C-251/89

OPINION OF MR VAN GERVEN —CASE C-251/89

OPINION OF MR ADVOCATE GENERAL VAN GERVEN delivered on 24 January 1991 *

Mr President, of these cases the national court considers it Members of the Court, necessary for the Court to give an interpre- tation of Articles 77 and 78 of Regulation No 1408/71. It has submitted to the Court a number of questions, which it has divided into four groups. 1. The Sozialgericht Nürnberg (Social Court, Nuremberg, hereinafter referred to as 'the national court') is required to decide a large number of cases brought by persons residing in a Member State other than the Before examining these questions, it seems Federal Republic of Germany against the to me useful to set out the distinguishing Bundesanstalt für Arbeit (Federal Labour features of the rules laid down in Articles 77 Office), the German institution responsible and 78 of Regulation No 1408/71. under the Bundeskindergeldgesetz (Federal Law on Child Allowances) for paying child allowance (Kindergeld). The question at issue in all these cases is whether the German institution is bound to pay to pensioners or orphans residing in another Distinguishing features of the rules laid Member State a 'supplement' (in German, down in Articles 77 and 78 of Regulation 'Unterschiedsbetrag'), equal to the No 1408/71 difference between the amount of benefits covered by Articles 77 and 78 of Regulation No 1408/71 ' which are actually received under the legislation of the Member State of residence and the amount of the child allowance provided for by the Bundeskin- 2. Article 77 of Regulation No 1408/71 dergeldgesetz. contains a number of rules for determining the Member State in accordance with whose legislation benefits for dependent children of pensioners are granted. It is expressly stated that these rules are applicable irrespective of From the large number of cases pending the Member State in whose territory the before it, the national court has chosen ten pensioner or the children are residing. examples ('Pilotfälle' — sample cases) in order to give the Court an overview of the types of cases which arise. In the framework

the benefits are to be granted in accordance Member State. If the amount of family with the legislation of that Member State benefits actually received by the worker in (Article 77(2)(a)). But even in the case in the Member State in which he resides is less which a pensioner draws pensions under the than the amount of the benefits provided for legislation of more than one Member State, by the legislation of the other Member it is still the rule that family allowances are State, he is entitled to a supplement to the in principle awarded in accordance with the benefits from the competent institution of legislation of one Member State. The the latter State equal to the difference following rules governing priority are then between the two amounts.' applicable. First comes the Member State in whose territory the pensioner resides (Article 77(2)(b)(i)). If no right to benefits is acquired under that legislation, in the second place comes the Member State to whose legislation he has been subject for the The Court confirmed this decision in longest period of time (first sentence of Patteri 3and Baldi. 4 Article 77(2)(b)(ii)). If no right to benefit is acquired under the legislation of that Member State either, it is necessary to consider the other Member States concerned, in decreasing order of the lengths of periods of insurance or residence 3. Article 78 of Regulation No 1408/71 completed there (second sentence of Article contains similar rules for determining the 77(2)(b)(ii)). Member State under whose legislation orphans' benefits are to be granted. Once again, orphans' benefits are in principle granted in accordance with the legislation of one Member State only, even in the case in which the deceased parent was subject to the legislation of several Member States. There is, however, one important exception Once again, there is an important exception to this principle whereby family allowances to this principle. In Gravina, 5 the Court are awarded in accordance with the legis- ruled as follows: lation of one Member State only, even if a pensioner draws pensions under the legis- lation of more than one Member State. In Laterza, 2 the Court ruled as follows:

The Court confirmed this decision in D'Amaria 6and Ventura. 7 The national court wishes to establish whether the competent institution of the other Member State (Germany) is required by Article 77 (first situation) or by Article The questions contained in (1) 78 of Regulation No 1408/71 (second situation) to pay a supplement where under the legislation of that State it is a condition of entitlement to benefit that the pensioner 4. The first question contained in (1) and his children or the orphan must reside concerns two different situations. in that State. The Bundeskindergeldgesetz does in fact make the award of child allowance subject to such a residence requirement. 8 The first situation concerns a pensioner subject to the legislation of two Member States because he has worked in both Member States. He has one or more children residing with him. In respect of those children he receives benefits in 5. It is clear from the order for reference accordance with the legislation of the that the national court takes as its starting Member State of residence. He considers, point the abovementioned judgments of the however, that in accordance with the Court in connection with the granting of a abovementioned judgments of the Court he supplement. It considers, however, that is entitled to a supplement to be paid by the these judgments are open to interpretation. competent institution of the other Member It points out in particular that the words 'by State (in this case, Germany). the legislation of the other Member State alone' in the Gravina judgment might provide support for the view that no supplement is payable to orphans and The second situation differs from the first in possibly even to pensioners if they do not so far as it concerns not a pensioner with satisfy all the conditions, including a residence requirement, for qualifying for 6 — Judgment of 24 November 1983 in Case 320/82 Benito benefit, laid down under the legislation of D'Amano v Landesversicberungianstalt Schwaben [1983] ECR3811. 7 — Judgment of 14 December 1988 in Case 269/87 Natalino 8 — See Paragraph 1, subparagraph 1(1) and 2(i), and Ventura v Landesversicberungianstalt Schwaben [1988] ECR Paragraph 2, subparagraph 5, of the Bundeskinder- 6411, paragraph 14. geldgesetz.

Those judgments are based on the idea that 7. This reasoning underlying the right to a Articles 77 and 78 of Regulation supplement may be used to define the scope No 1408/71 must be interpreted in the light of that right. By virtue of the right, the of Article 51 of the EEC Treaty, which pensioner or orphan concerned is entitled to requires the Council to adopt such measures an amount equal to the difference between in the field of social security as are the amount of the benefit which he actually necessary to provide freedom of movement receives in the Member State of residence for workers. As the Court stated in Gravina (first limb of the comparison) and the (paragraph 6), the aim of Article 51 would amount of the benefit which he would have not be achieved received under the legislation of the other Member State (in this case, Germany) if the pensioner or deceased worker had not exercised the right to free movement but 'if, as a result of the exercise of their right had continued to reside in that Member to freedom of movement, workers were to State (second limb of the comparison). lose the social security advantages guaranteed to them, in any event, by the legislation of a single Member State'.

It is clear from the foregoing that the judgments of the Court cannot be inter- Following the same reasoning, the Court preted as meaning that a supplement could stated in its judgment in Rossi (paragraph be refused if the legislation of the Member 14) 9 that, State which must bear the cost of the supplement subjects the payment of family benefits to a residence requirement. In the first place, it may be observed that the right 'The Community rules could not, in the to a supplement has no meaning unless the absence of an express exception consistent beneficiary resides in a Member State other with the aims of the Treaty, be applied in than that which bears the cost of the supplement. For purposes of assessing the 9 — Judgment in Case 100/78 Claudino Rossi v Caisse de Compensation des Allocations Familiales [1979] ECR 831 second limb of the comparison the Court

has, admittedly, acknowledged that the Under Paragraph 583, subparagraph 1, of pensioner and his children or the orphan the Reichsversicherungsordnung (National must satisfy the conditions governing entit- Social Insurance Code) they are entitled, lement to benefit under the legislation of the subject to certain conditions, to a Member State concerned (in this case, supplementary allowance in addition to Germany). In that context, however, the their invalidity pension, known as the persons concerned must be deemed to reside 'Kinderzulage' (hereinafter referred to as in that Member State, which effectively 'child supplement') if they have one or more means that a residence requirement cannot dependent children. This child supplement is be applied to them. It would ultimately be not an independent allowance paid by the incompatible with the express terms of institution responsible for paying child Regulation N o 1408/71 to attribute any benefit. It forms part of the invalidity other interpretation to the judgments of the pension, which is increased by 10% for each Court. Indeed, Article 77(2) of the regu- dependent child. lation provides that pensioners can claim the benefits provided for in that article in respect of their children 'irrespective of the Member State in whose territory the pensioner or the children are residing'. Article 78(2) of the regulation contains a similar provision as regards the orphans' benefits provided for in that article. These must be granted 'irrespective of the Member State in whose territory the orphan or the natural or legal person actually maintaining him is resident'. Paragraph 8 of the Bundeskindergeldgesetz provides that no child allowance — that is to say the child benefit which is in principle payable to all persons with dependent children who reside in the Federal Republic — is to be granted in respect of children for whom child supplement is Consequently, the answer to the first already paid. Nevertheless, a person who question in (1) must be that a supplement is has suffered an accident at work may claim payable even if, under the legislation of the child allowance if the amount of the child Member State responsible for paying the supplement granted is less than the amount supplement, the grant of benefits is subject of the child allowance which he would have to the condition that the pensioner and his received if he was not subject to the rules on children or the orphan reside in the territory invalidity. This situation can arise in of that State. particular in the case of large families because the rules on child allowance, unlike those on child supplement, provide for the allowance per child to increase according to the number of dependent children. 10 In such a situation, a person entitled to an invalidity pension may claim child allowance in 8. In order to understand the second respect of the difference between the question in (1), it is useful to examine the amount of the child supplement which he German rules applicable to persons who actually receives and what he would have have suffered a serious accident at work and who are in receipt of an invalidity pension. 10 — Sec paragraph 10 of the Bundeskindergeldgesetz.

9. Mr Palermo, who is the plaintiff in the No one denies that child supplement must seventh case pending before the national be regarded as a supplement to pensions court and is of Italian nationality, is in the granted under insurance schemes for latter situation, as is apparent from his accidents at work and are therefore outside observations to the Court. In 1978, while he the scope of Article 77 of Regulation was employed in Germany, he suffered a No 1408/71. As I understand it, the serious accident at work. In 1979 he question asked by the national court seeks returned to Italy. He resides there together to establish whether, as an extension of the with his five children, who were born exclusion of child supplement for a person between 1973 and 1982 (and some of whom in receipt of invalidity pension, other were therefore born after his return to benefits for children of the pensioner, and Italy). He is in receipt there of an invalidity therefore partial child supplement as well, pension and a benefit in respect of his are also excluded. children under the Italian legislation. He is also in receipt of an invalidity pension together with child supplement in accordance with the Reichsversicherungs- ordnung. The amount of the child supplement, however, is less than the 11. The exclusion of supplements to amount of child allowance normally pensions granted under insurance schemes payable. Mr Palermo therefore considers for accidents at work and occupational that he is entitled to partial child allowance, diseases is prompted by the fact that these subject to deduction of the (lower) child are allowances for which rules are laid benefit actually paid under the Italian legis- down elsewhere in Regulation No 1408/71 lation. (see Title III, Chapter 4 of Regulation No 1408/71, entitled 'Accidents at Work M — Paragraph 1, point 22, oí the Haushaltsbegleitsgesetz1984 of 22 December 1983 (Bundesgesetzblatt I, p. 1532). and Occupational Diseases').

On the basis of the provisions set out above Mr Palermo is entitled to — and is actually 13. In the questions in (2), the national in receipt o f — a n invalidity pension under court does not indicate the Community the German legislation together with child provision to be interpreted by the Court. supplement for his children who reside in Italy. 12 — Point IV. I (b) of the Declaration published in Official Journal 1980 C 139, p. 1. This Declaration, as amended by the Declaration published in Official Journal 1983 C 351, p. 1, reads as follows: '(b) Children's allowances (in the German version: Kindergeld): Law concerning Children's Allowances (Bundeskindergeldgesetz) of 14 April 1964, with 12. It does not follow from the foregoing amendments and supplements, in the applicable version.' that partial child allowance is also outside 13 — Judgment in Case 35/77 Elisabeth Beerens v Rijksdienst the scope of Article 77 of Regulation No voor Arbeidsvoorziening [1977] ECR 2249.

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From the context, however, it can be effect from June 1979) together with an inferred that the request for interpretation allowance for his children called a 'Kinder- concerns Article 77 of Regulation zuschuss' (hereinafter referred to as 'child No 1408/71 alone. This is the provision grant'). 14 The amount of the child grant, governing the situation of a pensioner with however, is less than the child allowance dependent children, to which these normally payable. Mr Giganti therefore questions relate. considers that he is entitled to partial child allowance, subject to deduction of the (lower) allowance actually paid under Italian legislation for his children.

The second question in (2) is asked in the event that the first is answered in the affirmative. It concerns a situation such as that of Mr Palermo's, in which the pensioner's family increases after his return This is the situation arising in particular in to the Member State of which he is a the case of Mr Giganti, the plaintiff in the national. The national court wishes to fourth case, as is apparent from his obser- establish whether the supplement is then vations to the Court. In 1979, Mr Giganti, payable only for children who were an Italian national who at that time resided in Germany, applied to the competent 14 — Under Paragraph 1262 of the Reichsversicherungs- German institution for an invalidity pension. ordnung, pensioners other than persons who have suffered serious accident at work (to whom the rule in Paragraph In 1980 he returned to Italy. Under the 583 of the Reichsversicherungsordnung is applicable) can Italian legislation he was granted an inva- claim child grant for their children if they were receiving this benefit before 1984- Its status is analogous to that of lidity pension and allowances for his two child supplement (discussed in 8- above). The persons concerned can also claim payment of partial child children. In 1981 the German institution allowance if the amount of child grant granted is less than awarded him an invalidity pension (with the child allowance normally payable.

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dependents before transfer of residence or and 78 of Regulation No 1408/71 whether it is also payable for children born (paragraph 7). thereafter.

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satisfied (for example, because the person is transferred. Mr Laterza was a pensioner concerned had not yet attained pensionable of Italian nationality who had worked in age or some other circumstance specified Belgium as a mine worker. He married and for actual payment had not yet occurred), had children after returning to Italy. Once the right to a pension and with it the right again, this did not prevent the Court from to child allowances is acquired condi- deciding that in such a situation a tionally. This conditional right to benefit is supplement was payable. protected by the Community rules in the same way as the right to benefits already payable on that date. Consequently, a supplement to be paid by a Member State other than the Member State of residence is payable even if the right to a pension does not arise under the legislation of that Member State until after residence has been The questions contained in (3) transferred, as well as for children born after residence is transferred.

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Paragraph 10, subparagraph 2, the child dergeldgesetz if the income of the person allowance for the second and each concerned exceeds a specified amount can following child is progressively reduced, be applied even if the person concerned however, to a basic amount of DM 70 for resides outside Germany and has income the second and DM 140 for each there. If so, it wishes to know how the child subsequent child if the annual income of the allowance must be calculated in so far as it person concerned and his or her spouse depends upon annual income. In particular, exceeds a specified amount by DM 480. it wishes to establish how the net income The specified amount is DM 26 600 for a received in another Member State, that is to married person residing with his or her say after deduction of certain household spouse and DM 19 000 for other persons, expenses within the limits prescribed by tax and these amounts are increased by law, must be quantified and taken into DM 9 200 for each child in respect of account for purposes of the reduction of the whom child allowance is payable to the child allowance. person concerned. 16

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'the anti-overlapping provisions referred to It is not necessary for me to evaluate the by that provision only concern cases where Commission's position since the national a single person is in receipt of more than court assumes in its questions that the one benefit' (paragraph 12). relevant provisions permit a reduction of child allowance on the basis of income received abroad and it is not for the Court to interpret those provisions. Consequently, I understand the questions as meaning that the national court wishes to establish and stated that Article 12 whether Articles 77 and 78 of Regulation No 1408/71 also permit such a reduction and, if so, how this reduction is to be calculated without breaching Community law.

21. The Commission takes the view that the reduction of child allowance provided for by Paragraphs 10 and 11 of the Bundeskin- dergeldgesetz cannot be applied to a person entitled to child allowance who resides in a At the hearing, it was argued on behalf of Member State other than Germany and has some of the plaintiffs in the main income there. This view is based on the proceedings contended that, in order to consideration that these provisions of the avoid difficulties of a practical nature, the Bundeskindergeldgesetz take into account competent German institution would annual income as defined in the German systematically reduce the child allowance Einkommensteuergesetz. To apply these payable to persons residing abroad to the German tax rules to persons residing in basic amount. Paragraph 11, subparagraph 3 other Member States would be tantamount of the Bundeskindergeldgesetz provides for to giving them extra-territorial application. such a reduction, in particular when the tax

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assessment of the annual income to be taken allowance for persons residing in another into account has not yet been made. Member State, the German authorities may apply the reduction provided for in the German rules only on the basis of satis- factory evidence of the income acquired abroad and expenditure incurred there. The German tax provisions to which the Bundes- If this administrative practice is actually kindergeldgesetz refers may then be applied applied, it seems to me to be contrary to the to these facts by analogy. principle of equal treatment laid down by Regulation No 1408/71. The Court has consistently held that this principle

24. On 17 October 1985 the Administrative Commission on Social Security for Migrant 23. Having said that, it is not in my view Workers, provided for in Articles 80 and 81 for the Court to decide how the German of Regulation No 1408/71, adopted rules on reduction of child allowance must Decision No 129 concerning the application be applied to persons residing in another of Articles 77 and 78 of Regulation Member State who have acquired income No 1408/71. 19 This decision contains a there. In view of the principle of equal number of provisions intended, in line with treatment, however, I would like to put the judgments of the Court, to determine forward one point. In calculating the child the cases in which a supplement must be paid and to specify the procedures for the 18 — See in particular the judgment in Case 41/84 Pietro Pinna v Caisse d'Allocations Familiales de la Savoie [1986] ECR 1, paragraph 23. 19 — OJ 1986 C 141, p. 7.

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20 — Judgment in Case 98/80 Giuieppe Romano v Inilitut National d'Anurance Maladie-Invalidité [1981] ECR 1241.

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(b) Article 77 of Regulation No 1408/71 is applicable to a part of the child allowance which, under the Bundeskindergeldgesetz, is payable to a person receiving a pension on account of an accident at work with one or more dependent children.

2. Article 77(2)(b)(i) of Regulation No 1408/71 must be interpreted as meaning that the abovementioned supplement must be paid by the State other than the State of residence

— if the right to a pension did not arise under the legislation of the other Member State until after the transfer of residence;