C-73/99

3. The German pension insurance institu- tions pay half the sickness insurance con- tributions payable by recipients of a Ger- man pension compulsorily affiliated to the statutory sickness insurance scheme in Germany, even if they live in another * Original language: English. Member State; 3 those contributions are 1 — The latest consolidated version is that published as Part I of calculated on the basis of the amount of Annex A to Council Regulation (EC) No 118/97 of 2 December 1996 amending and updating Regulation pension received from the statutory insur- (EEC) No 1408/71 on the application of social security ance scheme. 4The payment towards the schemes to employed persons, to self-employed persons and to members of their families moving within the Community and Regulation (EEC) No 574/72 laying down the proce- dure for implementing Regulation (EEC) No 1408/71, OJ 1997 L 28, p. 1. Although Regulation No 118/97 2 — Paragraph 23. entered into force after the Landesversicherungsanstalt Westfalen had taken the decision contested in the main 3 — SGB V, Paragraph 249 A. proceedings, the relevant provisions are the same. 4 — SGB V, Paragraph 226.

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OPINION OF MR JACOBS — CASE C-73/99

'A pensioner who is entitled to draw pensions under the legislation of two or more Member States, of which one is that 'benefits and pensions means all benefits of the Member State in whose territory he and pensions, including all elements thereof resides and who is entitled to benefits under payable out of public funds, revalorisation the legislation of the latter Member State, increases and supplementary allowances, taking account where appropriate of the subject to the provisions of Title III, as also provisions of Article 18 and Annex VI, lump-sum benefits which may be paid in shall, with the members of his family, receive such benefits from the institution of the place of residence and at the expense 5 — SGB V, Paragraph 255(1). of the institution as though the person 6 — SGB VI, Paragraph 106(1). concerned were a pensioner whose pension

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MOVRIN

was payable solely under the legislation of uncertain whether the refusal to grant the the latter Member State.' subsidy was compatible with Community law, referred to this Court the following question:

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OPINION OF MR JACOBS — CASE C-73/99

10. The essential question is whether the (1)(a)) and old-age benefits (Arti- subsidy is an old-age cash benefit within cle 4(1)(c)). The classification of a benefit the meaning of Article 10(1) of Regulation in a branch of social security is essentially No 1408/71, in which case it will be determined by the characteristics of each payable to Mr Movrin notwithstanding benefit, in particular its purpose and the that he is not resident in Germany. The conditions of its grant. 8 As the Commis- subsidy cannot be within the scope of sion notes, it is clear from the national Article 10(1) unless it falls within the scope legislation that both those factors point to of 'benefits and pensions' defined in Artic- the subsidy's being an element of old-age le 1(t); I will accordingly address that issue pension. The subsidy is granted by the first. pension institutions and is calculated on the basis of the level of sickness insurance contributions, which in turn is based on the pension received. The amount of the sub- sidy accordingly depends on the level of the pension without any discretionary assess- ment by the authorities. Moreover payment of the subsidy is both conditional on entitlement to a pension and payable as of Is the subsidy within Article 1(t)? right to recipients of a pension, again without any discretionary assessment. It is accordingly in the nature of an allowance supplementary to a pension within the meaning of Article 1(t) of the Regulation. 11. In my view, the sickness insurance subsidy, intended to contribute to payment of sickness insurance contributions, is a benefit within the meaning of Article 1(t) of Regulation No 1408/71.

account of the pensioner: its effect is the meaning of Article 1(t) of the Regula- accordingly to supplement the pension in tion, it is clearly an old-age benefit within real terms and it thus falls within the scope the meaning of Article 10(1) thereof. The of Article 1(t). It may be noted that Artic- Court has held that the purpose of that le 1(t) of Regulation No 1408/71 expressly provision is to promote the free movement includes in the definition of 'benefits' of workers by insulating those concerned 'payments made by way of reimbursement from the harmful consequences which of contributions'. Payment of a subsidy might result when they transfer their resi- towards a contribution has the same effect; dence from one Member State to another: indeed the view could equally be taken that the protection given must therefore neces- the sickness-contribution subsidy falls sarily extend to cover benefits which, while within this limb of Article 1(t). Moreover created within the confines of a particular the German Government appeared to scheme, are given effect by increasing the accept at the hearing that the subsidy value of the pension which would other- payable (by way of payment to the pen- wise accrue to the recipient. 9Moreover it sioner) in respect of sickness insurance is clear from that principle not only that the contributions where the pensioner is either person concerned retains the right to voluntarily affiliated or covered by private receive pensions and benefits acquired insurance falls within Article 1(t); I cannot under the legislation of one or more however see any difference of principle Member States even after taking up resi- between that type of subsidy and the dence in another Member State but also subsidy by way of direct payment to the that he may not be prevented from acquir- sickness insurance institute where the pen- ing such a right merely because he does not sioner is compulsorily affiliated to a statu- reside in the territory of the State in which tory scheme. I am accordingly not con- the institution responsible for payment is vinced by the German Government's argu- situated: 10 the objective pursued by Arti- ment. cle 10 is to safeguard not only the payment of benefits acquired but also the acquisition of entitlement to them. 1 1Article 10 there- fore means that a person may not be precluded from acquiring or retaining enti- tlement to the benefits, pensions and allowances referred to in that provision on the sole ground that he does not reside within the territory of the Member State in which the institution responsible for pay- ment is situated. 12 Since, as the Commis- Is the subsidy payable to non-residents? sion points out, Mr Movrin's lack of entitlement to the subsidy is attributable precisely and solely to the fact that he is

15. The LVA Westfalen'simplicit argument that the subsidy is a sickness benefit and hence by virtue of Article 27 of the Reg- 16. The German Government has raised ulation not payable by it is in my view the argument that the Netherlands' treat- misconceived. As noted by Mr Movrin and ment of recipients of pensions from both the Commission, that argument cannot be the Netherlands and another Member State reconciled with the judgment of the Court is contrary to Community law, and in in Aulich. 13 That case concerned the status particular Article 33 of Regulation of a similar allowance towards sickness No 1408/71. Unlawful conduct of that insurance contributions provided for under nature cannot, the German Government the Reichsversicherungsordnung (German continues, give rise to an obligation on the social insurance code). The Court ruled part of Germany to subsidise the resulting that, since the allowance was not granted contributions, at least where, as here, Mr after materialisation of the risk designated Movrin is in fact in a better financial by the person entitled, it could not be position than he would be if he were within the scope of Article 27, which was resident in Germany. limited to sickness (or maternity) benefits after materialisation of the risk insured against. The Court stressed that a distinc- tion must be drawn between insurance contributions and insurance benefits. The allowance at issue was not a benefit paid in 17. The German Government's reasoning is the event of sickness; on the contrary, it was as follows. It asserts that, where a recipient a payment towards contributions to sick- of a German pension resides in another ness insurance, which insurance was a pre- Member State, either the health system of condition for the entitlement to benefits that State will be financed exclusively by payable, in case of sickness, by the sickness tax, as in the United Kingdom, in which insurance institution. Or, in the rather more case no deduction will be made from the elegant formulation of Advocate General pension to cover his sickness insurance so

'The institution of a Member State which is responsible for payment of a pension and which administers legislation providing for deductions from pensions in respect of contributions for sickness and maternity shall be authorised to make such deduc- tions, calculated in accordance with the 18. The Netherlands however is a special legislation concerned, from the pension case, since a pension paid by another payable by such institution, to the extent Member State's statutory pension scheme that the cost of the benefits under Arti- is taken into account in full when calculat- cle 27, 28, 28a, 29, 31 and 32 is to be ing sickness insurance contributions. The borne by an institution of the said Member German Government considers that that is State.' incompatible with Regulation No 1408/71, in particular Article 33. 15 An unlawful measure cannot give rise to a legal obliga- tion on the part of the German institution which pays the pension on the basis of which the contributions are calculated to 20. I cannot see how the Netherlands' pay a subsidy towards those contributions. conduct is contrary to that provision. Such a subsidy is at the very least precluded Article 33(1) seeks to ensure that a pen- in circumstances such as those of the sioner cannot be required, because he present case in which the contribution resides in the territory of a Member State, which the applicant must pay to the to pay compulsory insurance contributions Netherlands sickness insurance institution to cover benefits payable by an institution on the basis of his German pension (5.4%) of another Member State. It accordingly

23. I accordingly conclude that the sickness insurance contribution subsidy is a 'benefit' within the meaning of Article 1(t) of Reg- ulation No 1408/71 and an old-age cash benefit within the meaning of Article 10(1) of the Regulation. It is therefore payable notwithstanding that the putative recipient resides in a Member State other than that 21. In any event, and as the Commission of the paying institution. In the light of.that submitted at the hearing, even if the conclusion, which is sufficient to answer conduct of the Netherlands were, as the referring court's question, I do not alleged, unlawful, that could not override consider that it is necessary to consider the rights conferred on Mr Movrin by Regula- arguments variously raised by Mr Movrin tion No 1408/71; the appropriate course and the Commission concerning Articles 6, would be for the Commission (or Ger- 48 and 51 of the EC Treaty (now, after many) to institute infringement proceed- amendment, Articles 12, 39 and 42 EC), ings. Article 3(1) of Regulation No 1408/71 and Regulation No 1612/68. 19

17 — Case C-140/88 Noij [1991] ECR I-387, paragraphs 11 and 14 of the judgment. 19 — Regulation (EEC) No 1612/68 of the Council of 15 Octo- 18 — Case 275/83 Commission v Belgium [1985] ECR 1097, ber 1968 on freedom of movement for workers within the paragraph 3 of the judgment. Community (OJ, English Special Edition 1968 (II), p. 475).

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MOVRIN

Conclusion

24. For the above reasons the question referred by the Sozialgericht, Münster, should in my opinion be answered as follows: