OPINION OF ADVOCATE GENERAL

WATHELET

delivered on 10 April 2014 ( 1 )

Case C‑4/13

Agentur für Arbeit Krefeld – Familienkasse

v

Susanne Fassbender-Firman

(Request for a preliminary ruling from the Bundesfinanzhof (Germany))

‛Social security — Regulation (EEC) No 1408/71 — Article 76, paragraph 2 — Family benefits — Rules against overlapping — No application for benefits made in the Member State of residence of the members of the family — Whether benefits may be suspended’

I – Introduction

1. The request for a preliminary ruling, lodged at the Court Registry on 2 January 2013 by the Bundesfinanzhof (Germany), concerns the interpretation of Article 76(2) 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, in the version amended and updated by Council Regulation (EC) No 118/97 of 2 December 1996, ( 2 ) as amended by Regulation (EC) No 1992/2006 of the European Parliament and of the Council of 18 December 2006 ( 3 ) (‘Regulation No 1408/71’).

2. This request for a preliminary ruling arose in the course of proceedings between the Agentur für Arbeit Krefeld – Familienkasse (Employment Agency, Krefeld – Family Allowances Office, ‘the Familienkasse’) and Ms Fassbender-Firman, concerning the withdrawal of the award of family allowances with effect from July 2006 and the recovery of family allowances paid between July 2006 and March 2007 (‘the period at issue’).

3. Ms Fassbender-Firman and her husband are entitled to receive family allowances for their son in Germany and Belgium. Under Article 76(1) of Regulation No 1408/71, Belgium, the Member State in which the members of the family reside, has priority of competence as regards the payment of their family benefits, in order to prevent their unjustified overlapping. However, during the period at issue, Ms Fassbender-Firman received family allowances in Germany while her husband neither applied for, nor received family allowances in Belgium.

4. The referring court asks the Court, in particular, whether, and if so in what circumstances, no application for family benefits having been made in the Member State of residence of the members of the family (the Kingdom of Belgium), the competent institution of the other Member State (the Federal Republic of Germany) has discretionary power, under Article 76(2) of Regulation No 1408/71, to suspend, up to the amount provided for by Belgian law, the benefits paid in Germany.

II – Legal framework

A – European Union law

1. Regulation No 1408/71

5. Article 1(u) of Regulation No 1408/71 provides: ‘(i) the term family benefits means all benefits in kind or in cash intended to meet family expenses under the legislation provided for in Article 4(1)(h) ...; (ii) family allowances means periodical cash benefits granted exclusively by reference to the number and, where appropriate, the age of members of the family’.

6. According to Article 4(1)(h) of Regulation No 1408/71, that regulation applies to all legislation relating to the branches of social security concerning family benefits.

7. Article 73 of Regulation No 1408/71, entitled ‘Employed or self-employed persons, the members of whose families reside in a Member State other than the competent State’, provided: ‘An employed or self-employed person subject 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.’

8. Article 76 of Regulation No 1408/71, entitled ‘Rules of priority in cases of overlapping entitlement to family benefits under the legislation of the competent State and under the legislation of the Member State of residence of the members of the family’, in the version applicable to the facts of the case in the main proceedings, provided: ‘1. Where, during the same period, for the same family member and by reason of carrying on an occupation, family benefits are provided for by the legislation of the Member State in whose territory the members of the family are residing, entitlement to the family benefits due in accordance with the legislation of another Member State, if appropriate under Article 73 or 74, shall be suspended up to the amount provided for in the legislation of the first Member State. 2. If an application for benefits is not made in the Member [State] in whose territory the members of the family are residing, the competent institution of the other Member State may apply the provisions of paragraph 1 as if benefits were granted in the first Member State.’

B – The national legal framework in force in Germany during the period at issue

9. Paragraph 65 of the Einkommensteuergesetz (German federal law on income tax) (‘the EStG’), entitled ‘Other child benefits’, provided: ‘1. Family allowances shall not be paid for a child who receives one of the following benefits or who would receive such a benefit if an application to that effect were made: (1) allowances for dependent children provided under statutory accident insurance or financial assistance provided under statutory invalidity–old age insurance; (2) child benefits granted outside Germany and comparable to family allowances or to one of the benefits referred to in point 1; ...’

10. Under Paragraph 4 of the Bundeskindergeldgesetz (German federal law on family allowances for dependent children) (‘the BKGG’), which is entitled ‘Other child benefits’: ‘Family allowances shall not be paid for a child who receives one of the following benefits or who would receive such a benefit if an application to that effect were made: (1) allowances for dependent children provided under statutory accident insurance or financial assistance provided under statutory invalidity–old age insurance; (2) child benefits granted outside Germany and comparable to family allowances or to one of the benefits referred to in point 1; ...’

III – The dispute in the main proceedings and the questions referred for a preliminary ruling

11. Ms Fassbender-Firman, a German national, and her husband, a Belgian national, have a son, born in 1995. Ms Fassbender-Firman is in employment subject to compulsory social security contributions in Germany. Her husband, who had been unemployed, began working for a Belgian temporary employment agency in November 2006. The family, which had been living in Germany, moved to Belgium in June 2006, where they have since resided. Ms Fassbender-Firman continued receiving family allowances in Germany for her child and her husband neither applied for nor received family allowances in Belgium.

12. When the Familienkasse learnt that the family had moved to Belgium, it withdrew the award of family allowances with effect from July 2006 and demanded the repayment of the family allowances paid as from that date and throughout the period at issue. The Familienkasse took the view that, although Ms Fassbender-Firman was entitled, under German legislation, to family allowances during the period at issue, an entitlement to family allowances existed in Belgium too. This amounted, according to the Familienkasse, to EUR 77.05 per month from July to September 2006 and EUR 78.59 per month from October 2006 to March 2007. According to the Familienkasse, pursuant to Articles 76 to 79 of Regulation No 1408/71, the entitlement to German family allowances had to be suspended up to the amount of the Belgian family allowances, and the Familienkasse was to pay only the difference between the respective entitlements in Germany and Belgium. In its view, it was irrelevant, under Article 76(2) of Regulation No 1408/71, that no application for family allowances had been made in Belgium, inasmuch as that provision was specifically intended to prevent the system of competences established by Regulation No 1408/71 being circumvented by an insured person refraining from making an application.

13. The Finanzgericht (Finance Court), before which Ms Fassbender-Firman brought her case, declared the decision of the Familienkasse to withdraw the award and recover the family allowances unlawful. It held that the Familienkasse had failed to exercise the discretion conferred on it by Article 76(2) of Regulation No 1408/71. According to the Finanzgericht, ( 4 ) under Article 76(2) of Regulation No 1408/71, by contrast with Article 76(1) of that regulation, the Familienkasse enjoyed discretion as regards the legal consequence of deducting the unclaimed Belgian family allowances from the German family allowances. In other words, the decision did not fall within the ambit of any circumscribed powers. It also held that, under the first sentence of Paragraph 102 of the Finanzgerichtsordnung (Rules of the Finance Courts), discretionary decisions taken by the administrative authorities were open to only limited judicial review.

14. In the appeal against the judgment of the Finanzgericht which it brought before the referring court, the Familienkasse argues that Article 76(2) of Regulation No 1408/71 does not confer discretion on the administrative authority, for the purposes of German tax law and social law, as regards the assessment of the legal inferences it draws from the facts. It asserts that Article 76(1) of Regulation No 1408/71 contains the basic rule on resolving overlapping entitlements to family benefits.

15. According to the Familienkasse, the implication for the case in the main proceedings is that entitlement to German family allowances must be suspended up to the amount of the family allowances that Ms Fassbender-Firman may claim in the Member State of residence. This means, according to the Familienkasse, that although an entitlement to family benefits exists in principle, the abovementioned suspension must take effect automatically.

16. On that basis, the Familienkasse considers that the word ‘may’, used in Article 76(2) of Regulation No 1408/71, cannot be interpreted as conferring discretion on the administrative authority and that, on the contrary, it simply means that the Member State in which benefits are suspended has to award only its share of the family benefits, even if no application for family benefits is made in the family’s Member State of residence.

17. Ms Fassbender-Firman, on the other hand, considers – like the Finanzgericht – that the deduction of family allowances provided for abroad falls within the discretion of the Familienkasse under Article 76(2) of Regulation No 1408/71.

18. In the view of the referring court, the competent institution of the Member State of employment is accorded discretion by Article 76(2) of Regulation No 1408/71 as to whether or not to apply Article 76(1) of that regulation when no application for benefits has been made in the Member State of residence of the members of the family and, therefore, to suspend, wholly or in part, the entitlement to the family benefits that it has to pay. The referring court submits that it is clear from, inter alia, the drafting history of Article 76(2) of Regulation No 1408/71, that that provision constitutes a special rule addressing the specific case in which no application for benefits is made in the Member State of residence of the family. By inserting paragraph 2 into Article 76 of Regulation No 1408/71, the legislature was specifically responding to the earlier case-law of the Court of Justice, ( 5 ) according to which, when no application is made in the family’s Member State of residence, entitlement to family allowances in the Member State of employment is not to be suspended.

19. The referring court nevertheless points out that, according to German interpretation, the use of the word ‘may’ in a legislative text or regulation does not necessarily imply that the administrative authority is accorded some degree of latitude. The word is used as a synonym for ‘has the power to’ or ‘is entitled to’. The referring court considers that, if Article 76(2) of Regulation No 1408/71 accords the competent institution a discretion as to whether to apply Article 76(1) of the regulation where no application for benefits is made in the Member State of residence of the members of the family, it must then be clarified what discretionary considerations the institution is to apply. It adds that, if Article 76(2) of Regulation No 1408/71 accords the competent institution a discretion, then the question arises of the extent of the power of judicial review.

20. It was in those circumstances that the Bundesfinanzhof decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling: ‘(1) Is Article 76(2) of Regulation No 1408/71 to be interpreted as meaning that the competent institution of the Member State of employment enjoys discretion in applying Article 76(1) of Regulation No 1408/71 where no application for benefits has been made in the Member State of residence of the members of the family? (2) If the first question is answered in the affirmative, on the basis of which discretionary considerations may the institution competent for family benefits in the Member State of employment apply Article 76(1) of Regulation No 1408/71 as if benefits had been awarded in the Member State of residence of the members of the family? (3) If the first question is answered in the affirmative, to what extent is the discretionary decision of the competent institution subject to judicial review?’

IV – The procedure before the Court

21. Written observations have been submitted by the Hellenic Republic and the European Commission. The Court put a written question to the Federal Republic of Germany, which provided a response within the time allowed.

22. A hearing was arranged for 5 March 2014. In addition to a question to the Commission, which was asked to give its answer at the hearing, the parties and the interested parties had been invited to express their position at the hearing on the answers to the questions referred for a preliminary ruling which the Commission had proposed in its written observations. Those inquiries were made in the hope that the hearing might give rise to a number of points for consideration, in anticipation of the attendance of the parties to the main proceedings and the Federal Republic of Germany, which had not submitted written observations.

23. However, because the Commission alone expressed its wish to attend, the hearing was cancelled and the question which had been put to it for an oral reply became a question for a written reply, which was received by the Court on 10 March 2014.

V – Analysis

A – Arguments

1. The first question

24. The Hellenic Republic considers that Article 76(2) of Regulation No 1408/71 must not be interpreted as meaning that the competent institution of the Member State of employment enjoys discretion in applying Article 76(1) of the regulation when no application for benefits has been made in the Member State of residence of the members of the family. According to settled case-law, failing harmonisation at European Union level, it is for the legislation of each Member State to lay down the conditions on which social security benefits are awarded, and also the amount of such benefits and the period for which they are awarded. ( 6 )

25. Therefore, according to the Hellenic Republic, whilst Article 76(2) of Regulation No 1408/71 does not extend ipso jure the prohibition of overlapping in the exercise of the right to family benefits to situations in which no application is made in the Member State of residence of the members of the family, there is nothing in the provision to prevent a Member State of employment from settling the question directly, choosing one legislative option or the other.

26. The Commission submits that the wording of Regulation No 1408/71 and, in particular, the use of the word ‘may’, indicates that Article 76(2) of the regulation is an enabling provision. The fact that the interpretation and application of Article 76 of the regulation make it possible to envisage a number of ‘criteria’ pleads in favour of regarding it as a provision which confers a power on the Member States. The Commission observes that the EU legislature also adopted, in both Article 76(1) of Regulation No 1408/71 and Article 10 of Council Regulation (EEC) No 574/72 of 21 March 1972 laying down the procedure for implementing Regulation 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 (OJ 1972 L 74, p. 1),as amended and updated by Regulation (EC) No 118/97, provisions relating to family benefits which leave no choice to the institutions concerned. The use of the word ‘may’ in Article 76 of Regulation No 1408/71, ought, a contrario, necessarily to signify that the legal consequence provided for is not automatic.

27. Nevertheless, the Commission considers that the entitlement of the affiliated person concerned to family benefits cannot be dependent on any discretionary power of the administrative authorities and that such benefits must be regulated clearly and unambiguously by the legislation of the Member States. It submits that, failing any criteria to guide the administrative authorities, a discretionary decision is not in fact possible. It is neither desirable nor even conceivable that, in the context of family policy, the important matter of family assistance should be left to the discretion of the administrative authorities.

28. On this point, the Commission points out that the Court of Justice has consistently held that a benefit may be regarded as a social security benefit in so far as it is granted, without any individual, discretionary assessment of personal needs, to recipients on the basis of a legally defined position and provided that it relates to one of the risks expressly listed in Article 4(1) of Regulation No 1408/71. If it is necessary to make provision for a benefit in legislation, then the same must apply to any reduction in that benefit, which cannot be left to the discretion of the relevant institution of the Member State concerned.

29. In its reply to the Court’s written question, the Commission stated that it had no precise information about the legislative intention underlying the insertion of Article 76(2) into Regulation No 1408/71. The Commission’s proposal for the amendment of Regulation No 1408/71 which it submitted to the Council of the European Union on 5 February 1988 (COM(88)27 final) did not include the amendment of Article 76, which was adopted by the Council subsequently. The Commission supposes that, by that amendment, the Council meant to react to the settled case-law of the Court, in particular its judgments in Salzano, 191/83, EU:C:1984:343, Ferraioli, 153/84, EU:C:1986:168, and Kracht, C‑117/89, EU:C:1990:279. The Commission did not answer the Court’s query as to whether the legislature had intended to authorise the competent institutions to apply Article 76(1) of Regulation No 1408/71 directly, and merely reiterated, to a large extent, the observations it had made on the second question referred for a preliminary ruling. The Commission went on to say that a binding rule on priority excluding the exercise of any discretion case by case would constitute a disproportionate restriction of the principle of the freedom of movement of workers.

2. The second question

30. The Commission, which alone submitted observations on this question, takes the view that, before the competent institution suspends payment or, as in this case, limits payments to the difference between its higher benefit and the lesser benefit of the Member State of residence, it must ensure that four conditions are fulfilled. First, it must inform the parents, and in particular the parent who falls within its jurisdiction, that he or she is entitled to family benefits in the Member State of residence. Secondly, it must ensure that there is, at least in principle, an entitlement to family benefits in the Member State of residence. Thirdly, it must allow parents who are entitled to benefits a period of time in which to complete the necessary formalities in accordance with the legal provisions of the Member State of residence and, in particular, to make the relevant application. Fourthly, it must be in possession of precise information concerning the conditions of eligibility and the amount of the benefit in the Member State of residence, since, without that information, it would be impossible for it to calculate correctly the difference between the two relevant amounts. Only once all those conditions have been fulfilled and only if there is still no application in the Member State of residence may the competent institution avail itself of the power conferred on it by Article 76(2) of Regulation No 1408/71. According to the Commission, ideally, all the conditions just mentioned should be laid down in the law of the competent Member State.

3. The third question

31. No party has submitted observations on this question.

B – Assessment

1. Preliminary observations on the legislation at issue

32. The questions referred by the national court concern the interpretation of Article 76(2) of Regulation No 1408/71 ( 7 ) and, more specifically, whether that provision confers on the competent institution a discretion as to whether or not to apply the rule against overlapping provided for in Article 76(1) of the regulation when no application for benefits has been made in the Member State of residence of the members of the family.

33. I should point out that Regulation No 1408/71 was replaced by Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems (OJ 2004 L 166, p. 1), which became applicable on 1 May 2010, on which date Regulation No 1408/71 ceased to apply. However, since the material time for the purposes of the main proceedings pre-dates the entry into force of Regulation No 883/2004, Regulation No 1408/71 remains applicable ratione temporis to the dispute. I would also point out that, since paragraph 2 of Article 76 was not incorporated into Regulation No 883/2004, the interpretation sought by the national court will be of only very limited use in the future.

34. The priority rules in the event of overlapping of family benefits are currently laid down in Article 68 of Regulation No 883/2004, paragraph 2 of which provides, in particular, that in the event of overlapping entitlements, family benefits are to be provided in accordance with the legislation designated as having priority and entitlement to family benefits by virtue of other conflicting legislation or legislations is to be suspended up to the amount provided for by the first legislation and a differential supplement provided, if necessary, in respect of the sum which exceeds that amount. Article 68(3) of that regulation provides that, if an application for family benefits is submitted to the competent institution of a Member State whose legislation is applicable, but not by priority right, that institution is to forward the application without delay to the competent institution of the Member State whose legislation is applicable by priority, inform the person concerned and provide, if necessary, the differential supplement mentioned in paragraph 2. Furthermore, the competent institution of the Member State whose legislation is applicable by priority is to deal with this application as though the latter had been submitted to it direct, and the date on which the application was submitted to the first institution is to be considered as the date of the application to the institution having priority.

35. Before answering the questions asked by the national court, I think it would be helpful to review the relevant provisions of Regulation No 1408/71 applicable to the fact of the case in the main proceedings.

2. The provisions applicable to the present case

36. Pursuant to Article 13(2)(a) of Regulation No 1408/71, a person who, like Ms Fassbender-Firman, is employed in the territory of one Member State (in this case, the Federal Republic of Germany) is subject to the legislation of that State even if he or she resides in the territory of another Member State ( 8 ) (in this case, the Kingdom of Belgium). Ms Fassbender-Firman was therefore subject to the provisions of German law for the purposes of social security. Under Article 73 of Regulation No 1408/71, a worker subject to the legislation of a Member State is entitled, in respect of the members of his or her family who are residing in another Member State, to the family benefits provided for by the legislation of the first Member State as if they were residing in the territory of the first State. ( 9 ) It follows that Ms Fassbender-Firman was entitled to German family benefits for her son during the period at issue.

37. In addition, during the period at issue and in respect of the same child, Ms Fassbender-Firman’s husband fulfilled the conditions for the award of family benefits under Belgian legislation on the basis of his status as an unemployed person insured abroad and his subsequent Belgian employment.

38. As its heading indicates, Article 76 of Regulation No 1408/71 contains ‘[r]ules [on] priority in cases of overlapping entitlement to family benefits under the legislation of the competent State and under the legislation of the Member State of residence of the members of the family’. It is clear from the terms of that provision that it addresses overlapping between, on the one hand, for example, entitlement to family benefits under Article 73 of that regulation and, on the other, national legislation of the State of residence of family members conferring entitlement to family benefits by reason of the carrying on of an occupation. ( 10 )

39. Because the parallel application of the German and Belgian social security legislation in question in the case in the main proceedings could have resulted in the overlapping of entitlements to family benefits, and thus to overcompensation of family expenses, ( 11 ) given that Ms Fassbender-Firman and her husband were entitled to family benefits by reason of their respective occupations in Germany and Belgium, their entitlements to family benefits must be considered in the light of the provisions against overlapping laid down in Article 76 of Regulation No 1408/71.

40. Pursuant to paragraph 1 of Article 76, the fact that Ms Fassbender-Firman’s husband carries on an occupation in the Member State of residence of the members of the family gives rise, in principle, to the suspension of the entitlement to family benefits provided for by German law up to the amount of the family benefits provided for under Belgian law. ( 12 ) Indeed, the Kingdom of Belgium has priority of competence in the payment of the family benefits in question and the Federal Republic of Germany must, if appropriate, pay a differential supplement.

41. Nevertheless, it is important to bear in mind that, in the case in the main proceedings, Ms Fassbinder-Firman’s husband had neither made an application for family benefits in Belgium during the period at issue nor received any such benefits. The reasons for that omission have not been communicated to the Court. Nor does the Court know whether Belgian benefits for the period at issue would still be payable to Ms Fassbender-Firman’s husband were he to make an application, or whether a late application would be time-barred. The dearth of information in the present case has been accentuated, not to say aggravated, by the fact that neither the Familienkasse nor Ms Fassbender-Firman, or indeed the Federal Republic of Germany or the Kingdom of Belgium, has submitted written observations or expressed a wish to attend the hearing fixed by the Court. That lack of interest on the part of the parties to the main proceedings and the Federal Republic of Germany may be connected with the amount of time that has elapsed since the relevant facts in the case in the main proceedings, which occurred in 2006 and 2007, with the very small sums at issue and with the fact that the provision in question, of which the national court seeks interpretation, ceased to be in force on 1 May 2010 and was not laid down again in Regulation No 883/2004.

3. Interpretation of Article 76 of Regulation No 1408/71

42. It is clear from settled case-law on the application of Article 76(1) of Regulation No 1408/71 that, if it is to be possible for family benefits to be regarded as being payable under the legislation of a Member State, the law of that State must recognise the right to the payment of benefits in favour of the member of the family who works in that State. It is therefore necessary for the person concerned to fulfil all the conditions, as to both form and substance, imposed by the internal legislation of that State in order to be able to exercise that right, which may in some cases include the condition that a prior application must have been made for the payment of such benefits. ( 13 )

43. In the case giving rise to the judgment in Ragazzoni (134/77, EU:C:1978:88) the Court explained that Article 76(1) was an exception to the principle laid down by Article 73 of the regulation and that it was intended only to restrict the possibility of overlapping benefits. ( 14 ) The suspension of entitlement to family benefits payable in the Member State of employment was thus only required where there was an actual overlap with family benefits in the Member State of residence of the members of the family, which presupposed that the latter had actually been received and therefore applied for in that State. ( 15 )

44. It follows that, according to Article 76(1) of Regulation No 1408/71, as interpreted by the Court, Ms Fassbender-Firman’s entitlement to family benefits in Germany, under Article 73 of the regulation, ought not to be suspended because no family benefits were received ( 16 ) in Belgium, the Member State of residence of the members of the family, no application having been made there. ( 17 )

45. Does paragraph 2 of Article 76 of Regulation No 1408/71, inserted by Regulation No 3427/89, alter that conclusion?

46. According to the wording of Article 76(2), where an application for benefits has not been made in the Member States in whose territory the members of the family are residing, ‘the competent institution’ of the other Member State ‘may’ apply the provisions of Article 76(1) of Regulation No 1408/71, and thus suspend entitlement to the family allowances payable in the latter Member State up to the amount provided for under the law of the Member State of residence of the members of the family, as if benefits had been granted in the first Member State.

47. Contrary to the arguments raised by the Familienkasse before the referring court, I consider that the use of the word ‘may’ in that provision clearly indicates that the suspension of entitlement to family benefits payable in the Member State of employment is not mandatory. Accordingly, Article 76(2) of Regulation No 1408/71 authorises, but does not require, such suspension.

48. It is unequivocally clear from the wording of Article 76(2) of Regulation No 1408/71 that that provision acknowledges the possibility of such a suspension even when there is no actual overlapping of benefits.

49. That provision therefore renders it permissible for a migrant worker or those claiming under him to be deprived of benefits awarded by virtue of the legislation of a Member State, with the consequence that he or they will receive an amount of family benefits less than that provided for by the legislation both of the Member State of employment and of the Member State of residence of the members of the family. ( 18 ) A derogation of that kind must, in my opinion, be interpreted strictly and, accordingly, may not be mandatory.

50. At this juncture, it is necessary to examine who may exercise this option and under what conditions. I consider that those questions are connected and must be analysed in light of the settled case-law according to which a social security benefit within the meaning of Regulation No 1408/71 must be awarded to recipients without any individual and discretionary assessment of personal needs, on the basis of a legally defined position and relating to one of the risks expressly listed in Article 4(1) of Regulation No 1408/71. ( 19 )

51. The requirement that family benefits must be awarded on the basis of a legally defined situation implies that the conditions governing not only their award, but also, if necessary, their suspension, must be laid down in the legislation of the competent Member State and in particular, in the case before us, the Member State of employment. I would point out in this connection that Article 1(j) of Regulation No 1408/71 provides that ‘legislation means in respect of each Member State statutes, regulations and other provisions and all other implementing measures, present or future, relating to the branches and schemes of social security covered by Article 4 (1) ...’.

52. Consequently, as the national court and the Commission have observed in this case, Article 76(2) of Regulation No 1408/71 constitutes, in EU law, an enabling provision. It enables ‘the Member State of employment’ ( 20 ) to make provision in its legislation for the suspension by the competent institution of entitlement to family benefits where no application for obtaining those benefits has been made in the Member State of residence of the members of the family. It follows that the competent institution of the Member State of employment may apply Article 76(1) of Regulation No 1408/71 where no application for benefits has been made in the Member State of residence of the members of the family only if the legislation of the Member State of employment expressly and unequivocally provides that it may do so.

53. Indeed, it is only provisions of that kind that can ensure that the public is provided with at least a minimum of information. As the Commission rightly points out, the entitlement of the persons concerned to family benefits may not be dependent on any discretionary power of the competent institution.

54. It is a requirement of the principles of legal certainty and transparency that migrant workers or those claiming under them should have the benefit of a clear, precise legal situation enabling them to ascertain not only the full extent of their rights but also, where necessary, the limitations of those rights. ( 21 )

4. The national legislation at issue

55. It is appropriate to examine briefly whether national provisions, such as Paragraph 65 of the EStG and Paragraph 4 of the BKGG, satisfy the conditions of the enabling provision laid down in paragraph 2 of Article 76 of Regulation No 1408/71.

56. The Federal Republic of Germany observes, in substance, that, in the case giving rise to the judgment in Hudzinski and Wawrzyniak, C‑611/10 and C‑612/10, EU: C: 2012:339, Paragraph 65 of the EStG and Paragraph 4 of the BKGG were interpreted and applied consistently with EU law. Suspension is clearly provided for, as is the payment of any difference between lesser foreign family benefits and higher national family allowances. This Member State maintains that the competent institution has no discretion in this regard.

57. Subject to verification by the national court, I believe it is apparent from the documents before the court that provisions such as Paragraph 65 of the EStG and Paragraph 4 of the BKGG meet the criteria of legal certainty and transparency laid down by EU law for the exercise of the option provided for by Article 76(2) of Regulation No 1408/71 and ensure that any differential supplement will be paid. ( 22 )

5. Whether there are any additional conditions for suspension

58. It is necessary for me to reconsider the Commission’s observations regarding the conditions which, it submits, must be fulfilled before family benefits may be suspended in accordance with Article 76(2) of Regulation No 1408/71. ( 23 )

59. In my opinion, the conditions described by the Commission in great detail are, to some extent, inspired by the terms of Article 68(3) of Regulation No 883/2004 ( 24 ) which are intended to safeguard entitlement to family benefits payable in the Member State whose legislation is applicable by priority where an application for such benefits is made to the competent institution whose legislation is not applicable by priority.

60. It must be observed that it is clear that those precise conditions proposed by the Commission do not appear in the text of Article 76(2) of Regulation No 1408/71 and cannot retroactively limit the enabling force of that provision.

61. In conclusion, I am of the opinion that the competent institution enjoys no discretion as regards its decision whether or not to suspend family benefits pursuant to Article 76(2) of Regulation No 1408/71. That provision authorises the Member State of employment to make provision in its legislation for the suspension by the competent institution of entitlement to family benefits where no application for obtaining those benefits has been made in the Member State of residence of the members of the family. The legislation of the Member State of employment must circumscribe clearly the use that may be made of that option. I consider that an assessment ‘case by case’, proposed by the Commission in its written reply to the question put to it by the Court, ( 25 ) not only stands in contradiction with its earlier written submissions on the competent authority’s lack of any discretionary power in the matter, ( 26 ) but also conflicts with the very notion of social security benefit within the meaning of Regulation No 1408/71. ( 27 )

62. In light of the foregoing and, in particular, the competent authority’s lack of any discretionary power in the matter, I consider that there is no need to answer the second and third questions referred by the national court.

VI – Conclusion

63. In light of all the foregoing considerations, I propose that the Court give the following answer to the Bundesfinanzhof: The competent institution enjoys no discretion as regards its decision whether or not to suspend family benefits pursuant to Article 76(2) 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, in the version amended and updated by Council Regulation (EC) No 118/97 of 2 December 1996, as amended by Regulation (EC) No 1992/2006 of the European Parliament and of the Council of 18 December 2006. That provision authorises the Member State of employment to make provision in its legislation for the suspension by the competent institution of entitlement to family benefits where no application for obtaining those benefits has been made in the Member State of residence of the members of the family. The legislation of the Member State of employment must circumscribe clearly the use that may be made of that option.

( 1 ) Original language: French.

( 2 ) OJ 1997 L 28, p. 1.

( 3 ) OJ 2006 L 392, p. 1.

( 4 ) And contrary to the view espoused by the Familienkasse.

( 5 ) Salzano, 191/83, EU:C:1984:343, Ferraioli, 153/84, EU:C:1986:168, and Kracht, C‑117/89, EU:C:1990:279.

( 6 ) Klöppel, C‑507/06, EU:C:2008:110, paragraph 16, and Xhymshiti, C‑247/09, EU:C:2010:698, paragraph 43.

( 7 ) This provision was inserted by Council Regulation (EEC) No 3427/89 of 30 October 1989 amending Regulation (EEC) No 1408/71 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 Regulation No 574/72 (OJ 1989 L 331, p. 1) and became applicable on 1 May 1990. The purpose of the provision was not explained in the recitals of the preamble to Regulation No 3427/89. Moreover, the insertion of the provision in question by Regulation No 3427/89 was not provided for in the Proposal for a Regulation amending Regulation No 1408/71 and Regulation No 574/72 (COM(88)27 final) submitted by the Commission to the Council on 5 February 1988. (see point 29 above). I would also point out that Decision 91/425/EEC of 10 October 1990, Decision No 147 concerning the application of Article 76 of Regulation (EEC) No 1408/71 (OJ 1990 L 235, p. 21) from the Administrative Commission of the European Communities on Social Security for Migrant Workers, which defines, inter alia, the procedure on implementing Article 76 with regard to the information to be provided by the institution of the place of residence to the competent institution for the purposes of the suspension of benefits under Article 76(2), with regard to the comparison between the amounts provided for by the two legislations concerned and with regard to the determination of the differential supplement that may have to be paid by the competent institution, equally fails to explain the purpose of the provision in question.

( 8 ) Bosmann, C‑352/06, EU:C:2008:290, paragraph 17.

( 9 ) See, inter alia, Dodl and Oberhollenzer, C‑543/03, EU:C:2005:364, paragraph 45, Weide, C‑153/03, EU:C:2005:428, paragraph 20, and .Slanina, C‑363/08, EU:C:2009:732, paragraph 21.

( 10 ) Schwemmer, C‑16/09, EU:C:2010:605, paragraph 45.

( 11 ) See, to that effect, Dodl and Oberhollenzer, EU:C:2005:364, paragraph 51. Indeed, in accordance with the objective of avoiding unwarranted overlapping of benefits, stated in the twenty-seventh recital in the preamble to Regulation No 1408/71, Article 12 of that regulation, entitled ‘Prevention of overlapping of benefits’, provides, inter alia, in paragraph 1, that the regulation ‘can neither confer nor maintain the right to several benefits of the same kind for one and the same period of compulsory insurance’. Given that Article 12 of Regulation No 1408/71 falls within Title I of the regulation, which lays down general provisions, the principles set out in that provision apply to the rules on priority in cases of overlapping entitlements to family benefits laid down in Article 76 of the same regulation. See also my Opinion in Wiering, C‑347/12, EU:C:2013:504, points 51 and 52.

( 12 ) In its judgment in Ferraioli, EU:C:1986:168, the Court pointed out that the provisions of Regulation No 1408/71 must be interpreted in the light of the principle of freedom of movement for workers and that Article 76 of that regulation must not be applied in such a way as to deprive workers of the benefit of more favourable allowances by substituting the allowances payable in one Member State for the allowances payable in another. According to the Court, the principles underlying Regulation No 1408/71 required that, if the amount of the benefits payable in the State of residence is less than that of the benefits payable in the other State, the worker retains the right to the higher amount and is entitled to a supplement to the benefits from the competent institution of the latter State equal to the difference between the two amounts. It must be borne in mind that procedures for applying the rules against overlapping of family benefits have been put in place by the EU legislature and provide, in particular, for the exchange of information between the institutions of the Member States of residence and employment to enable a comparison to be made of the benefits at issue and of their respective amounts so that the amount of any differential supplement may be calculated. See, in particular, Decision 91/425. See my Opinion in Wiering, , EU:C:2013:504, points 53 and 54 and the case-law cited.

( 13 ) Schwemmer, EU:C:2010:605, paragraph 53 and the case-law cited.

( 14 ) Paragraphs 6 and 7.

( 15 ) Kracht, EU:C:1990:279, paragraph 11.

( 16 ) The provision speaks of benefits being ‘provided for’.

( 17 ) I would observe that, in paragraph 54 of the judgment in Schwemmer, EU:C:2010:605, the Court pointed out that, in the judgments in Ragazzoni, EU:C:1978:88, Salzano, EU:C:1984:343, Ferraioli, EU:C:1986:168, and Kracht, EU:C:1990:279, the reasons for the absence of a prior application were not relevant to the answers given by the Court in the proceedings concerned.

( 18 ) See, by analogy, Schwemmer, EU:C:2010:605, paragraph 58. Indeed, pursuant to Article 76(2) of Regulation No 1408/71, only the difference between the higher German benefit and the lesser Belgian benefit, that is to say, the differential supplement, would be payable, despite the fact that both Ms Fassbender-Firman and her husband were entitled to family allowances for their son in both those Member States.

( 19 ) See, to that effect, Lachheb, C‑177/12, EU:C:2013:689, paragraph 30 and the case-law cited. My emphasis.

( 20 ) Kracht, EU:C:1990:279, paragraph 10, and Schwemmer, EU:C:2010:605, paragraph 56.

( 21 ) See, by analogy, Altmark Trans and Regierungspräsidium Magdeburg, C‑280/00, EU:C:2003:415, paragraphs 58 and 59.

( 22 ) See paragraph 12 above. Indeed, it seems that the Familienkasse considers that a differential supplement is payable.

( 23 ) See paragraph 30 above.

( 24 ) See paragraph 34 above.

( 25 ) See point 29 above.

( 26 ) See points 27 and 53 above.

( 27 ) See point 50 above.