Important legal notice

61999C0073

European Court reports 2000 Page I-05625

Opinion of the Advocate-General

The national legislation

Relevant Community legislation

benefits and pensions means all benefits and pensions, including all elements thereof payable out of public funds, revalorisation increases and supplementary allowances, subject to the provisions of Title III, as also lump-sum benefits which may be paid in lieu of pensions, and payments made by way of reimbursement of contributions.

5. The first sentence of Article 10(1) of Regulation No 1408/71 provides:

Save as otherwise provided in this Regulation invalidity, old-age or survivors' cash benefits, pension for accidents at work or occupational diseases and death grants acquired under the legislation of one or more Member States shall not be subject to any reduction, modification, suspension, withdrawal or confiscation by reason of the fact that the recipient resides in the territory of a Member State other than that in which the institution responsible for payment is situated.

6. Article 27 of Regulation No 1408/71 provides:

A pensioner who is entitled to draw pensions under the legislation of two or more Member States, of which one is that of the Member State in whose territory he resides and who is entitled to benefits under the legislation of the latter Member State, taking account where appropriate of the provisions of Article 18 and Annex VI, shall, with the members of his family, receive such benefits from the institution of the place of residence and at the expense of the institution as though the person concerned were a pensioner whose pension was payable solely under the legislation of the latter Member State.

Facts

Is European Community law infringed where the defendant refuses to grant a subsidy in respect of the cost of Netherlands sickness insurance to the plaintiff, who receives a normal old-age pension from the defendant?

Analysis

10. The essential question is whether the subsidy is an old-age cash benefit within the meaning of Article 10(1) of Regulation No 1408/71, in which case it will be payable to Mr Movrin notwithstanding that he is not resident in Germany. The subsidy cannot be within the scope of Article 10(1) unless it falls within the scope of benefits and pensions defined in Article 1(t); I will accordingly address that issue first.

Is the subsidy within Article 1(t)?

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.

12. The Court has stated on numerous occasions that a benefit may be regarded as a social security benefit in so far as it is granted without any individual and discretionary assessment of personal needs to recipients on the basis of a legally defined position and provided that it concerns one of the risks expressly listed in Article 4(1) of Regulation No 1408/71. That list includes both sickness benefits (Article (1)(a)) and old-age benefits (Article 4(1)(c)). The classification of a benefit in a branch of social security is essentially determined by the characteristics of each benefit, in particular its purpose and the conditions of its grant. As the Commission notes, it is clear from the national legislation that both those factors point to the subsidy's being an element of old-age pension. The subsidy is granted by the 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 subsidy accordingly depends on the level of the pension without any discretionary assessment by the authorities. Moreover payment of the subsidy is both conditional on entitlement to a pension and payable as of 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.

13. The German Government argues that the fact that, at least in the case of a pensioner compulsorily affiliated to the German statutory sickness insurance scheme, the subsidy is paid by the pension insurance institution not to the pensioner but directly to the sickness insurance institution means that it cannot constitute a benefit within the meaning of Article 1(t) of Regulation No 1408/71. As the Commission points out, however, the payment is none the less made for the benefit and account of the pensioner: its effect is accordingly to supplement the pension in real terms and it thus falls within the scope of Article 1(t). It may be noted that Article 1(t) of Regulation No 1408/71 expressly includes in the definition of benefits payments made by way of reimbursement of contributions. Payment of a subsidy towards a contribution has the same effect; indeed the view could equally be taken that the sickness-contribution subsidy falls within this limb of Article 1(t). Moreover the German Government appeared to accept at the hearing that the subsidy payable (by way of payment to the pensioner) in respect of sickness insurance contributions where the pensioner is either voluntarily affiliated or covered by private insurance falls within Article 1(t); I cannot however see any difference of principle between that type of subsidy and the subsidy by way of direct payment to the sickness insurance institute where the pensioner is compulsorily affiliated to a statutory scheme. I am accordingly not convinced by the German Government's argument.

Is the subsidy payable to non-residents?

15. The LVA Westfalen's implicit argument that the subsidy is a sickness benefit and hence by virtue of Article 27 of the Regulation not payable by it is in my view misconceived. As noted by Mr Movrin and the Commission, that argument cannot be reconciled with the judgment of the Court in Aulich. That case concerned the status of a similar allowance towards sickness insurance contributions provided for under the Reichsversicherungsordnung (German social insurance code). The Court ruled that, since the allowance was not granted after materialisation of the risk designated by the person entitled, it could not be within the scope of Article 27, which was limited to sickness (or maternity) benefits after materialisation of the risk insured against. The Court stressed that a distinction must be drawn between insurance contributions and insurance benefits. The allowance at issue was not a benefit paid in the event of sickness; on the contrary, it was a payment towards contributions to sickness insurance, which insurance was a pre-condition for the entitlement to benefits payable, in case of sickness, by the sickness insurance institution. Or, in the rather more elegant formulation of Advocate General Gand in Dekker, an earlier case concerning the same allowance:

There is an inherent contradiction between the concept of contribution and that of benefit; the first is a condition precedent to the creation of a right, the second presupposes the existence of a right.

16. The German Government has raised the argument that the Netherlands' treatment of recipients of pensions from both the Netherlands and another Member State is contrary to Community law, and in particular Article 33 of Regulation No 1408/71. Unlawful conduct of that nature cannot, the German Government continues, give rise to an obligation on the part of Germany to subsidise the resulting contributions, at least where, as here, Mr Movrin is in fact in a better financial position than he would be if he were resident in Germany.

17. The German Government's reasoning is as follows. It asserts that, where a recipient of a German pension resides in another Member State, either the health system of that State will be financed exclusively by tax, as in the United Kingdom, in which case no deduction will be made from the pension to cover his sickness insurance so that the payment of a subsidy would not be justified, or the health system will be essentially financed by contributions. In the latter case, the Member State in question should, when setting the level of contributions, take account only of the pension paid by it; any pension paid by another Member State's statutory pension insurance scheme should be disregarded. According to the German Government's information, all Member States except the Netherlands proceed on that basis. In all those States, therefore, sickness insurance costs do not reflect the German pension received, so that any relief by way of sickness insurance subsidy is irrelevant.

18. The Netherlands however is a special case, since a pension paid by another Member State's statutory pension scheme is taken into account in full when calculating sickness insurance contributions. The German Government considers that that is incompatible with Regulation No 1408/71, in particular Article 33. An unlawful measure cannot give rise to a legal obligation on the part of the German institution which pays the pension on the basis of which the contributions are calculated to pay a subsidy towards those contributions. Such a subsidy is at the very least precluded in circumstances such as those of the present case in which the contribution which the applicant must pay to the Netherlands sickness insurance institution on the basis of his German pension (5.4%) is less than the contribution he would have to pay on the basis of his German pension (7%) if he were resident in Germany and compulsorily affiliated to the German sickness insurance institution. The applicant is thus in a better position than he would be if he were in Germany. Since there is no disadvantage, a sickness insurance subsidy is not objectively justified.

19. Article 33(1) of Regulation No 1408/71 provides:

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 deductions, calculated in accordance with the legislation concerned, from the pension payable by such institution, to the extent that the cost of the benefits under Article 27, 28, 28a, 29, 31 and 32 is to be borne by an institution of the said Member State.

21. In any event, and as the Commission submitted at the hearing, even if the conduct of the Netherlands were, as alleged, unlawful, that could not override rights conferred on Mr Movrin by Regulation No 1408/71; the appropriate course would be for the Commission (or Germany) to institute infringement proceedings.

22. Nor can I see how Mr Movrin's rights under Community social security law could be extinguished by the circumstance that, as alleged, he in fact pays lower overall sickness insurance contributions as a Netherlands resident than he would as a German resident. What is relevant is that denial of the subsidy on the ground that he is resident in the Netherlands puts him in a worse position than he would be in if he were resident in Germany, and that is clearly contrary to the general principle of freedom of movement for workers underpinning the Regulation.

Conclusion

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

A sickness insurance contribution subsidy such as that payable by virtue of Paragraph 249A of the Sozialgesetzbuch Fünftes Buch and Paragraph 106(1) of the Sozialgesetzbuch Sechstes Buch is a benefit within the meaning of Article 1(t) of Regulation (EEC) No 1408/71 of the Council of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community and an old-age cash benefit within the meaning of Article 10(1) of that Regulation. It is therefore payable to the recipient of a German pension who is resident in another Member State where he is compulsorily affiliated to that State's statutory sickness insurance scheme.