Report for the Hearing in Case C-326/90

I — Facts

A — Relevant Provisions

(a) Community law

1. Title II of Council Regulation (EEC) No 1612/68 of 15 October 1968 on freedom of movement for workers within the Community (OJ, English Special Edition 1968 (II), p. 475) lays down rules concerning employment and equal treatment. In particular, Article 7(2) provides that a worker who is a national of a Member State ‘shall enjoy the same social and tax advantages as national workers’. Article 3(1) of Council Regulation (EEC) No 1408/71 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, as amended and updated by Council Regulation (EEC) No 2001/83 of 2 June 1983 (OJ 1983 L 230, p. 6) provides:

‘Subject to the special provisions of this regulation, persons resident in the territory of one of the Member States to whom this regulation applies shall be subject to the same obligations and enjoy the same benefits under the legislation of any Member State as the nationals of that State.’

(b) National legislation

2. By virtue of Article 1 of the Belgian Law of 1 April 1969 establishing a guaranteed income for old people, as amended by Royal Decree No 417 of 16 July 1986, the grant of that allowance is subject to the requirement that the person concerned should have resided for a period of five years on Belgian territory preceding the date of qualification for the grant or for ten years during his life. That requirement is imposed on all claimants, whatever their nationality. Article 1 of the Royal Decree of 27 March 1987 amending the Law of 7 August 1974 introducing the right to minimum means of subsistence (‘minimex’) imposes the same conditions as to duration of residence. Finally, Article 4 of the Law of 27 February 1987 on allowances for handicapped persons and Article 3 of the Royal Implementing Decree of 6 July 1987 impose the same five year residence requirement on claimants, in addition to Belgian nationality.

B — Background to the dispute

3. Since it considered that the abovementioned national legislation was incompatible with Community law, the Commission decided to send a letter before action under Article 169 of the EEC Treaty to the Belgian Government on 29 September 1988. The Belgian Government answered that letter by a letter of 16 January 1989 from its Permanent Representation to the European Communities in which it claimed, first, that the residence requirement imposed by Belgian law on its own nationals and those of the other Member States alike did not constitute discrimination prohibited by Community law and, secondly, that the problem could be appropriately resolved by the adoption of a Community measure governing the aggregation of periods of residence in the area concerned. The Commission did not find those arguments relevant and decided to deliver a reasoned opinion requesting the Belgian Government to take the necessary measures in order to comply with it within two months. The Belgian Government, which replied to the reasoned opinion by letter of 11 January 1990 from its Permanent Representation, pointed out that even if the Belgian legislation in issue did amount to indirect discrimination there were objective and legitimate reasons justifying discrimination arising from the prior residence condition for the grant of the allowances in question. Furthermore, the Belgian Government referred to the proposals for regulations amending Regulations (EEC) Nos 1612/88 and 1408/71, cited above, with regard to aggregation of periods of residence. The Commission then decided to bring the present action.

II — Written procedure and forms of order sought by the parties

4. The Commission's application was registered at the Court Registry on 23 October 1990. The written procedure followed the normal course. Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry. The Commission claims that the Court should: declare that, by maintaining the requirement of a period of residence on Belgian territory which workers from other Member States subject to Belgian legislation must satisfy in order to qualify for the grant of the allowances for handicapped persons, the guaranteed income for old people and the minimum means of subsistence (minimex), contrary to Article 7(2) of Council Regulation (EEC) No 1612/68 and Article 3 of Council Regulation (EEC) No 1408/71, the Kingdom of Belgium has failed to fulfil its obligations under the EEC Treaty and, in particular, under the abovementioned provisions of Regulation (EEC) No 1612/68 and Regulation (EEC) No 1408/71; order the Kingdom of Belgium to pay the costs.

5. The Belgian Government did not formally seek any orders.

III — Pleas in law and arguments of the parties

6. The Commission considers firstly that, according to the settled case-law of the Court, the allowances at issue in this case may fall within the scope either of the concept of social advantages within the meaning of Article 7(2) of Regulation (EEC) No 1612/68 or of the social security benefits referred to in Article 4 of Regulation (EEC) No 1408/71. According to the Commission, in order to fall within the field of social security covered by Regulation (EEC) No 1408/71, legislation must in any event satisfy, inter alia, the condition of covering one of the risks specified in Article 4(1) of that regulation. The Court has already held that the scope of Regulation (EEC) No 1408/71 includes, in particular, benefits for the handicapped in Belgium (see, in particular, the judgments in Case 187/73 Callemeyn v Belgium [1974] ECR 553 and Case 7/75 Mr and Mrs F. v Belgium [1975] ECR 679) and the guaranteed income for old people in Belgium (see the judgment in Case 1/72 Frìtti v Belgium [1972] ECR 457). In contrast, the Court held in its judgments in Case 249/83 Hoeckx v Openbaar Centrum voor Maatschappelijk Welzijn Kalmthout [1985] ECR 973 and Case 122/84 Scrivner v Centre Public d'Aide Sociale de Chastre [1985] ECR 1027 that the minimex cannot be classified under one of the branches of social security listed in Article 4(1) of Regulation No 1408/71 and therefore does not constitute a social security benefit within the specific meaning of the regulation. This type of allowance has however been regarded as a social advantage within the meaning of Article 7(2) of Regulation No 1612/68. The Commission adds that, as far as concerns the persons covered by the last national provision, the right to equality of treatment with regard to social advantages has been extended by the Court's decisions to the members of the family who have exercised the right to install themselves with the worker, conferred by Article 10(1) of Regulation No 1612/68 (see, for example, the judgment in Case 32/75 Cristini v SNCF [1975] ECR 1085). In any event, according to the Commission, whether the allowances in question are covered by Regulation (EEC) No 1408/71 or by Regulation (EEC) No 1612/68, the relevant national legislation must comply with the equal-treatment rule laid down in Articles 3 and 7(2) of those rwo regulations respectively. According to the settled case-law of the Court, the rule of equal treatment prohibits not only overt discrimination based on nationality but also all covert forms of discrimination which, by applying other distinguishing criteria, in fact achieve the same result. In the present case — continues the Commission — there is obviously disguised discrimination because although the requirement of previous residence in Belgium is applicable irrespective of nationality, its primary or secondary effect is to exclude nationals of other Member States from the benefit of the allowances in question, even if that is not the intended object. The result is different treatment for nationals of the host State as compared with nationals of other Community countries, which amounts to an objective obstacle to the exercise of the right to freedom of movement for workers, a right which for every Community national, constitutes a right which does not allow of any restrictions not objectively and legitimately justified. In the circumstances, according to the Commission, such a residence requirement appears all the more discriminatory because workers — and members of their families — have the right to social advantages laid down in Article 7(2) of Regulation (EEC) No 1612/68 from the moment they arrive on the territory of another Member State and are employed there. From that time on, the provisions of that regulation apply in their entirety and consequently enjoyment of those social advantages may not be deferred in respect of workers exercising free movement and members of their families. The Commission notes that, in its reply to the reasoned opinion, the Belgian Government acknowledges that the legislation at issue might lead to indirect discrimination against nationals of the other Member States. However, the Belgian Government puts forward objective and legitimate reasons to justify that indirect discrimination, namely the need for some attachment to the State granting the benefits, in this case ‘actual’ or ‘normal’ residence, and the need to be able to establish a lack of other resources in the recent past. The Commission notes, in that regard, that the equal-treatment rule contained in Articles 3 of Regulation (EEC) No 1408/71 and 7(2) of Regulation (EEC) No 1612/68 clarifies the principle set forth in Articles 7 and 48(2) of the EEC Treaty, which are directly applicable, and therefore prevail over national law. It follows that any derogation from that rule must be interpreted restrictively. The Commission considers that although like situations may be treated differently if the distinction is objectively justified, the Court has nevertheless refused, within the sphere of application of those two regulations, to allow a breach of the principle of equal treatment to be justified by considerations concerning tax or the encouragement of a rising birth-rate or the territorial nature of social security benefits (see, inter alia, the judgment in Cristini, cited above). The objective nature or otherwise of the distinction in issue must be assessed with respect to the principle of proportionality, widely recognized in Community law, in such a way that the measures enabling the national objective to be attained are the least restrictive from the point of view of Community law. The Commission maintains that, in the case in point, there is covert discrimination without objective justification. The requirement of some connection with the State granting the benefits, such as ‘actual’ or ‘normal’ residence, is a condition contrary to the common objective of Regulations (EEC) No 1408/71 and No 1612/68 which seek to guarantee freedom of movement for workers and members of their families. The Commission considers that in any event the imposition of a prior residence requirement is a disproportionate measure in relation to the intended goal, namely the possibility of monitoring incomes, which could be achieved by other means. It is not impossible for the competent authorities to be in a position to obtain the tax returns of applicants for the benefit, even if they have been in the host State for only a year. Moreover, they could require the submission of tax returns in the state of origin, without precluding collaboration among the countries concerned. To that end, Article 84 of Regulation (EEC) No 1408/71 provides for administrative cooperation with regard to the application of that regulation. The Commission notes that in its judgment in Case C-175/88 Biehl v Administration des Contributions du Grand-Duché de Luxembourg [1990] ECR I-1789, the Court held that the aim of protecting a taxation system could not objectively justify a national provision liable to infringe the principle of equal treatment. The same argument may be applied to the present case, since Community nationals who have worked for more than a year and submitted their tax returns have provided sufficient information for the tax authorities to be able to give a decision with full knowledge of the facts concerning their resources. The Commission points out that in its reply to the reasoned opinion, the Belgian Government claimed that the proposal for amendment of Regulation (EEC) No 1612/68 also provides, in Article 1(3), for the aggregation of periods of residence. In that respect, the Commission considers it apposite to state that its proposal for the amendment of that regulation does not contain any provision for the aggregation of periods of residence. It did however wish to include in Community legislation, by means of a new subparagraph in Article 7, the principle that like situations must be treated alike, laid down over and again in the case-law of the Court. It seems, therefore, clear to the Commission that the amendment proposal, which has not yet been adopted, cannot take precedence over compliance with Community law, as interpreted by the Court. The Commission regards as even less relevant the argument that the proposal for a regulation amending Regulation (EEC) No 1408/71 (OJ 1971 C 240, p. 6) provides for the non-exportation of the benefits in question, in order to cover non-contributory multi-purpose benefits. In its view, in addition to the fact that in so far as that proposal has not been adopted, it does not constitute positive law and must not, accordingly, be relied on, the exportation or otherwise of those benefits is a different problem from that arising in this case, which is merely the finding of breach of the rule of equal treatment set forth in Articles 3 of Regulation (EEC) No 1408/71 and 7(2) of Regulation (EEC) No 1612/68.

7. The Belgian Government states that it has decided to amend the legislation in question with a view to bringing it into line with Community law. To that end, a draft law is in progress which will be communicated to the Commission as soon as it is approved.

G.C. Rodríguez Iglesias

Judge-Rapporteur

1 Language of the case: French.