C-198/90

COMMISSION v NETHERLANDS

O P I N I O N O F M R ADVOCATE GENERAL VAN G E R V E N delivered o n 17 S e p t e m b e r 1991 *

Mr President, (a) a resident; Members of the Court,

1. The Commission seeks a declaration by (b) is not a resident but is subject to income the Court that, by refusing to grant family tax in respect of employment in the allowances to employed persons who have Netherlands.' retired early and reside outside the national territory but in accordance with Articles 73 and 75 of Regulation N o 1408/71' fall under the Netherlands legislation, has failed to fulfil its obligations under the EEC Treaty. It follows from that provision that all residents — that is those who live in the Netherlands (see Article 2 of the Law), irrespective of whether they are employed persons or not, are entitled to family allowances for their dependent children. 2. Central to this case is Article 6(1) of the Non-residents may also claim benefit when Algemene Kinderbijslagwet (General Law they are employed in the Netherlands and on Child Benefit) which provides as follows: are subject there to income tax. Moreover, it is not disputed between the parties that non-residents to whom an old-age pension is payable under Netherlands legislation can also claim family allowances.

'An insured person for the purposes of the provisions of this law is a person who is,

the pensionable age may, depending on the the Member States' employment policy. undertaking or sector in which they were They seek to assist workers approaching employed, receive early retirement benefit. pensionable age to relinquish their jobs in Early retirement benefit, as the Netherlands favour of younger unemployed persons. Government explained, is not provided for These schemes give rise to difficult problems by law but is based on a private of interpretation because they were estab- arrangement between employers and lished only after the entry into force of employees, by way of either a company Regulation N o 1408/71 against the back- scheme or a sectorial scheme. The person ground of the economic crisis of the end of taking early retirement is not an employed the 1970s. person within the meaning of the Ziektewet (Law on Sickness Assurance), the Wet op de Arbeidsongeschiktheidsverzekering (Law on Assurance against Incapacity to Work), the Werkloosheidswet (Law on Unemployment Assurance) and the Ziekenfondswet (Law on Sickness Funds), and is therefore not insured under that legislation and is not Problems arise in particular in regard to the liable to pay contributions. In this provisions of Regulation N o 1408/71 in connection an exception applies in the case relation to family allowances. The regu- of certain persons taking early retirement lation deals with the payment of this benefit with regard to the Ziekenfondswet. expressly in the case of children dependent Compulsory sickness insurance remains on employed persons (Article 73), unem- applicable for the period of early retirement ployed persons (Article 74) and pensioners in regard to employed persons who were (Article 77). In accordance with the relevant already compulsorily insured for sickness provisions family allowances are paid by the before leaving their employment. competent authority of the appointed Member State, irrespective of the Member State in which the worker, the unemployed person or the pensioner, or their children, are residing. An employed person, an unem- ployed person or a pensioner under the relevant provisions cannot therefore be The dispute viewed in a wider context required to comply with a residence requirement as provided for in Article 6 of the General Law on Child Benefit. However, the payment of benefit for children dependent on persons taking early retirement is not expressly provided for in Regulation N o 1408/71. 4. Arrangements similar to the Netherlands scheme for early retirement benefit also exist in other Member States, but those are generally not private schemes but schemes provided for by legislation. As the Court indicated in the Valentini judgment (paragraph 17), 2 these early-retirement schemes were introduced in the context of 5. T h e Commission has for some time endeavoured to close this gap. As early as 1980 it submitted a proposal to the Council 2 — Judgment in Case 171/82 Valenlim v ASSEDIC [1983] ECR2157. for the amendment of Regulation No

1408/71 on that point. 3 That proposal paid more heed to the solution whereby sought to make the provisions of Article 74 persons entitled to an early-retirement of Regulation No 1408/71 on family pension might be assimilated to pensioners allowances applicable to persons taking within the meaning of Article 77 of the early retirement. 4 The proposal was not Regulation. In itself this viewpoint certainly approved by the Council. seems arguable. 5 However, the Commission pointed out that the Court in the abovemen- tioned Valentini judgment established such differences between early retirement benefits and old-age benefits that it is not possible to regard them as analogous for the purposes In bringing this action under Article 169 of of Regulation No 1408/71. the EEC Treaty, the Commission has

Member State. As the Court stated in the Article 73 of the Regulation, or unemployed Lohmann judgment 6 the term 'legislation' persons within the meaning of Article 74 of has the scope defined in Article l(j) of the Regulation, or pensioners within the Regulation N o 1408/71. However, benefits meaning of Article 77 of the Regulation. in respect of early retirement based on contractual arrangements between employers and employees cannot, it is said, be payable pursuant to 'legislation' within the meaning of that provision. None of these solutions is free from difficulty.

Member State. It is not therefore clear whether the v Sociale Verzekeringsbank [1991] ECR I-3757, considered proposal also covered the situation of persons in receipt of that persons who have taken early retirement fall under the early retirement benefits under the Netherlands scheme scope of that directive in the same way as old-age since, according to the Netherlands Government, those pensioners. payments are not provided for by law but are derived from private arrangements between employers and employees 6 — Judgment in Case 129/78 Sociale Verzekeringsbank v (see also paragraph 5 in fine). Lohmann [1979] ECR 853.

'(f) a person to whom the legislation of a Member State ceases to be applicable, without the legislation of another Alleged infringement of Articles 73 and 75 Member State becoming applicable to him in accordance with one of the rules laid down in the aforegoing subpara- graphs or in accordance with one of the exceptions or special provisions laid 7. The Commission bases its application for down in Articles 14 to 17, shall be a declaration that Articles 73 and 75 of subject to the legislation of the Member Regulation N o 1408/71 have been infringed on the following threefold reasoning. 7 — Council Regulation (EEC) N o 2195/91 of 25 June 1991 amending Regulation (EEC) N o 1408/71 on the application of social security schemes to employed iersons, to self-employed persons and to members of their f amilies moving within the Community and amending Regulation (EEC) N o 574/72 laying down the procedure for implementing Regulation (EEC) N o 1408/71 (Official First, it points out that persons who have Journal 1991 L 206, p.2). 8 — Proposal for a Council Regulation (EEC) amending taken early retirement are employed persons Regualtion (EEC) N o 1408/71 on the application of social within the meaning of Article 1(a) of Regu- security schemes to employed persons, self-employed persons and to members of their families moving within lation No 1408/71 and that they fall within the Community, and of Regulation (EEC) No 574/72 laying down the procedure for implementing Regulation (EEC) N o 1408/71 (OJ 1990 C 221, p.3). 9 — Judgment in Case 302/84 Ten WoWer[1986] ECR 1821.

The Commission applies this pronouncement to the fact acknowledged 'Article 13(2)(a) of Regulation N o 1408/71 by the Netherlands Government that must be interpreted as meaning that a persons taking early retirement — in fact worker who ceases to carry on an activity in certain persons taking early the territory of a Member State and who retirement — namely those who before has not gone to work in the territory of leaving their employment were compulsorily another Member State continues to be insured under the sickness assurance legis- subject to the legislation of the Member lation, remained insured pursuant thereto. State in which he was last employed, In so doing, the Commission says that the regardless of the length of time which has Netherlands Government is acknowledging elapsed since the termination of the activity that persons who have opted for early in question and the end of the employment retirement fall under the Netherlands legis- relationship.' lation.

Thus, the Commission evidently proceeded on the basis that persons taking early The Commission finally submits that retirement not resident in the Netherlands, employed persons within the meaning of since they have ceased activities on Regulation N o 1408/71 to whom the Netherlands territory and do not go to Netherlands legislation is applicable are work on the territory of another Member entitled to equal treatment as defined in State, remain subject to Netherlands legis- Article 3 of Regulation No 1408/71, and lation, and in particular to the General Law that in accordance with Article 73 of the on Child Benefit. Regulation they are eligible for family allowances with no need, as is apparent from Article 75 of the Regulation, for them to comply with a residence requirement. In the Reasoned Opinion and in the application the Commission also bases its

Commission's arguments are based on an Article 13(2)(a). In its written pleadings the incorrect interpretation of Regulation N o Commission, moreover, bases itself on a 1408/71. similar interpretation of Article 73 of the Regulation. With reference to the inter- pretation given by the Court to Article 13(2)(a) in the Ten Holder judgment, it It is of course true, and moreover not takes the view that this provision points to disputed by the Netherlands Government, Netherlands legislation as being the legis- that persons who have taken early lation applicable to persons who have taken retirement are employed persons within the early retirement. meaning of Article 1(a) of Regulation N o 1408/71 and that they fall within the personal scope thereof as defined in Article 2 thereof.

Advocate General of the regulation. Mischo in his Opinion delivered on 14 June 1990 in Case C-245/88 Daalmeijerv Bestuur van de Sociale Verzekeringsbank f 1991] ECR 1-555 (particularly paragraphs 12 to 24), Solely employed persons 'subject to the convincingly demonstrated that the Court legislation of a Member State' are contem- did not thereby wish to introduce an plated by Article 73. In view of the structure unlimited affiliation in the country of of the regulation that expression must be employment for persons who have defini- interpreted as meaning the legislation of a tively ceased to be employed.

In and establishment in another Member State, that judgment the Court stressed the link even if for quite a long period, does not between Article 73 and the provision of result in the worker losing his affiliation to Title II applicable in that case, namely the social security system of the Member State in which he works (and intends to 11 — Judgment in Case 104/80 Beeck v BundesanstaltfiirArbeit continue working). [1981] ECR 503.

In its judgments in Cases C-140/88 Noij v (paragraph 21) it is not for the Member Staatssecretaris van Financiën [1991] ECR States to determine 'the extent to which 1-387 (paragraphs 9 and 10) and in Daal- their own legislation or that of another meijer, cited above, (paragraphs 12 and Member State is applicable'. 13), 12 the Court upheld the line taken by Advocate General Mischo and held that

non-resident. In that connection the Court inferred the following (paragraphs 14 to 16) Consequently, the argument which the from the finding that Article 13(2)(d) of Commission seeks to infer from paragraph 2 Regulation N o 1408/71 does not concern of the operative part of the Ten Holder persons who have definitively ceased to be judgment is also erroneous. According to employed : that argument persons who have taken early retirement are subject to the Netherlands General Law on Child Benefit because they are compulsorily insured under the sickness assurance legislation and the Netherlands 'It follows that the residence requirements legislature has thereby acknowledged that laid down for affiliation to the national Netherlands legislation is, in their case as social security scheme may be applied in a well, the applicable legislation under Article case such as this, unlike cases where the

applicable to him. The Court's judgment is, however, applicable only where such desig- nation has occurred which, as already stated, is not so in the case of workers who In that regard it should be borne in mind have definitively ceased employment. The that, as the Court has consistently held, it is fact that the Netherlands legislature for the legislature of each Member State to acknowledged its legislation to be the legis- lay down the conditions creating the right lation indicated by the conflict rule in or the obligation to become affiliated to a Article 13(2)(a) is, moreover, irrelevant social security scheme or to a particular since, as the Court held in Ten Holder branch under such a scheme, which include the conditions governing the cessation of 12 — Judgments in Case C-140/88 Noij v Staatssecretaris van affiliation, provided always that in that Financien [1991] ECR 1-387, and Case C-245/88 Daal- connection there is no discrimination meijer v Bestuur van de Sociale Verzekeringsbank [1991]

I-5813

OPINION OF MR VAN GERVEN — CASE C-I98/90

According to the settled case-law of the Court 13 In line with that judgment, it seems to me that the Netherlands legislature was entitled to resolve to continue to operate the sickness assurance fund in the case of persons who have taken early retirement ' . . . the scope of an action brought under and already prior to their definitive Article 169 of the EEC Treaty is delimited cessation of employment were compulsorily both by the preliminary administrative insured under the sickness assurance legis- procedure provided for by that article and lation, without that leading to their being by the conclusions set out in the application insured under all the other branches of the scheme including, in particular, the General 13 — See in particular the judgment in Case 166/82 Commission v Italy [1984] ECR 459, at paragraph 16.

I - 5814

COMMISSION v NETHERLANDS

14. In the light of all the foregoing, I propose that the Court should dismiss the application and order the Commission to pay the costs.

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