectives set (see sections 6.2.1, 6.2.3 and 6.2.4). PO2.1 proposes safeguards that prevent in particular the stigmatisation of legitimate interest representation. They notably include equal transparency requirements for all entities, the obligation for Member States’ authorities to ensure that no adverse consequences arise from the mere fact of registration, the non-publishment of data based on an overriding legitimate interest, and thresholds limiting the powers of supervisory authorities to ask for information.

However the extended requirements in PO2.2 would impose more costs and further restrict the freedom to conduct a bussiness and could have disportionate effects on the freedom of association and the freedom of the arts and sciences and have greater geopolitical implications.

7.5.Comparison of options 

The options are compared against the criteria of effectiveness, efficiency, coherence and proportionality.

In the context of this initiative, effectiveness describes to what extent each option would achieve the specific objectives defined in chapter 4.2, i.e. to facilitate cross-border interest representation activities carried out on behalf of third countries when done transparently (1) and to improve knowledge about the magnitude, trends and actors of interest representation carried out on behalf of third countries (2). PO2.1 proves to be most effective with regard to objective 1, PO2.1 and PO2.2 are equally effective with regard to objective 2.

Efficiency assesses the anticipated costs of the measures against the expected benefits of increased effectiveness. PO2.1 performs best in terms of efficiency, notably because of the higher costs that PO2.2 would generate without being more effective.

Coherence describes how the proposed measures would complement existing and planned initiatives. Both PO2.1 and PO2.2 would be most coherent with other initiatives.

Proportionality relates effectiveness against efficiency and any negative impacts. PO1 and PO2.1 would be proportionate to the objectives set while PO2.2 would impose more costs, further restrict the freedom to conduct a business and could have disproportionate effects on other freedoms and diplomatic relations.

Table 6: Comparison of options against the baseline

The table should be read in horizontally: the symbols have the same meaning as in table 5. Methodology is explained in Annex 4.

8.Preferred option

8.1.Description of the preferred option 

Against this assessment, the preferred option consists in a legislative intervention with targeted requirements.

This option would best meet the general objectives as well as the specific objectives of this intervention. The harmonised requirements should provide the legal certainty and level playing field necessary to remove the obstacles identified in the internal market. It would also prevent further fragmentation. The transparency requirements should provide sufficient information to improve knowledge about the magnitude and trends of interest representation carried out on behalf of third countries. This option is less intrusive as it would limit the costs on national administration while facilitating carrying out interest representation activities on behalf of third country entities across borders and facilitate cross-border cooperation between national authorities. Finally, this option is less intrusive in terms of impacts on fundamental rights, in particular with regard to the freedom of association and the freedom of the arts and sciences and has limited geopolitical implications.

8.2.The choice of instrument

With regard to the choice of instrument, under the legal basis of Article 114 TFEU, both a Regulation, or a Directive providing for full harmonisation, would support the attainment of the general and specific objectives. In the stakeholder consultation, 4 CSOs out of 11 and 1 Member State out of 15 have expressed a preference for a Regulation. 5 Member States do not want to harmonise transparency requirements for interest representation carried out on behalf of third countries and prefer policy option 1. The other 9 Member States do not position themselves on the choice of instrument under the legal basis of Article 114 TFEU.

Having recourse to a Regulation 241 has the advantage of being of direct application without having to wait that Member States have transposed the Directive in national law, which could be a benefit due to the urgency to take action against the problems identified by the initiative.

A Directive providing for full harmonisation of the transparency requirements applicable to entities carrying out interest representation on behalf of third countries conducted with the objective of influencing the development, formulation or implementation of policy or legislation, or public decision-making processes in the internal market, is the most suitable option. It would set legally binding standards to be met in all Member States while leaving some flexibility in particular regarding the articulation with existing transparency registers.

By providing for full harmonisation, the Directive will provide a uniform regulatory framework, removing internal market barriers and increasing legal certainty for interest representatives in the internal market on the basis of a proportionate standard. Member States would, within the framework of the harmonised rules, be prohibited from diverging from the rules including by laying down more extensive transparency requirements (so-called “gold plating”). The Directive would provide for a harmonised comprehensive system of safeguards, including effective judicial review, harmonised sanctions limited to administrative fines, independent supervisory authorities, obligations to prevent stigmatisation, in particular to ensure that no adverse consequences arise from the inclusion of an entity in the register.

The competence of Member States to establish rules, in full respect of EU law, for the aspects not covered by the harmonised rules will not be affected, for example, to establish rules for their public officials contacting entities carrying out interest representation activities on behalf of third countries or regulating the legality of the availability of interest representation activities carried out on behalf of third countries.

8.3.Application of the “one in, one out” approach

An overview of estimated costs is provided in Annex 3 with methodology in Annex 4.

Table 7: Costs related to the ‘one in, one out’ approach

9.How will actual impacts be monitored and evaluated?

A report on the implementation of the legislative measures contained in the preferred option would take place at the latest by 12 months after the deadline for Member States to transpose the Directive. The Commission would also carry out an evaluation 242  of those legislative measures at the latest by 4 years after the transposition deadline. This evaluation will also assess potential changes to the scope of the Directive, as well as the effectiveness of the safeguards provided therein. 

Data on the following objectives and indicators will be collected through Eurobarometer and other surveys directed to citizens and stakeholders (entities carrying out interest representation activities on behalf of third countries, interest parties (journalist, researchers), public officials and enforcement authorities), as well as through cooperation with Member States authorities in charge of the implementation of the measures contained in the preferred policy option. Data from external agencies and stakeholders (CSOs, researchers, etc.), could also be used. This data collection effort will also be addressed specifically in the work programme for the European Cooperation Network on Elections (ECNE) 243 .

Table 6: monitoring and evaluation of the impacts

Annex 1: Procedural information

1.Lead DG, Decide Planning, CWP references

The Staff Working Document was prepared by the Directorate-General for Justice and Consumers.

The Decide reference of this initiative is PLAN/2023/68.

This initiative was announced in the September 2022 State of the Union speech by President of the Commission von der Leyen and follows the Commission Work Programme for 2023.

2.Organisation and timing

The Impact Assessment was prepared by DG JUST as the lead Directorate General.

The Inter-Service Steering Group (ISSG) was set up in October 2022 under the coordination of the Secretariat-General and gathered representatives of the Legal Service, DG JRC (Joint Research Center), DG NEAR (Neighbourhood & Enlargement Negotiations), DG HOME (Migration & Home Affairs), DG GROW (Internal Market, Industry, Entrepreneurship & SMEs), DG INTPA (International Partnerships), DG RTD (Research & Innovation), DG CNECT (Communications Network, Content & Technology), DG COMP (Competition), DG EAC (Education, Youth, Sport and Culture) and the European External Action Service.

The ISSG was consulted on the concept note, the consultation strategy, main legislative and non-legislative options and the interim and final reports of the supporting study. On a number of other deliverables, such as the questionnaire for the Open Public Consultation, services were consulted separately in writing.

ISSG meetings, chaired by the Secretariat-General, were held on 10 October and 30 November 2022, 31 March, 26 September 2023.

The last meeting of the ISSG, chaired by the Secretariat-General of the European Commission was held on 5 October 2023.

3.Consultation of the RSB

An upstream meeting took place on 18 September 2023 and the recommendations of the Regulatory Scrutiny Board were duly taken into account.

The Regulatory Scrutiny Board discussed the draft impact assessment in the hearing that took place on 15 November 2023.

The Board issued a positive opinion with reservations on the draft impact assessment. The Board’s recommendations have been taken into account in the Impact Assessment, as the table below displays.

4.Evidence, sources and quality

The evidence base is drawn from internal and external research, literature review, extensive consultation activities, bilateral meetings with stakeholders, and was supported by an external study available here:  https://commission.europa.eu/document/455c1bda-8c39-48f0-971c-86758f8b7c90_en  . In particular, evidence was based on the following:

·The preparatory studies and open consultation for the European Democracy Action Plan, transparency of political advertising initiative and the 2020 EU Citizenship Report;

·The implementation of the Commission’s September 2018 electoral package, as described in the Commission’s report on the 2019 elections; 

·The Commission toolkit on Tackling R&I foreign interference;

·European Parliament resolution of 10 October 2019 on foreign electoral interference and disinformation in national and European democratic processes (2019/2810(RSP)); 

·European Parliament resolution of 9 March 2022 on foreign interference in all democratic processes in the European Union, including disinformation (2020/2268(INI)); 

·European Parliament resolution of 17 February 2022 with recommendations to the Commission on a statute for European cross-border associations and non-profit organisations (2020/2026(INI)); 

·European Parliament studies, including those prepared for the INGE committee;

·International organisations and bodies documents, research and recommendations, such as the OECD, the OSCE, the Council of Europe or International IDEA;

·An Open Publication Consultation;

·A series of Focus Group meetings with relevant stakeholders;

·A Flash Eurobarometer on Citizenship and Democracy;

·A Flash Eurobarometer on Democracy;

·The work of the European Cooperation Network on Elections

·A targeted consultation with relevant stakeholders

Annex 2: Stakeholder consultations

1.The consultation strategy

The Commission conducted a first wave of wide consultations of stakeholders on issues relevant to transparency of interest representation activities carried out on behalf of third countries, free, fair and resilient elections, and civic engagement, between October 2022 and May 2023.

Following on the first wave of consultations, the Commission sent out additional questionnaires on potential policy options to Member States authorities, commercial entities and CSOs on 4 August 2023 with a (extended) deadline for contribution on 25 September 2023.

A Public Consultation, accompanied by feedback on the Call for Evidence document was published on 16 February 2023 and ran until 14 April (8 weeks). Feedbacks and contributions from stakeholders helped further developing problem definitions and policy options.

The Commission also ran a Flash Eurobarometer on Citizenship and Democracy and a second on Democracy. The 2 Eurobarometers are still unpublished.

The Commission organised in this period a series of focus groups meetings with relevant stakeholders, to gather additional evidence and data on the issues addressed by the package, the potential policy options, and their impacts. It also conducted bilateral consultations and met with stakeholders, at their own initiative. The Commission received additional feedbacks.

Finally, the Commission contracted an external study to support its work on this package. As part of this study, the contractor also conducted a series of individual consultations with key stakeholders.

Relevant work in the European Parliament (including the Special Committee for foreign interference in all democratic processes in the EU, including disinformation) provided further input to the Commission analytical process. The Council of the European Union’s work (including in the relevant working parties) has also provided valuable input.  

The original consultation strategy had identified the following stakeholders with the aim of gathering their input:

1.Commercial actors, covering entities engaged in interest representation activities, including public relations and lobbying firms;

2.Legal professionals involved in interest representation;

3.International organisations and standards setting bodies;

4.Research bodies, education entities and Academia;

5.Non-commercial actors, including CSOs, human rights defenders and think-tanks;

6.Political actors – including candidates, parties, foundations, campaign and activist organisations in the Member States, at national and European level. Local and regional political actors should be considered, as well as their representative bodies at a European level. 

7.Public authorities – national authorities with competence to monitor and enforce relevant rules, transparency obligations and electoral commissions, including via the European Cooperation Network on Elections;

8.General public, including EU and non-EU citizens, through the Public Consultation.

The methodology, consultation tools, overview and analysis of the results are further described below.

2.Public consultation

The Public Consultation was launched on 16 February and ran until 14 April (8 weeks). It was opened to everyone, from EU citizens to private companies. A communication campaign on the Public Consultation was organised by the Commission, including social media posts to reach out to specific entities and individuals, and communication on the Commission’s website. This campaign reached out to 6,501,095 people.

In total, 852 responses were received in the context of the Public Consultation. The majority of respondents were from the EU, with only 12 from outside the EU. Their main countries of origin were France, Slovakia, Belgium and Spain. The vast majority of feedback was received from EU citizens (92%). Non-Governmental Organisations amounted for 3.5% of the respondents. However, only 3 company/businesses replied to the consultation.

2.1.Results

The public consultation was divided into 4 main sections, with some answers available only to those ticking dedicated boxes corresponding to specific requirements.

a.On interest representation and foreign interference

This specific section of the public consultation examined perceptions on entities that can significantly influence public decision-making processes and, more specifically, posed the question of which entities are more likely to create a risk of covert interference of third countries in the European democratic space.

-Lobbying is perceived as having the highest potential to significantly influence legislation in the EU. A total of 802 respondents (96.4%) labelled lobbying as either very (83.2%) or somewhat (13.2%) influential.

-The activities of ‘Public relations, advertising, media campaigns, including social media’, and of political parties are also considered as having the potential to significantly influence legislation or other public decision-making processes. More specifically, public relations activities were considered as very or somewhat influential by a combined 91.2% of respondents, while the same figure for activities of political parties was 91.5%.

-Whilst the extent of influence for the remaining activities listed (‘Education and training’, ‘Research’ and the ‘Organisation of conferences’) was not perceived to be as influential, respondents still considered them to be able to influence the legislation making process to some degree.

The public consultation then focused on examining the EU perception of risks of interference with the European democratic space and public debate related to the control or remuneration of influential activities by third countries.

-Lobbying and public relations activities remunerated by or controlled by third countries are perceived by stakeholders to pose the greatest risk to the European democratic space, with 86.6% considering this factor to trigger a high risk.

-A total of 79.8% considered political parties funded by third countries or funded/supported by entities based in third countries to be a factor that can trigger high risk.

-Cyberattacks on digital election tools and electoral infrastructures are also perceived to be likely to create particular risks, as 74.5% labelled these activities as a factor triggering a high risk and 16.9% a moderate risk.

-Finally, the activities of think tanks remunerated by or controlled by third countries were perceived by 66.9% to constitute a high-risk factor and by 25.8% to pose a moderate one.

Therefore, the public consultation illustrates that, while all noted activities are perceived to carry the potential to influence and a risk of interference, lobbying entities and political parties are both perceived to retain a particularly high level of influence towards legislation and at the same time can trigger the highest risk of third country covert interference.

b.On transparency and other requirements

Overall, the public consultation responses highlighted just how much transparency requirements are valued and perceived to be imperative across the EU-27. Almost the entirety of respondents (95.6%) believes that there is a need to provide more transparency in the EU regarding lobbying, public relations activities or any other activity conducted for third countries that significantly impacts the democratic sphere.

In addition, the respondents largely agreed that every single type of information listed in the public consultation should be provided by entities conducting such activities (more than 92.5%). This includes information about the origin and amount of funding, the position of third countries and other entities vis-à-vis financing, and the purpose of financing. This continues to highlight a trend found across the public consultation responses of a need for more information to be made available and for transparency across the EU.

Considering other means to combat the influence risks highlighted in the first section, respondents were asked about the role of civil society and citizens more generally in the context of policy-making. Effective and inclusive engagement with both independent civil society and citizens in the context of policy-making processes is perceived to be important or very important by a large majority of respondents.

On this basis, respondents were then asked about possible measures to improve the engagement, inclusiveness and effectiveness of participatory processes for citizens and CSOs. The measure considered most necessary – selected by 64.2% of respondents – was the implementation of dedicated structures to support civil participation in policy-making processes (such as open online consultation, platforms to provide feedback). Following this, the most popular response options were the dissemination of clear, adequate and timely information about participation opportunities, modalities and objectives (51.3%) and capacity building for citizens, including at local levels, on how to better engage in the policy-making process (41.9%).

Finally, the vast majority of respondents agreed or strongly agreed that there is a need to increase the engagement of CSOs and citizens through purposefully organised processes in policy-making at all local, national and European levels (more than 60% strongly agreed and more than 20% agreed in all cases).

c.On codes of conducts, self-regulation and standards

The questionnaire then focused on the topic of codes of conduct, self-regulation and standards, and showed that even though the stakeholders agree that the prioritisation of transparency and accountability is crucial, there seems to be a lack of knowledge or availability of best practices on the topic across the EU.

d.On free, fair and resilient elections

The final section of the public consultation related to the topic of free, fair and resilient elections, where questions focused on measures that could be taken to promote resilient electoral processes and protect election-related infrastructure.

When questioned about the importance of certain measures that could be taken by Member States to promote resilient electoral processes and protect the infrastructure that is critical for the organisation of elections, it is notable that respondents perceived each of the measures listed to be important. The most heavily supported measure was the need to focus on cyber security of electoral processes and related infrastructure, such as introducing incident notification rules.

Two additional sections (‘Other’ and ‘Concluding remarks’) were available to respondents to add any further information and/or upload any concise document. In total, 24 documents were received from respondents, mostly from CSOs and more specifically Non-Governmental Organisations, which were carefully analysed.

2.2.Position of stakeholders in the public consultation

a.Position of EU Citizens

Overall, EU Citizens indicated that EU action is needed to tackle foreign interference in democratic processes and to increase transparency of lobbying, public relations activities and any other activities that, when carried out on behalf of third countries, could significantly impact the democratic sphere. EU Citizens have expressed support for proposing transparency on this matter, while stricter transparency requirements and ethical obligations for public officials, candidates to elections and their staff were also mentioned.

In addition, the majority of respondents called for more involvement of CSOs and citizens in the policy-making process, and for more education about the EU.

b.Position of CSOs

CSOs expressed their support to a package aiming at defending democracy and to EU-wide measures increasing transparency of lobbying and public relations activities. However, some expressed strong concerns over the Directive potentially being seen as a “Foreign Agent Act”, based on international precedents. Many of them stressed the need to fight against all democratic challenges, including those coming from within the EU, and not focus only on foreign risks. Most of them stressed the need to respect fundamental rights and the principle of proportionality and to avoid any potential stigmatisation of CSOs.

Additionally, CSOs called for more long-term funding opportunities and reminded of the important role they plan in defending and protection democratic values. They asked to be more involved in decision-making processes and called for more regular and inclusive consultations of CSOs and citizens.

3.Feedback on the call for evidence document

Feedback on the Call for Evidence document ran from 16 February to 14 April 2023, on the Have Your Say portal. In total, 1,198 responses were provided, the vast majority being EU Citizens (91%), with further inputs by 63 non-governmental organisations (5.2%). Most of the feedback was submitted by stakeholders based in Slovakia (70.3%), most of whom were responding as EU citizens. Other notable countries of origin of respondents were DE, FR, BE and AT.

A significant number of responses with similar (or identical) sentiments were submitted, spanning multiple languages and countries of origin. Indeed, the Have your say website identified a campaign of similar feedback, based on 11 matching submissions submitted by anonymous respondents from DE.

In addition, some submissions appeared to be copy-pasted with guide words, potentially used as part of a coordinated campaign. For example, “support the opinion:” (or “Podporujem názor:” in Slovak) was included at the beginning of the submissions.

4.Dedicated stakeholders’ meetings

4.1.Focus Groups

The Commission organised a series of focus group meetings from November 2022 to April 2023, with relevant stakeholders as identified in the consultation strategy. The aim of these focus groups was to gather additional evidence and data on the issues addressed by the package from actors on the ground, to build on their experience.

Focus groups lasted 1.5 hours and the discussions were organised around 4 main strands: foreign interference, transparency measures, safeguards and free, fair and resilient elections. A list of guiding questions was sent to all participants ahead of the meetings, containing general questions posed to all stakeholders, as well as more specific questions targeted at the particularities of the different groups.

While organising the focus groups, the Commission ensured representativeness and inclusiveness in the selection of all participants.

Overall, participants to the Focus Groups expressed their support for an initiative covering foreign interference and common transparency rules for interest representation activities.

a.Focus group with international standard setting bodies

This focus group gathered representatives of the Council of Europe, including the Venice Commission, ODIHR, International IDEA, the OECD and UNESCO. Colleagues from the EEAS also attended the focus group.

Participants expressed concerns about the influence of third countries in democratic processes and stated that some of their organisations were currently working on this issue. They highlighted that key stakeholders need to be equipped with adequate tools to tackle it, and that additional evidence is needed to understand the best policy-making solutions, notably to close legislative loopholes.

Participants agreed that transparency is the best solution to tackle the problem of foreign interference. Some of them additionally highlighted the need to tackle disinformation and to discuss foreign funding of political activities. Finally, they discussed safeguards to be considered (e.g. elections observations, oversight bodies to enforce transparency measures related to candidates or politicians, etc) and potential risk-assessments.

b.Focus group with academia and research organisations

This focus group gathered members of academia and research organisations talking in their personal capacities.

Most researchers agreed that there is some urgency when it comes to interference by third countries in the research sector, with a few experts disagreeing based on lack of evidence. Participants emphasized the role of individual researchers in responding to the issues of interference and agreed that any measures taken would have to be taken cautiously in order to respect the principles of independent review.

Participants underlined the importance of international cooperation in research and indicated that only authoritarian states should be considered to be a threat (and not all third countries). It was also agreed on by the participants that transparency could contribute to the awareness and ethics of researchers but not necessarily bring more incidents into light.

c.Focus group with legal experts

This focus group gathered legal professionals and experts, such as lawyers, representatives of law associations and of administrative judges’ associations.

The majority of participants agreed that the issue of interference by third countries in the democratic sphere of the EU should be tackled urgently, as there is evidence of it having an impact on legal professions. In particular, most of them emphasised the importance of setting up transparency requirements on the funding of CSOs and foundations aiming at influencing EU policies.

Finally, participants finally discussed the differences between legal representations of clients and interest representation activities. Many of them consider the distinction achieved in the Transparency Register appropriate.

d.Focus group with commercial entities involved in interest representation

This focus group gathered professionals working for commercial entities involved in interest representation, notably lobbying firms, consultancy companies and representatives of lobbying associations.

Participants all indicated to be registered in the EU Transparency Register, and most of them declared to also incentivise their clients to register, which they all believe is a useful tool. They highlighted the fact that the issue of foreign interference might lie with the entities not registered.

Moreover, participants confirmed that consultancies conduct due diligence before taking on new clients. Participants also agreed that policy-makers should only be allowed to meet with entities registered in the EU TR.

Several participants declared to be in favour of a harmonisation of all Transparency Registers with a single EU-wide number for registrants. They emphasised that the different systems across the EU related to registration and transparency requirements, which are highly distinctive between each market, pose a major challenge to interest representation as an industry.

e.Focus group with members of the European Lobby Registrars Network

This focus group gathered EU members of the European Lobby Registrars Network.

Participants presented the specificities of their national lobby registers, their rules, the actors covered, accompanying codes of conducts, as well as oversight and compliance mechanisms. Participants identified foreign interference as an important topic and expressed the need to tackle it. Finally, they discussed the safeguards and legislative loopholes to be addressed.

f.Focus group with CSOs and non-commercial actors involved in the defence of democracy

The focus group with CSOs and non-commercial actors involved in the defence of democracy was introduced by a member of the cabinet of Commission Reynders, who emphasised the key role of CSOs for the well-functioning of our democracies and introduced the package.

Some participants expressed their concerns that CSOs seem to be considered as a problem, and not a solution to tackle foreign interference and protect the EU democratic sphere. They condemned the presumption of culpability when it comes to relations between institutions and CSOs. The majority of participants declared never to have been confronted with issues of foreign influence. They asked for more support to CSOs, included more funding from the EU.

Participants added that additional transparency measures could be burdensome and difficult to comply with for most CSOs, agreeing that they already must comply with many reporting and transparency requirements. They stated that public officials should follow integrity standards.

g.Focus group with commercial entities involved in cross-border interest representation services

Following a first meeting with professionals involved in interest representation (see point d. above), this second focus group gathered commercial entities involved in interest representation, with the aim to focus on cross-border activities and having to comply with different registration and transparency requirements.

Participants expressed their support for an initiative covering foreign interference, and stated they would welcome common transparency rules, as this would not only facilitate their registrations but also prevent market and reputational issues for companies and clients. They emphasised the challenges of having to comply with different systems and rules across Member States.

h.Focus group with grants beneficiaries of CERV programme working on projects related to the 2024 elections to the European Parliament

This meeting was a second focus group gathering CSOs, with the aim to focus on those receiving funds under the CERV programme and working on projects related to the upcoming elections to the European Parliament.

During this focus group, participants largely considered that the main barriers to turnout in elections to the European Parliament were the lack of information about the EU among the general population, and the lack of participative and deliberative democracy between elections. They argued that actions at the local level and more engagement and support to CSOs would help increasing turnout, inclusiveness and understanding of elections. They highlighted the importance of increasing trust and transparency of decision-making processes at the EU level.

i.Focus group with European Political Parties and Foundations

A focus group was organised with European Political Parties and European Foundations. Most participants said never to have been directly affected by foreign interference, but agreed it was a pressing issue. Some of them, however, declared that any additional measures on political parties would be burdensome, or even counter-productive, as some of their members are parties based in third countries. The question of providing a level playing field in terms of transparency requirements between entities impacting democracy was raised.

On the part related to free, fair and resilient elections, participants agreed there is a general lack of knowledge about citizen’s rights, the elections to the European Parliament and the general functioning of the EU. References were made to the proposed new electoral law, as a means to increase turnout and citizen’s representativeness in elections.

j.Focus group with Local Authorities

This focus group gathered representatives of local authorities.

While some participants agreed foreign interference is a growing problem for local democracies, others said not to have experienced it at the local level. A participant mentioned that a priority for Baltic cities was to ensure resilience of cities and local authorities. Most of participants also expressed concerns on cyberattacks and disinformation.

Participants additionally shared best practices and examples of local democratic processes, such as innovative participatory mechanisms and co-governing processes.

k.Focus groups with Member States

Two Focus groups were organised with Member States, which welcomed the upcoming package, agreeing that foreign interference in democratic processes is a growing issue which needs to be tackled. They recalled the need to respect the principles of subsidiarity, proportionality, fundamental rights and to keep a whole-of-society approach. All Member States consider transparency as a key measure to tackle foreign interference.

On free, fair and resilient elections, Member States discussed the fight against disinformation, asked for more inclusiveness in elections and called for more awareness-raising among citizens.

Discussion with Member States also took place in Council Working Groups and in the framework of the European Cooperation Network on Elections.

4.2.Meetings with stakeholders

The Commission conducted bilateral meetings with a diverse range of stakeholders, including Member States and CSOs, at their own initiative.

The Commission held regular meetings of the European Cooperation Network on Elections (ECNE) as follows: 15th ECNE meeting November 2022, 16th ECNE Meeting January 2023 and 17th ECNE meeting 29th March 2023. At the last meeting, Member States exchanged their views on the package.

On several occasions, the Commission also met with Members of the European Parliament, notably from the INGE committee.

5.Ad hoc contributions

The Commission received 25 written contributions via email outside of the official consultation process. Some of these contributions were made following the different focus groups, while others were sent due to having missed the deadline of the Open Public Consultation.

The Commission received 3 follow-up emails to the focus groups from CSOs, expressing their concern on the way the discussion on the package was framed and asking to avoid any potential stigmatisation of CSOs.

The EU Foundation Sallux provided further input on the status and challenges of European political parties and Foundations.

The Fundamental Rights Agency sent a letter to the Commission to stress the need that the Defence of Democracy package should aim to protect the fundamental rights enshrined in the Charter and called for proportionate measures.

The European Institute for Gender Equality (EIGE) welcomed the Commission’s call for evidence and provided further data on gender equality in the EU in relation to the Defence of Democracy package, notably on gender inequality in elections.

The Public Relations company First PR (based in Poland) sent additional information they gathered on the future of disinformation and the importance to tackle the issue to protect our democracies.

The company The Logically Ltd. shared their written contribution, focusing notably on the impact that online disinformation can have on voter turnout. They called Member States and political parties to step up efforts to promote voter turnout and inclusive participation in elections.

The Society of European Affairs Professionals, recalled its commitment to the highest standards of ethical conduct in public affairs. They reminded the Commission of the benefits of lobbying within the EU decision-making process and that it is a legitimate act of political participation, when done transparently and with integrity. SEAP stated that the impact on public affairs professionals of additional transparency requirements regarding activities conducted for third countries would vary according to the measures envisaged but could be burdensome for smaller actors involved in interest representation, including not-for-profit organisations.

An individual EU citizen sent a note to the Commission asking to take into consideration the outcome of the Conference on the Future of Europe in the drafting of the package.

The European University Association welcomed the package but emphasized the need to carefully balance the instruments, to fully empower civil society as democratic actors, and ensure dialogue. They called the Commission to respect academic freedom and protect it.

The Erfurt University of Applied Sciences also welcomed the initiative and the recognition of civil society as a cornerstone of democracy, but argued there is an urgent need to focus on ensuring long-term funding of CSOs.

Finally, the Commission received position papers from several CSOs 246 , expressing common concern about the potential impacts of the Directive on civic space, fundamental rights and pointed the risk of misuse by malicious actors. They regretted the lack of an impact assessment accompanying the Defence of Democracy package and recalled the need to respect the principles of proportionality and necessity. These position papers generally welcome the inclusion of a recommendation on civic engagement, called for more structured dialogue and collaboration with Civil Society Organisations and for better long-term funding opportunities.

Following the focus groups, 10 Member States (France, Poland, Spain, Finland, Belgium, Lithuania, Slovenia, Romania, Germany, and Ireland) also sent their contributions via email. Member States welcomed the initiative and agreed that tackling foreign interference is a growing issue and that transparency is a key priority at national level. They, however, stressed the importance of respecting fundamental rights, the principles of proportionality, subsidiarity and taking a whole-of-society approach.

Ad hoc bi-laterals between the Commission and interested Member States and their authorities also took place.

6.Specific consultations conducted by contractor

The contractor conducted a specific and extensive consultation, by the means of interviews, targeted at different stakeholder groups. The interview programme originally aimed to consult 35-40 stakeholders across key groups.

This table presents a breakdown of the individual stakeholders contacted (16), as well as the 62 interviews performed across key stakeholder groups.

1.The think tanks / research institutes / CSOs interviewed cover both: i) organisations that conduct advocacy activities and are experts in lobbying transparency / foreign interference; and ii) organisations that are purely included as they conduct advocacy activities.

2.The stakeholders interviewed from trade / business / professional associations, in many cases, also represented specific public affairs / public relations consultancies.

7.Flash Eurobarometer on Citizenship and Democracy (Flash EB 528)

Flash Eurobarometer 528 on Citizenship and Democracy, indicates considerable popular support for several initiatives of the Defence of democracy package. In the following, a brief overview is provided with respect to the findings relevant for the contents of the package.

7.1.On more transparency in interest representation services

About 8 in 10 respondents (81%) agree that foreign interference in our democratic system is a serious problem that should be addressed, and over 7 in 10 (74%) agree that such interference can affect citizens’ voting behaviour. Views are somewhat more divided on the question of whether foreign countries are justified in aiming to influence EU election outcomes to defend their interests: 42% agree that they are justified, while 55% disagree.

Still, there is strong majority support for tackling such covert interference in our democratic systems. About 8 in 10 respondents (81%) agree that entities representing foreign governments should be registered to prevent the problem.

The proportion agreeing that foreign interference in our democratic system is a serious problem holds at over 8 in 10 in all Member States with the exception of the Scandinavian countries, and Hungary and Romania, where it ranges from 69% (in Finland) to 75% (in Sweden). The proportion agreeing that foreign interference can affect citizens’ voting behaviour similarly holds at a majority level in all countries and, indeed, is notably higher than average in Slovakia (80%), Croatia (82%), Slovenia (83%), Sweden (83%) Cyprus (84%) and Czechia (85%).

8.Flash Eurobarometer on Democracy, 2023 (Flash EB 522)

Flash Eurobarometer 522 on Democracy, indicates considerable popular support for several initiatives of the Defence of Democracy package. In the following section, a brief overview is provided with respect to the relevant findings for the contents of the package.

8.1.Overall findings

When asked about their degree of satisfaction with the way democracy works in their country, close to half of respondents reply being ‘very satisfied’ (10%) or ‘somewhat satisfied’ (37%), in contrast to about1 in 2 respondents who reply they are ‘not very satisfied’ (31%) or ‘not at all satisfied’ (20%). A handful of respondents (2%) answer that they ‘don’t know’.

Respondents were asked which institutions or actors they have confidence to defending democracy in their country. The largest share reply that they have confidence in citizens to defend democracy in their country (9% ‘very confident’ and 45% ‘somewhat confident’). More than half of respondents show confidence in EU institutions, including the European Court of Justice (15% ‘very confident’ and 39% ‘somewhat confident’), followed by about half of respondents who trust CSOs to defend democracy (9% ‘very confident’ and 44% ‘somewhat confident’).

Smaller shares of respondents have confidence in national courts (49%), electoral authorities (48%), public administration (46%), in their national (and local) government (44%), in their national (and local) parliament (42%) or in the media (38%). Finally, about 3 in 10 respondents (29%) put confidence in political parties and politicians to defend democracy in their country.

8.2.On more transparency in interest representation services

Respondents were presented with a list of 10 items that may constitute a serious threat to democracy in their country. They were asked to select up to 3 threats. The threat to democracy listed most frequently by respondents is ‘false and/or misleading information in general circulating online and offline’ (38%); this is followed by ‘growing distrust and scepticism towards democratic institutions’ (32%).

Another 4 of the threats are selected by more than1 in 5 respondents: ‘lack of engagement and interest in politics and elections among regular citizens’ (26%), ‘lack of opportunities for citizens to voice their opinions’ (23%), ‘propaganda and false/misleading information from a non-democratic foreign source’ (22%), ‘covert foreign interference in the politics and economy of your country, including through financing of domestic actors’ (21%).

In 22 countries, respondents are most likely to reply that one of the most serious threats to democracy in their country is ‘false and/or misleading information in general circulating online and offline’. The proportion selecting this threat varies between 24% in Bulgaria and 48% in Hungary and Malta.

8.3.On electoral resilience

Respondents were presented with a list of 6 elements associated with free, fair and resilient elections, and they were asked which elements they consider the most important to define free, fair and resilient elections (they could select up to 3 elements).

About 1 in 2 respondents (51%) select ‘voters having access to accurate information to make an informed choice’ as one of the most important elements of free, fair and resilient elections, followed by 47% selecting ‘the electoral administration being independent and impartial’.

Respondents were also presented with a list of 6 elements associated with free, fair and resilient election campaigns, and they were asked which elements they consider the most important to define such campaigns (up to 3 elements could be selected).

The largest shares of respondents select ‘debates and campaigns avoiding hate speech, manipulation and lies’ (46%) and ‘candidates and political parties having equal opportunity to access the media’ (41%). Each time about a third of respondents refer to ‘voters know who finances candidates and political parties’ (35%), ‘voters can engage with candidates and political parties in debate’ (33%) and ‘voters know who finances political advertising and sponsored content and can distinguish between sponsored content and non-paid for political information’ (32%) as important elements of free, fair and resilient electoral campaigns.

9.Additional meetings with stakeholders

On 6 July 2023 a meeting took place at political level with Civil Society Organisations representatives to discuss the ‘Defence of Democracy’ Package in the context of the preparation of an impact assessment and broader consultations.

CSOs highlighted the importance of the continued engagement with civil society and the importance on conducting a thorough IAs in preparation of the proposal. They welcomed the inclusion of strong safeguards, further enquired about the scope and the organisations possibly captured by the instrument.

CSOs flagged the possible risks and issues: the risk to fail to capture the issue as a whole and fall short foreign funded interest representations happening internally to the EU; the risk that other undemocratic regimes would use EU action as a pretext for acting with wrong intentions; possible misuse of the data captured by the envisaged registries; the issue for organisations advocating in repressive regimes for which globally it was difficult to get support and resources.

10.Additional questionnaires

Lastly, the Commission sent out additional questionnaires on potential policy options to Member States authorities, commercial entities and CSOs on 4 August 2023 with a deadline for contribution on 25 September 2023.

The Commission has received 29 replies: 11 replies from CSOs, 15 replies from Member States, and 3 replies from organisations representing the interest representation industry.

10.1.Replies from CSOs

Scope of the transparency measures

Some respondent CSOs took a stance on the issue of the nature of the instrument to be considered in the intervention with 4 out of 11 CSOs considering that the intervention should take the form of a Regulation, 1 of which expressing that a Directive could be misused by Member State. 5 CSOs noted that a Recommendation could encourage Member States to adopt transparency rules, but that it would not be sufficient to solve the issues at hand.

9 CSOs expressed a view that the legislative intervention should cover all types of interest representation activities and not be limited to those carried out on behalf of third countries.

2 CSOs highlighted that focusing on third countries is not sufficient and interferences from EU Member States into CSOs activities should also be covered.

3 CSOs raised the issue of the risk of circumvention through private entities.

3 respondents expressed the need to provide a clear definition of the notion of interest representation.

Registration and transparency requirements

The majority of CSOs expressed that all entities should provide information on the Member States of registration, the Member States where the interest representation takes place, clear information on the actors involved, and clear information on the legislation, policy or initiative of interest.

3 respondent CSOs emphasized the need of balancing the right of access to information with the right to privacy data and personal data.

Most CSOs highlighted the need to assess coherence with other measures, with 3 responses emphasising the EU Transparency Register as a reference point. Some of them expressed that, when it comes to CSOs, registration and disclosure requirements existing at EU and, overall, at national level already provide an adequate framework to increase transparency, with 4 respondents indicating that undertaking a comprehensive comparative analysis of existing requirements is necessary.1 respondent in particular underlined the need for registration requirements not to hinder the freedom of association.

All but 3 respondent CSOs put an emphasis on the issue of avoiding stigmatisation, explaining that registration should not lead to stigmatisation but to normalisation of interest representation, as legitimacy of interest representation does not depend on whose interest is being represented, but on the ethical standards that are applied when carrying out interest representation activities.

The majority of CSOs indicated that a prior authorisation/licence system would risk amounting, in particular if applied to CSOs, to a disproportionate interference on the right to public participation. – 5 of which indicating that such a system would run afoul of international and EU human rights law. However, 1 respondent indicated that it would be useful to create such a requirement, while 3 others did not answer or address the questions related to prior authorisation/licensing.

4 CSOs expressed that it would be disproportionate to create a general requirement to disclose a registration number before meeting EU or Member States officials.

On the information which should be made publicly available in national registers to ensure accountability, 1 contribution suggested to make publicly available an annual budget (income and expenditure) and an annual activity report.

1 CSO proposed that the registration mechanism be user-friendly and easily accessible to anyone, including people with disabilities.

Derogations and safeguards

Most CSOs were of the opinion that entities involved in interest representation activities aiming to influence policy-making should not be exempt from requirement to register. CSOs highlighted that the Commission should put in place safeguards including on the language, enforcement and democratic impact.

4 CSOs highlighted the need to create a minimum threshold for certain types of entities in order to avoid that all CSOs would fall under the obligation to register.

2 respondent CSOs expressed that there should be no exemption for CSOs from the scope of the initiative, while 2 other respondents expressed on the contrary that they should benefit from an exemption (the first exemption proposed was to exclude youth organisations, while the other concerned entities known to bona fide pursue public interest).

1 respondent underlined the need to avoid creating a system of double registration: in one register for interest representation activities in general and in another one for when they are carried out on behalf of third countries.

4 respondents expressed that requirements should rely on a strict risk-based approach in order to avoid discriminatory practices.

2 respondents expressed that there should be no white list or black list of third countries,1 of which stressing that it should especially not be left to Member States to draw up such lists as countries would risk being excluded or included based on political or economic ties with that Member State, thereby creating circumvention risks. However, 1 respondent expressed that as part of a risk-based approach there should still be a distinction between democratic and non-democratic countries.

1 respondent highlighted that principles of transparency and accountability inherent to the right to good administration should be taken into account, and 3 respondents specifically referred to the need to ensure safeguards required by the right to an effective remedy and to a fair trial.

Monitoring and sanctions

7 CSOs welcomed the establishment of an independent oversight body to ensure that the transparency register is regularly and properly monitored. 1 of them suggested that there should be cooperation with the Transparency Register Secretariat managed by the Commission.

2 respondents also suggested that the Commission could facilitate an exchange at EU level among existing supervisory authorities, and provide recommendations as to their independence, fairness, and effectiveness. Only 1 respondent expressed that an EU-level governance mechanism would not be useful.

2 respondents expressed that proportionate administrative sanctions are the most appropriate option to deter misconduct and that a fully harmonised sanction regime should be created at EU level, 1 of which highlighting that a full harmonisation of the enforcement and sanctions is essential to avoid adverse consequences and misuse by Member States. On the contrary, 1 respondent expressed that the Commission should not propose any sanctions regime before having conducted a comprehensive comparative analysis of existing sanctions regimes in Member States.

10.2.Replies from Member States

5 out of 15 Member States expressed the view that it is necessary to put in place harmonised measures enhancing the transparency of interest representation activities seeking to influence decision-making processes. 1 Member State however expressed concern that a regulation that has the effect of a “foreign agent law” or can be understood as such, could cause negative consequences.

5 Member States expressed some reservations as to whether harmonisation at EU level would be the best option.

3 Member States suggested to opt for the first proposed policy option – a non-legislative solution promoting common standards. Transparency recommendations resulting in a combination of various non-legislative solutions promoting common standards would allow Member States to evaluate their current sets of measures and to introduce where necessary additional tailored improvements.

On a potential obligation to obtain prior authorisation/license at EU level to carry out interest representation activities on behalf of third countries, 1 Member State expressed that a prior authorisation scheme does not appear to be the most proportionate solution for achieving the objective pursued, and suggested that a transparency regime based on a reporting regime, coupled with the application of ethical obligations, would appear more appropriate.

Scope of the transparency measures

1 Member State highlighted that complicating the exchange between lobbyists and policy-makers, could discourage interest representations from participating in the political decision-making process. It added that it could therefore negatively impact the participation of civil society.

Member States broadly agreed that society has a fundamental interest to be informed about interest representation activities carried out on behalf of third countries.

1 Member State expressed concerns about specifying at EU level whether and which contacts at the national level are permissible, or whether and to what extent contacts of national parliamentarians or government representatives have to be published.

1 Member State expressed concerns about the measures to introduce binding rules for national transparency registers. It stated that deciding on the degree of transparency for national processes falls within the competence of the Member States.

6 Member States argued that it would be desirable to transparently handle all types of interest representation activities that attempt to influence the formulation or implementation of policies, legislation or public decision-making processes in the EU, and not to focus only on the cases where such activities are carried out on behalf of third countries.

1 Member State expressed that in addition to further national initiatives to promote transparency, measures developed on an EU wide basis would play a crucial role in fostering accountability and trust.

1 Member State expressed that harmonisation of all the measures governing interest representation in the Member States would go far beyond the purpose of the Commission’s initiative and would be difficult to achieve at least in the short term. This Member State added that the establishment of a general regime covering interest representation activities for the benefit of strictly private actors and activities for the benefit of third countries might not be sufficient to effectively regulate the latter type of activity.

1 Member State emphasized that the influence measures which deserve particular attention, and which must therefore be covered as a matter of priority are those involving elected representatives, former elected representatives and certain public officials; with a view to influencing public life. 1 other Member State expressed it was in favour of an obligation for public officials to also provide information on their meetings with entities carrying out interest representation activities.

1 Member State warned that too extensive regulation has its risks from the point of view of democratic values and the rule of law.

1 Member State suggested that new forms of lobbying, such as digital lobbying and lobbying using artificial intelligence should also be covered.

Registration and transparency requirements

7 Member States stated that information on the names and owners of entities should be disclosed, 6 of which stating that the name of the countries from which fundings are received. 1 Member State specified that publication could cover data relating to the identity of the natural person or, in the case of a legal person, its directors, the nature of influence actions carried out, as well as, where applicable, the amount of expenditure incurred in respect of those actions, specifying the foreign power of foreign political organisation for the benefit of which they are carried out.

1 Member State expressed that publication should cover, when talking about natural persons, their nationality, all citizenships they have or have had in the past, business relations with third-country entities, natural and legal persons. When it comes to legal entities, information about the country of registration, its history of changes, implemented projects, partners linked by cooperation ties.

5 Member States expressed that the interlocutors of the meetings with public officials and the numbers of meetings be disclosed. 3 Member States expressed that the topics of discussions and purpose of the activities be disclosed as well. 2 Member States stated that the time and place of the activities should be registered as well.

Member States largely agreed on the need to follow the GDPR principles when publishing personal data.

1 Member State expressed that registration requirements could be analogous to those for lobbyists registration, where such laws exist. In addition, information on connections, affiliated entities, etc, would be required. The information submitted should be crossed checked using specialized tools and databases developed and maintained by Member States.

4 Member States expressed that they were in favour of a prior authorisation/licensing system, while 6 explained that they were against such a system.

1 Member State wrote that it was in favour of an obligation for entities carrying out interest representation activities to provide their registration number before meeting decision-makers.

Derogations and safeguards

1 Member State highlighted that its legislation contains exemptions of the obligation to register.

1 Member State expressed that certain exemptions could be necessary; however, overly generous exemptions could dilute the purpose of the registration requirements. That Member State emphasized that measures addressing interest representation could have an impact on diplomatic relations with third countries. It would be therefore important to provide for some exceptions also at EU level, as otherwise international exchange would be restricted, and could lead to a chilling effect.

1 Member State considered that the exclusion of civil society organisations and SMEs as a matter of principle does not seem desirable, since these entities could serve as any other conduit for influence activities carried out on behalf of foreign powers.

2 Member States highlighted that the legislative proposal must be designed with due regard for fundamental rights. Moreover, the principles of legality, necessity and proportionality must therefore be fully respected.

1 Member State expressed that there should not be any specific exemptions.

4 Member States stated that SMEs should not benefit from specific derogations. 1 of those Member States however distinguished for CSOs, stating that for them a general derogations could apply with regard to protection of fundamental rights, exercise of constitutional rights and sensitive personal data protection.

2 Member State wrote that activities directed at safeguarding or representing the interests of a party or participant in connection with an administrative or judicial procedure should be exempt.

3 Member States explained that diplomatic actors and activities should not be covered.

1 Member State raised the issue that the adoption of a legislative instrument might lead to risks of stigmatisation for certain entities.

2 Member States proposed a system whereby one part of the register can only be accessed by authorities.

Monitoring and sanctions

1 Member State warned that setting up a sanctions regime that restricts activities of actors from third countries in the EU may lead some of these countries to establish reciprocal rules, and this could restrict the work of local civil society organisations in third countries which have so far been supported through European development cooperation and whose active role is very important.

1 Member State expressed that supervisory authorities entrusted with monitoring would not necessarily have to be “completely independent”, but they may also be located in a ministry, and be removed from an undue influence by decision-makers by other measures.

On the obligation to obtain prior authorisation/license at EU level to carry out lobbying activities on behalf of third countries, 1 Member State expressed that a prior authorization scheme does not appear to be the most proportionate solution for achieving the objective pursued, and suggested that a transparency regime based on a reporting regime, coupled with the application of ethical obligations, would appear more appropriate.

1 Member State emphasized that Member States should have autonomy in designating the competent authority for their national register.

2 Member States highlighted that sanction regimes must leave the Member States a wide margin of discretion.

4 Member States advocated for a sanctions regime defined at Member State level, 2 of which mentioning the possibility to establish guidelines to ensure enforcement consistency.

7 Member States expressed that supervisory authorities should be permitted to ask specific information from registered entities, subject to safeguards.

1 Member State expressed that the implementation of monitoring should be entrusted to the institutions responsible for the regulation of lobbying activities and compliance with national security interests.

1 Member State suggested that a network of authorities could serve as a platform for regular exchanges of information and structured cooperation.

3 Member States expressed that non-penal/administrative sanctions should also be considered, varying in accordance with the gravity of the misconduct.

10.3.Replies from organisations representing interest industry

Scope of the transparency requirements

1 out of 3 industry representatives explained that establishing harmonized measures to enhance transparency in interest representation activities conducted on behalf of third countries at EU level is necessary. According to that respondent to define which specific third countries should fall under such measures, it suggests employing a set of criteria: the geopolitical significance of a country, and security and strategic interests.

1 respondent expressed that, at present, commercial interest representation activities carried out on behalf of third countries and seeking to influence the formulation or implementation of policy or legislation or public decision-making processes in the EU are transparent. Another respondent expressed a similar opinion, that its member organisations are also complying with applicable regulatory frameworks.

2 respondents recommended the Commission to take into consideration all forms of interest representation activities and not to harmonise only those performed on behalf of third countries.

1 industry representative highlighted the importance to discern between the public and private sector of the public authorities, the transparency in the exercise of the activity, whether they are elected or named, there must be some limits that allow the necessary confidentiality derived from the protection of privacy.

All 3 industry representatives considered that no specific entity should benefit from exemptions for the scope of transparency requirements, in order to avoid risks of circumvention.

2 respondents expressed that transparency requirements should not lead to stigmatisation such as ‘organisations supported from abroad’ or lead to the creation of ‘special foreign influence register’.

1 respondent expressed that it is in favour of a harmonised transparency register at EU level, and cautions against the risks associated with the creation of a parallel registration system for interest representation activities carried out on behalf of third countries.

1 respondent underlined the challenge of balancing transparency with the need for confidentiality in certain diplomatic matters.

Registration and transparency requirements

All 3 industry representatives favour registration and transparency requirements to be harmonised at EU level but are not in favour of a licensing/prior authorisation mechanism, although 1 expressed it would be in favour of a mandatory registration system.

All 3 industries are in favour of an obligation to provide a registration number before being able to meet public officials. 1 respondent underlined that it would be essential to implement this requirement in a practical and user-friendly manner.

1 industry representative stated that any new harmonised system should base itself on the EU Transparency Register as a model.

1 respondent considered that potential registration requirements could include mandatory registration.

Derogations and safeguards

All 3 industry representatives are not in favour of any specific exemptions for certain entities or of any de minimis threshold.

1 respondent considered that safeguards should encompass a range of measures, including rigorous monitoring and auditing of interest representation activities to verify compliance with transparency requirements, and that regular compliance reviews should be conducted.

Monitoring and sanctions

1 industry representative considered that the Register must be independently considered from a functional and administrative point of view and must depend on an independent body.

All 3 industry representatives expressed that they are in favour of providing supervisory authorities with powers to request additional information from registered entities about the nature of their activities or the veracity of the information in the register (although 1 was not in favour of allowing information requests about contracts above certain thresholds).

1 respondent expressed that it is in favour of administrative sanctions and suggested that sanctions to deter misconduct could include the possibility to be banned from registers and to have their names published. Repetitive misconduct should be taken into account as a criteria in assessing the type and level of sanctions to be applied. Another respondent similarly expressed that a registration ban is an appropriate sanction mechanism. 1 other respondent stated that restricting sanctions to limited administrative measures may be a reasonable approach.

Another respondent underlined that the obligations imposed in the register cannot be enforced without an adequate framework for defining violations and the corresponding penalties for non-compliance.

1 industry representative emphasized the need to appropriately enforce currently existing transparency regimes before considering the creation of new or enhanced transparency and registration requirements.

1 industry representative highlighted the important of the right to due process and the rights of defendants against accusations of bad behaviour, with the possibility of having access to an independent judicial authority to provide redress.

Annex 3: Who is affected and how?

This annex provides in-depth information and estimated cost figures on the stakeholders affected by the initiative. All figures were gathered through the supporting study.

1.Practical implications of the initiative

The following table presents a description of the categories of stakeholders considered by the initiative, with a summary analysis of how they will be affected by the proposed measures.

2.Who is affected?

This section presents an estimated size of the internal market for interest representation activities carried out on behalf of third countries and entities affected by the preferred policy option. Information on the methodology used for this estimation is provided in Annex 4.

Estimates of the number of entities carrying out interest representation activities on behalf of third countries by scenario, EU-27