C-4/95

STÖBER AND PIOSA PEREIRA ν BUNDESANSTALT FÜR ARBEIT

OPINION OF ADVOCATE GENERAL LA PERGOLA delivered on 6 June 1996

1. The questions raised by the Landessozial- 3. In November 1988 Mr Stöber asked the gericht Nordrhein-Westfalen concern the German administrative authorities to take scope ratione personae of Regulation N o into account in calculating the family allow- 1408/71 1 (hereafter 'the Regulation'). More ances due in respect of the two children of specifically the national court asks which of his second marriage — who lived in Ger- the various provisions in Article 1 of the many — the daughter of his first marriage, Regulation should be applied to define a who lived in Ireland with her mother, on the 'self-employed person' for the purpose of grounds that she spent her holidays with her the grant by the German authorities of fam- father and was registered as a German resi- ily allowances in respect of children resident dent. abroad, pursuant to Article 73 of the Regu- lation.

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1988 and as such was liable to contribute to by the federal law on family allowances.' 2 compulsory sickness and old-age insurance As the national court was uncertain, in the schemes. From 1 April 1989 he became self- light of the Community rules, whether that employed and likewise made voluntary con- right could be recognized under Article 73 of tributions to a recognized independent sick- the Regulation, it decided to stay the pro- ness insurance scheme. ceedings and refer to the Court of Justice in both cases before it questions concerning the scope ratione personae of the provisions of the Regulation concerning family allowances.

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Case C-5/95 basis, for one or more of the contin- gencies covered by the branches of a social security scheme for employed or self-employed persons; 'For the purposes of the payment of family allowances in the Federal Republic of Ger- many, is a person who carries on an activity as a self-employed person in the Federal Republic of Germany and as such satisfies ii) any person who is compulsorily the definition of a "self-employed person" insured for one or more of the con- within the meaning of Article l(a)(i) and (iv) tingencies covered by the branches but not the definition contained in the first of social security dealt with in this sub-alternative of the second alternative in Regulation, under a social security Article l(a)(ii) in conjunction with Paragraph scheme for all residents or for the I. C.(b) of Annex I a "self-employed person" whole working population, if such within the meaning of Article 73 of Regu- person: lation (EEC) N o 1408/71.'

The relevant legislation — can be identified as an employed or self-employed person by virtue of the manner in which such scheme is administered or 9. N o w that I have explained the questions financed, or, raised, but before I begin to consider them, I should first outline the relevant legislation:

— failing such criteria, is insured for Article 1(a) of the Regulation: some other contingency specified in Annex I under a scheme for employed or self-employed per- sons, or under a scheme referred 'For the purpose of this Regulation: to in (iii), either compulsorily or on an optional continued basis, or, where no such scheme exists in the Member State concerned, complies with the definition (a) "employed person" and "self-employed given in Annex I; person" mean respectively:

Annex I, paragraph I. C. Article 73 of the Regulation

'If the competent institution for granting family benefits in accordance with Chapter 7 of Title III of the Regulation is a German institution, then within the meaning of 'An employed or self-employed person sub- Article l(a)(ii) of the Regulation: ject to the legislation of a Member State shall be entitled, in respect of the members of his family who are residing in another Member State, to the family benefits provided for by the legislation of the former State, as if they were residing in that State, subject to the (...) provisions of Annex VI.'

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The substance (sickness) for which he is now covered on an optional basis 'under a scheme for employed persons'.

10. The questions before the Court arise The national court argues further that, because, in order to resolve the dispute, the because the plaintiffs have made contribu- national court has to choose between differ- tions to those schemes on an optional basis, ent definitions of self-employed person: they should fall within the scope ratione per- those contained in Article 1(a)(i) and (iv) of sonae of the Regulation as self-employed the Regulation and the one specifically set persons, with the result that the rules laid out in the annex for the purpose of the pay- down in respect of family allowances should ment of family allowances pursuant to be held to apply to them. Article 73 by the competent German institu- tions.

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special rules which prevail over the general were extended in two successive stages to the rule laid down in Article 1(a) of the Regu- self-employed. lation.

16. Having regard to the fact that 'freedom 14. Having argued thus, the national court of movement for persons (...) is not confined describes the implications of applying the to employed persons but also extends to self- latter defining provision to this case. The employed persons in the framework of the plaintiffs are not bound 'to join, or pay con- freedom of establishment and the freedom tributions in respect of, an old-age insurance to supply services,' Regulation (EEC) N o within a scheme for self-employed persons,' 1390/81 extended the provisions of the nor 'to join a scheme within the framework Regulation relating to employed persons so of compulsory pension insurance,' but make as to cover the self-employed. 3 At that time, their own contributions on an optional basis. although clearly motivated by a manifestly Therefore, they do not fall within the defini- 'expansionary' logic, the legislature nonethe- tion of self-employed person as laid down in less laid down a very precise exception in the annex and, as they are thus excluded respect of family allowances. The rules, in from the scope of the Community legisla- fact, provided that the provisions of Article tion, they are entitled to family allowances 73 should not apply to self-employed per- only to the extent permitted by the German sons and thus ensured that family allowances rules applicable to them. could not be exported in their case.

20. As the Court has pointed out, in order 18. The objective of the Regulation was to to satisfy the objectives of the legislation the coordinate the legislation in force in the vari- definition of the term 'worker' must be ous Member States, 'each of which deter- interpreted broadly. 9 This rule of interpreta- mines the conditions for affiliation to the tion is based on the spirit of Regulation various social security schemes.' 6 Individual (EEC) N o 1408/71 and on the objectives of States do not have absolute discretion in this the Treaty, and must be applied vis-à-vis respect but must legislate within the confines employed and self-employed persons of Community law. Thus, Community law alike. 10 To define the term restrictively coordinates, but does not directly harmo- would undermine any attempt to coordinate nize, the various national rules. 7 the various systems and workers would be deprived of adequate protection. Their right to freedom of movement, the ultimate objec- tive of the legislation, would be unjustifiably restricted. 11

19. In accordance with the logic of the Regulation, the definition of the term 'worker' constitutes the 'doorway' to the rights provided for by the Community 21. I, too, agree that the concept of 'self- rules. 8To that end the decisive criterion for employed person' should, in principle, be the application of the Regulation is affiliation interpreted broadly, as described above. to a social security scheme. The various However, I take the view that the logic and the letter of the Community legislation

which must be taken into account preclude the grant of family allowances. The defini- the plaintiffs from claiming the rights in tions set out in Article 1 (a)(ii) are therefore question as self-employed persons falling not applicable to them: nor is that set out in within the category of workers contemplated the first indent of the alternative, nor that in by the general provisions of the Regulation. I the first Glimb of the second indent of the reach this conclusion on the basis of the fol- alternative. lowing observations.

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this criterion is adhered to, the definition of the meaning of the Regulation. 16 In support self-employed person for the purposes of the of its arguments the Commission referred to payment of family allowances cannot, in my the judgment in the Brack case, in which the view, leave the definitions contained in the Court adopted a defining criterion based on annex out of account. It is those provisions, the factor 'risk'. 17 rather than any others, which enable a worker to enjoy his rights to such allow- ances under Community law.

15 — Case 388/87 Warmerdam - Steggerda [1989] ECR 1203. In that case the right of Mrs Warmerdam, a Dutch citizen, to receive unemployment benefit from the competent institu- tion in the Netherlands was under discussion. After initially 16 — See the Commission's arguments in the report for the receiving unemployment benefit in the Netherlands, the hearing in Warmerdam - Steggerda [1989] ECR 1204, II, plaintiff found work in Scotland. Under the United King- section 4. dom system she was insured only against the risk of indus- 17 — Case 17/76 Brack, cited in footnote 13. In that case it fell to trial accident and paid contributions for that purpose. be decided whether a British accountant, afflicted as a self- When she returned to her country of origin she applied to employed person to the British social security system, hav- be registered as unemployed in the Netherlands. The Dutch ing previously paid contributions as an employed person, administrative authorities refused her application on the could be considered a worker within the meaning of Regu- ground that, during her period of employment in the lation N o 1408/71 for the purposes of the application of United Kingdom, she had not been insured against the con- Article 22(1), which lays down rules concerning the reim- sequences of unemployment and therefore could not be bursement of expenses relating to medical treatment considered an employed person within the meaning of received in another Member State. The Court decided that Regulation N o 1408/71 for the purposes of the payment of the claimant had the status of a worker solely on the basis unemployment benefit. The problem was not tackled by of his insurance against the contingency of sickness on the judgment (the national court's first question, specifi- which the case turned. O n the basis of that decision the cally concerning the relationship between the various defi- Commission argued for the need for a selective approach to nitions, was subsumed into the reply given to the second the application of the Regulation based on the specific con- question). tingencies insured against.

28. First, the fact that the special rules of one or more of the contingencies covered by definition — for cases where the institutions the branches of a social security scheme for competent to grant benefits are German — (...) self-employed persons' [definition con- was laid down solely in relation to Article tained in Article l(a)(i)]. l(a)(ii) shows that, according to the logic of the Regulation, those are the rules which, to the exclusion of any other, governs a work- er's right to family benefits, where, as in this case, the national rules contain no criteria for distinguishing between the various categories of worker. The combined effect of the rules 30. As the German Government rightly set out in the Regulation and those contained points out, this means that, through the pro- in the annex, in my view, brings out the fact visions set out in the annex, the legislature that there is a very precise, consequential intended to lay down — exclusively and connection between the type of social secu- exhaustively — the definition of self- rity benefit sought by the worker (in this employed person for the purposes of obtain- case, family allowances) and the criteria ing family allowances from the German which that worker must satisfy in order to administrative authorities. If this is the case, be recognized as being entitled to the benefit. I do not see how it is possible to go along with the proposition put forward by Spain to the effect that, in the light of the objec- tives of the Regulation, it is possible to read the defining provisions together. Secondly, this is also evidenced by the express wording of the last recital in the pre- amble to Regulation N o 1390/81. It states that, in Annex I, the legislature felt it 'neces- sary to stipulate (...) what the terms "employed person" and "self-employed per- 31. The coherence of the legislation must be son", introduced in Regulation (...) N o respected. It cannot reasonably be consid- 1408/71, mean when the person concerned is ered that the intention was to define the insured under a social security scheme which scope ratione personae of the Regulation as applies to all residents'. regards family allowances granted by the competent German authorities and, at the same time, to allow access to that entitlement by another route. That is not all. A different reading of the Regulation would divest 29. This conclusion is confirmed by a sec- national systems of the autonomy allowed to ond sort of consideration, if it is considered them in determining the 'conditions for what criteria were used to define a self- affiliation to national systems.' employed person in the annex. It is useful to note in this connection that a 'person ... bound to join, or pay contributions in respect of, an old-age insurance within a scheme for self-employed persons' (defini- tion contained in the annex) must be consid- ered to be capable of being equated with a 32. My conclusion is not affected by the 'person who is insured compulsorily (...) for Court's judgment in the Kits van Heijningen

case cited by the national court. 1 8I do not basis; conversely, they cannot be considered believe that that judgment can be applied to to be self-employed persons, having regard the present case. Leaving aside the major dif- to the lex specialis set out in the annex, for ferences between that case and the cases the purposes of the grant of family allow- under consideration, I take the view that, ances. 19 when the Court stated that the expression 'employed persons' within the meaning of the Regulation meant any person who was insured under one of the social security schemes referred to in Article 1(a), it was not adopting a position on the question under consideration here. The Court confined itself to establishing the scope of the rule con- tained in Article 2 of the Regulation but did not set out to resolve the problems posed by the defining provisions contained in Article 1(a) in order to say who should be consid- ered to be an employed person within the 33. I have a few remarks to add on two fur- meaning of that provision. The ultimate ther aspects of the cases before the Court. meaning of the Court's position, if it were The first is that the provisions contained in sought to be applied to the present cases, the annex define, for the purposes of obtain- would in my view be that Mr Piosa Pereira ing family allowances, both the concept of and Mr Stöber fall within the definition of employed person and that of self-employed self-employed person within the meaning of person. What the above definitions have in the Regulation only in respect of the benefits common is the reference to cover by a com- for which they are insured on an optional pulsory social security scheme (against unemployment in the case of employed per- sons and old-age insurance or compulsory pension insurance in the case of the self-

The answer to the question was found in the fact that the plain- the solidarity-based community of the Ger- tiff was affiliated to a compulsory insurance scheme, which man social security scheme. meant that it was irrelevant, for the purpose of determining the scope of the Regulation, whether he was actually and effectively working. It was, therefore, on those bases and for those purposes that the Court, in paragraph 9 of its judgment, made it clear that any person insured under one of the social security schemes referred to in Article 1(a) 19 — The same sort of considerations lead me to consider irrel- must be considered to be a self-employed person within the evant the amendment to the German version of the Regu- meaning of the Regulation. N o r can wc ignore the fact that lation pointed to by the referring court, which argues that it the Court's view was reached on the basis of a case which endorses the application on an alternative basis of the vari- did not raise the question of the 'parallelism' between the ous definitions of self-employed person contained in insurance scheme to which the plaintiff was affiliated (gov- Article 1(a). That observation docs not offer any useful erned by the Dutch legislation on family allowances) insight into the definitions contained in the annex or, more and the benefit (family allowances) which the plaintiff was generally, into their position within the internal logic of the

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34. The interpretation I espouse is endorsed by the competent German institutions under by the relevant national legislation from Article 73. Having reached that conclusion, another point of view, too. The German however, we come up against an inescapable Social Security Code (Sixth Volume) makes problem: under the German legislation express provision for a worker to belong to Mr Stöber and Mr Piosa Pereira have been the compulsory scheme on an optional granted the right to family allowances in basis. 20 The exercise of that right would have respect of their children resident in Germany had the effect, as the German Government but not in respect of those resident in other acknowledges in its observations, of bringing Member States. It must be asked whether Mr Stöber and Mr Piosa Pereira within the such different treatment is contrary to Com- scope ratione personae of the provisions of munity law. the Regulation and thereby of granting them rights under Article 73 in respect of children non-resident in Germany. I take the view that this option — of which the two plain- tiffs did not avail themselves as they could have done within the adequate time limits — objectively serves to eliminate the discrepan- cies there may be in the German national system between the treatment of self- employed and employed persons. 36. Under the German legislation on this subject, the Bundeskindergeldgesetz, the payment of family allowances is not depen- dent on the payment of contributions but derives automatically from a person's status as a resident and as a parent irrespective of the occupational status of the worker. As the German Government itself points out in its observations, under the legislation 'the right 35. An initial conclusion can be reached on to family allowances does not depend on the the basis of the various factors considered: existence of compulsory or optional insur- neither the provisions of the legislation nor ance'. its overall aims enable the plaintiffs to be regarded as being 'self-employed persons' within the meaning of the Regulation for the purposes of the grant of family allowances

38. The Court has held that, although in the be brought within the scope of the specific absence of specific Community rules it is for Community legislation either. the Member State to enact the legislation applicable to the workers within its jurisdic- tion, national legislation must not impose even indirect obstacles to the exercise of the freedom of movement of persons: 21 that is 40. Having established that the provisions of to say it must not obstruct workers seeking the Treaty apply to the present cases, let us to make use of that freedom in order to try to define in what terms it should be carry out or extend their activities in another analysed. There are two aspects to consider. Member State. 22 In the first place, the rules in question have to be assessed from the point of view of their compatibility with the principle of non- discrimination enshrined in Article 6 of the Treaty. In our case, that article must be read in conjunction with the provisions of Article 52 of the Treaty relating to freedom of estab- lishment. As the persons concerned are self- employed, it is reference to that article which will prove useful in resolving the dispute. 24 39. O n the basis of these legislative guide- Secondly, it should not be forgotten that lines the Court has held to be incompatible freedom of movement is also a right of citi- with the fundamental principles of Commu- zens of the Union as a result of Article 8a, nity law national legislation which had the which was introduced into the Community effect of imposing financial burdens on legal order by the Maastricht Treaty. Admit- migrant workers in addition to those they tedly, this is a legislative development which already bear in their respective States of ori- occurred after the events of the main pro- gin in order to obtain the same social secu- ceedings and we can only take account of it rity benefits. In the Stanton and Wolf cases, only incidentally in gauging what limits will as in the Kemmler case, the cases before the be imposed on the criterion of residence as a Court concerned self-employed workers and result of this important development of the events prior to the entry into force of Regu- right to freedom of movement within the lation N o 1390/81. 23 That regulation, as we territory of the Union. have seen, extended the provisions of Regu- lation N o 1408/71 to cover self-employed persons. In the absence of specific provisions of Community law, the Court, making direct recourse to the relevant provisions of the Treaty, held that a double financial burden 41. The question — in the terms in which I was essentially unlawful. The same interpre- am putting it and considering it — has not tation should, therefore, hold good for the been directly raised by the national court. I present cases. As we have seen, they cannot am, however, encouraged to tackle it here by the settled case-law of the Court. I refer to the judgments confirming that although it does not have jurisdiction to rule on the 21 — Case 16/78 Choquei [1978] ECR 2293. 22 — Case 107/83 Klopp [1984] ECR 2971, paragraph 19. 23 — Case 143/87 Stanton [1988] ECR 3877; Joined Cases 154/87 and 155/87 Wolf [1988] ECR 3897; Case C-53/95 Kemmler [1996] ECR I - 703, paragraph 9. 24 — Kemmler, cited in the preceding footnote, paragraph 8.

42. There are just a few points still to be made in order to indicate to the national court what material relating to the interpre- tation of Community law is relevant for the purposes of the assessment of the German legislation in this case. 44. It must first be stressed that a 'geo- graphical constraint' for the purposes of obtaining family allowances of the sort embodied in the German legislation is in 43. I shall begin with the provisions of itself likely to have a greater impact on a Article 52 of the Treaty. According to the migrant worker than on a national worker. 30 second paragraph of that article: 'Freedom of This must hold good even where, as in these establishment shall include the right to take cases, on a formal level the same conditions up and pursue activities as self-employed apply to foreign workers as to national persons (...) under the conditions laid down workers under the national legislation. In for its own nationals by the law of the coun- this connection the principle which has con- try where such establishment is effected (...).' sistently informed the decisions of the Court is that of 'substantial' equal treatment of workers. 31 O n the basis of that criterion, the prohibition must extend to 'not only overt The Court has consistently held that this discrimination based on nationality, but all provision is a directly applicable rule of Community law, which Member States are bound to observe. 27 It must be viewed in the 28 — See, to this effect, the second recital in the preamble to more general context of the provisions of the Regulation (EEC) N o 1390/81: 'freedom of movement for persons, which is one of the cornerstones of the Commu- Treaty relating to the free movement of per- nity, is not confined to employed persons but also extends sons, whose aim is to make it easier for to self-employed persons in the framework of the freedom of establishment and the freedom to supply services.' Community citizens to carry out work of 29 — Case 197/84 Steinhauser [1985] ECR 1819, paragraph 16 any nature throughout the territory of the (my emphasis). 30 — As evidence of that different impact it is useful to look at statistics on family allowances broken down according to whether the children are resident in the Federal Republic of Germany or abroad, even though they predate the events in issue (1984). These show that more than 17% of children of 25 — Case C-188/91 Deutsche Shell [1993] ECR I-363, para- citizens of other Member States living in Germany and graph 27. entitled to German family allowances lived abroad, whereas 26 — See, for example, Case C-438/92 Rustica Semences [1994] German citizens whose children lived abroad represented ECR I-3519 and Case C-131/91 K Line Air Service Europe 0.03% of those entitled. These statistics are reproduced in [1992] ECR I-4513. the report for the hearing in Case C-228/88 Bronzino [1990] ECR 531, in particular at 536. 27 — Judgments cited in footnote 23: Stanton, Wolf and Kemmler. 31 — Case 152/73 Sorgiu [1974] ECR 153, paragraph 11.

46. In my view, the German legislation — in providing for different treatment between a worker whose children are resident in Ger- many and one whose children are resident in other Member States — constitutes covert discrimination within the meaning of the aforementioned case-law: that legislation — to use the terminology employed by the Court in its decision in the Stanton case — 45. O n the basis of this reasoning, the Court places Community nationals at a disadvan- has brought within the category of covert tage in their exercise of their right to free- dom of movement. The discriminatory effect cannot be denied. 32 — Case 41/84 Pinna [1986] ECR 1, paragraph 23. 33 — Case C-279/93 Schumacker [1995] ECR 1-225; Case C-321/93 Imbernon Martinez [1995] ECR 1-2821; sec also Case C-228/88 Bronzino [1990] ECR 1-531, paragraph 12. 36 — Pinna, cited above, paragraph 2 of the operative part; 34 — Case C-175/88 Biehl [1990] ECR 1-1779, paragraph 14. Bronzino, cited in footnote 34; Case C-12/89 Gatto [1990] 35 — Opinion in Pinna, cited in footnote 32, section 6 B. ECR 1-557.

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own children. This aim is therefore not, as workers' families were not living in the State such, logically connected in any way with those workers chose to live in: hence the the place of residence of those children, as it inequalities in the system adopted for family might be in the case of social security ben- allowances are unjustified. efits granted in the territory or serving some other purpose, for which that factor might justifiably be taken into account. 37 O n the contrary, on proper reflection, it is when a member of a worker's family is no longer living in the same country as he that the expenses he must incur to maintain them is, presumably, greater. However, it is in pre- cisely that situation that the benefit due to the whole family is unjustifiably limited by the German legislation. The wording of 48. Allow me, finally, a brief observation on Article 73 of the Regulation, moreover, Mr Stöber's position.

. .) 37 — In the case-law of the Court a distinction has been made are, with regard to their State of origin, in a between family allowances according to the extent to which situation which may be assimilated to that of the geographical element is relevant to their function: see Case 313/86 Lenoir [1988] ECR 5391, paragraphs 11 and any other persons enjoying the rights and 16. In that case, the Court held as follows (paragraph 16): 'If the legislation of the Member State by which the pension liberties guaranteed by the Treaty.' 38 More- is payable grants periodical cash benefits to the recipient's over, in general terms, the Court held in family exclusively by reference to the number and, where appropriate, the age of the members of the family, the grant Scholz that 'any Community national who, of such benefits continues to be justified wherever the recipient and his family reside. By contrast, benefits of another kind or subject to other conditions, as in the case, for example, of a benefit intended .to cover certain costs incurred at the beginning of the school year, arc in most cases closely linked with the social environment and there- 38 — Case 115/78 Knoors [1979] ECR 399, paragraph 24, and fore with the place where the persons concerned reside.' Case C-19/92 Kraus [1993] ECR I-1663, paragraph 15.

49. It follows from the foregoing consider- ations that the provisions of Articles 52 and 6 of the Treaty are incompatible with national legislation which makes the grant of 51. Of relevance in this case are the provi- family allowances exclusively conditional on sions of Article 8a, which entitle every citi- the criterion of residence in the Member zen to move and reside freely within the ter- State on the part of the worker's family or ritory of the Member States. It is my view the beneficiary of the allowance. 41 As we that the criterion adopted by the German have seen, such legislation is objectively legislation directly conflicts with that right, likely to have a more significant impact on a as regards both the worker and members of Community worker than on a national his family, since the latter are unduly worker and cannot be justified objectively. restricted in their ability fully to exercise the right they enjoy as citizens of the Union within the meaning of Article 8a. The exer- 39 — Case C-419/92 Scholz [1994] ECR I-505, paragraph 9. cise of that right, — enshrined with the sta- 40 — Most recently, the Opinion of Advocate General Léger tus of a right of citizenship — would directly of 15 February 1996 in Case C-107/94 Asscher [1996] ECR 1-3089 is on the same lines, recognizing as it does the impose economic damage on the family of applicability of the provisions of the Treaty relating to freedom of movement and, in particular, the provisions of the person no longer entitled to family Article 52, to the case of a Dutch national who had moved to Belgium for reasons of work but at the same time had allowances. retained a link for the purposes of work with his State of origin which gave rise to the dispute in connection with which the Court has been asked to give a ruling on Community law (see section 36 of the Opinion). 41 — Bronzino (cited in footnote 33) and Gatto (cited in footnote 42 — Opinion in Case C-214/94 Boukhalfa [1996] ECR 1-2253, 36). section 63.

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