OPINION OF ADVOCATE GENERAL

MENGOZZI

delivered on 9 June 2011 ( )

Case C‑225/10

Juan Pérez García

José Arias Neira

Fernando Barrera Castro

Dolores Verdún Espinosa, successor to José Bernal Fernández

v

Familienkasse Nürnberg

(Reference for a preliminary ruling from the Sozialgericht Nürnberg, Germany)

(Regulation (EEC) No 1408/71 – Family allowances – Benefits for handicapped children dependent on persons who draw a pension under the legislation of more than one Member State – Benefits for orphans of workers subject to the legislation of more than one Member State – Right to payment of family allowances by a State in which an occupation was carried on – Family allowances of the State of residence incompatible with another cash benefit for which the person concerned has opted)





1. The questions referred for a preliminary ruling by the national court concern the interpretation of Articles 77 and 78 of Regulation (EEC) No 1408/71 ( ) (‘the regulation’). These provisions, on which the Court has already ruled on various occasions, were amended completely by the provision that replaced Regulation No 1408/71, that is to say, Regulation (EC) No 883/2004. ( ) However, the new provisions are irrelevant to the present case.

2. The subject-matter of the dispute to be resolved by the national court is the purported right of certain Spanish pensioners, residing in Spain but who in the past have worked in Germany, to the allowances for dependent children (Kindergeld) provided for in German law. The German authorities have refused to pay these benefits on the ground that the applicants in the main proceedings may apply for higher Spanish cash benefits (prestaciones por hijo a cargo).

I – Legal context

A – European Union law

3. Article 1(u) of the regulation contains the two following definitions:

‘(i) the term family benefits means all benefits in kind or in cash intended to meet family expenses …, excluding the special childbirth or adoption allowances referred to in Annex II;

(ii) family allowances means periodical cash benefits granted exclusively by reference to the number and, where appropriate, the age of members of the family’.

4. Articles 77 and 78 of the regulation, about which the national court questions the Court, are contained in Title III, Chapter 8, entitled ‘Benefits for dependent children of pensioners and for orphans’.

5. Article 77 provides:

‘1. The term “benefits”, for the purposes of this Article, shall mean family allowances for persons receiving pensions for old age, invalidity or an accident at work or occupational disease, and increases or supplements to such pensions in respect of the children of such pensioners, with the exception of supplements granted under insurance schemes for accidents at work and occupational diseases.

2. Benefits shall be granted in accordance with the following rules, irrespective of the Member State in whose territory the pensioner or the children are residing:

…

(b) to a pensioner who draws pensions under the legislation of more than one Member State:

(i) in accordance with the legislation of whichever of these States he resides in provided that, taking into account, where appropriate, the provisions of Article 79(1)(a), a right to one of the benefits referred to in paragraph 1 is acquired under the legislation of that State.’

6. Article 78 provides as follows:

‘1. The term “benefits”, for the purposes of this Article, means family allowances and, where appropriate, supplementary or special allowances for orphans.

2. Orphans’ benefits shall be granted in accordance with the following rules, irrespective of the Member State in whose territory the orphan or the natural or legal person actually maintaining him is resident:

…

(b) for the orphan of a deceased employed or self-employed person who was subject to the legislation of several Member States:

(i) in accordance with the legislation of the Member State in whose territory the orphan resides provided that, taking into account, where appropriate, the provisions of Article 79(1)(a), a right to one of the benefits referred to in paragraph 1 is acquired under the legislation of that State;

…

However, the legislation of the Member State applicable in respect of provisions of the benefits referred to in Article 77 for a pensioner’s children shall remain applicable after the death of the said pensioner in respect of the provisions of the benefits to his orphans’.

7. Article 5 of the regulation provides that ‘[t]he Member States shall specify … the benefits referred to in Articles 77 and 78 in declarations to be notified and published …’

8. Article 76 of the regulation is not directly relevant in the present case since it refers to active workers and not pensioners. It was, however, cited in the observations submitted and will have to be examined during the discussion of the questions referred. In the version thereof currently in force, which was also applicable at the time of the facts of the main proceedings, that article provides as follows:

‘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 States 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’.

9. The most recent version of the declaration by Germany pursuant to Article 5 of the regulation ( ) refers to Kindergeld as a family allowance falling within the scope of Articles 77 and 78 of the regulation.

10. Similarly, the most recent declaration by the Kingdom of Spain ( ) includes the benefits provided for in Royal Legislative Decree No 1/1994, to which the applicants in Spain are entitled according to the national court, among those to which Articles 77 and 78 are applicable.

B – German law

11. The allowances for dependent children (Kindergeld) ( ) are provided for in German law for all children up until the age of 18. Where particular conditions are satisfied (continuing education without significant income, etc.), these allowances can be paid up to the age of 21 or even 25.

12. In the case of handicapped children incapable of supporting themselves, the allowances for handicapped children are paid in principle regardless of age.

13. The amount of the allowances for dependent children is updated periodically. By way of illustration, in respect of the year 2010 that amount varied between EUR 184 a month (for the first child) and EUR 215 a month (for the fourth child and any further children). Apparently, the family allowances are not incompatible with possible other benefits for handicapped persons.

C – Spanish law

14. The allowances for dependent children provided for in Spanish law and to which the order for reference refers, which are governed by Real decreto legislativo No 1/94, ( ) are paid on the basis of a system which differs in part from the German system. In particular, allowances for dependent children are normally paid only if the family’s income is below a minimum threshold defined by law.

15. However, in the case of handicapped children there are no income limits in either Spain or Germany. Nor, furthermore, if the degree of incapacity is over 65% are there any age limits. In respect of a child over the age of 18 suffering from 65% incapacity, the monthly amount paid in 2010 was EUR 339.70. In the case of incapacity of 75% or over, it was EUR 509.60.

16. However, Spanish legislation provides that the right to allowances for dependent children ceases when a handicapped person is paid other benefits including, in particular, an invalidity pension within the meaning of Law No 13/1982 on the social integration of handicapped persons. ( )

II – Facts, the proceedings before the national court and the questions referred

17. The applicants in the main proceedings are Spanish nationals residing in Spain. They are pensioners ( ) who have in the past worked in Germany, thereby acquiring a right to a pension under German law. In other words, they receive a German pension which was granted to them without their having to have aggregated periods of employment completed in various Member States. The applicants have in common the fact that they have handicapped children of full age dependent on them.

18. According to the information provided by the referring court, in Spain the applicants’ children draw invalidity pensions under Law No 13/1982. Consequently, under Spanish law allowances for dependent children may not be paid.

19. For some time, the applicants drew the German family allowances for their dependent handicapped children. Later, however, payment of this allowance was suspended: according to the German authorities, the applicants have an ‘acquired’ right to Spanish family allowances under Article 77(2)(b)(i) of the regulation. Therefore, because they have this right in the State of residence, in accordance with that provision of European Union law the German family allowances are no longer payable. The fact that the applicants chose to draw in Spain benefits provided there as an alternative to Spanish family allowances does not alter the fact that they could, if they wished, choose to receive, instead of those alternative allowances, the family allowances sensu stricto.

20. In order to resolve the dispute the national court referred the following questions to the Court for a preliminary ruling:

‘1. Is Article 77(2)(b)(i) of Regulation (EEC) No 1408/71 to be interpreted as meaning that family allowances need not be granted by the former State of employment to persons who receive pensions for old age, invalidity or an accident at work or occupational disease under the legislation of more than one Member State and whose pension entitlement is based on the legislation of the former State of employment (national pension entitlement) if provision is made in the State of residence for a comparable, higher benefit, which is, however, incompatible with another benefit for which the person concerned, having been given the choice, has opted?

2. Is Article 78(2)(b)(i) of Regulation (EEC) No 1408/71 to be interpreted as meaning that family allowances for orphans of a deceased employed or self-employed person who was subject to the legislation of several Member States and who enjoyed a notional entitlement to an orphan’s pension based on the legislation of the former State of employment (potential national pension entitlement) need not be granted by the former State of employment if provision is made in the State of residence for a comparable, higher benefit, which is, however, incompatible with another benefit for which the person concerned, having been given a choice, has opted?

3. Does the same apply to a benefit under Article 77 or Article 78 of Regulation (EEC) No 1408/71 for which provision is generally made in the children’s State of residence, but for which the person concerned, as someone who is not being given a choice, cannot opt?’

III – Preliminary observations

21. The questions raised by the referring court are based on the assumption that both the allowances for dependent children provided for in Spanish Real Decreto Legislativo No 1/94 and the family allowances provided for in German law fall within the scope of Article 77 (and Article 78) of the regulation. However, in the light also of the observations submitted in writing and orally at the hearing, it is necessary as a preliminary point to determine whether this is the case. It would no longer be necessary to reply to the questions referred by the national court if the benefits did not fall within the ambit of Article 77.

22. As we saw when setting out the legislative context, the two notions of family benefits and family allowances are clearly distinct for the purpose of the regulation. In particular, under Article 1(u) ‘family benefits’ are intended to ‘meet family expenses’. Consequently, the payment thereof is linked to social conditions or the income of the potential beneficiaries. ‘Family allowances’, by contrast, are cash benefits granted ‘exclusively by reference to the number and, where appropriate, the age of members of the family’.

23. The specific feature of Article 77 of the regulation lies in the fact that the ‘benefits’ to which it refers are exclusively ‘family allowances’. The Court has repeatedly held that the notion of ‘family allowances’ within the meaning of Article 77 coincides with that contained in Article 1(u). ( ) In particular, the Court has found that the fact that Article 77 of the regulation applies only to family allowances is justified by the fact that only benefits linked to the number or age of the children can be regarded as payable also by a State that is not the State in which the beneficiaries reside. By contrast, other benefits, such as family benefits, intended to meet specific family expenses, ‘are in most cases closely linked with the social environment and therefore with the place where the persons concerned reside’. ( )

24. It is therefore necessary to determine whether the allowances for dependent children provided for in Spanish law and the family allowances provided for in German law are ‘family allowances’ within the meaning of the regulation.

25. As regards the Spanish benefit, the basic mechanism provides, as has been noted above, for family allowances for dependent children to be granted only to families whose income is below a minimum threshold. For this reason, those allowances depart from the typical model of family allowances provided for in Community law: they are granted not only on the basis of conditions linked to the number and age of the children but of another element too, that is to say, the income of the family.

26. In the case of severely handicapped children, however, Spanish law provides that the income-related conditions are no longer relevant and that no account is to be taken of the children’s age. On the other hand, the degree of incapacity affects the amounts paid.

27. As regards Germany, the ‘normal’ mechanism of family allowances certainly falls within the model of the regulation. Only the number and age of the children are relevant and the family’s income has no role to play. However, the German system also operates differently in the case of handicapped children in that it takes no account of age.

28. Therefore, as we have seen neither the Spanish system nor the German system provides, in the case of handicapped children of full age, for a system which is completely coherent with the definition of ‘family allowances’ contained in the regulation. In both cases, it is precisely the incapacity which triggers the right to the allowances for handicapped children of full age, a right which, in principle, would not otherwise exist. In other words, both Spanish and German law grant the benefit having regard to an additional element (incapacity) in relation to the other two (age and number of children) which, according to the regulation, are the only ones that can determine the right to a benefit that can be defined as a ‘family allowance’. Moreover, in the case of the Spanish allowance the fact that account is also taken of the degree of incapacity in determining the amount of the allowance for dependent children introduces a further element of differentiation.

29. However, it should be noted that, as I indicated earlier, in their respective declarations pursuant to Article 5 of the regulation both the Kingdom of Spain and the Federal Republic of Germany included the allowances for dependent children provided for in Spanish law and the family allowances provided for in German law, respectively, among the benefits to which Articles 77 and 78 of the regulation are applicable.

30. In this respect, the Court has held that although the fact that a benefit has not been included in the declaration pursuant to Article 5 of the regulation is not sufficient to rule out that possibility that it could be among those covered by Article 77, the benefits that are included in such a declaration, by contrast, automatically fall within the ambit of Article 77. In other words, a State may not, once having included a benefit in its declaration, seek to withdraw from its obligations by claiming that that benefit does not satisfy the conditions laid down by the regulation to be covered by Article 77. ( )

31. It follows, therefore, that generally speaking both the Kingdom of Spain and the Federal Republic of Germany are obliged to grant, respectively, allowances for dependent children and family allowances paid to handicapped children of full age as ‘family allowances’ within the meaning of Article 77 of the regulation.

32. At the hearing the Commission stressed the need for the Spanish benefits to be assessed on the basis of their objective characteristics without considering their designation or the fact that they were notified pursuant to Article 5. That view cannot be upheld.

33. Firstly, as we have seen, both the Member States have granted a right to the benefits under discussion here. That fact does not determine per se which of the two States must pay them. It simply means that the rules laid down in Articles 77 and 78 must be applied in the situations concerning the two States in question in order to determine which State is to pay the benefits. This applies in the relations between Spain and Germany both in the case of residents in Spain who have worked in Germany (as in this case) and in the opposite case.

34. Secondly, the Commission’s view entails the risk of rendering almost redundant Article 5 of the regulation and the notification obligation laid down therein. It is true that the concept of ‘family allowances’ within the meaning of the regulation is one of European Union law which is set out in detail in Article 1 of the regulation. It is also true, however, that according to case-law, as we have seen above, ( ) this notion specifically includes, on the one hand, the benefits that the Member States have declared pursuant to Article 5 and, on the other, other benefits which, although not declared, have the characteristics set out in Article 1(u) in relation to ‘family allowances’.

35. Adopting the Commission’s interpretation would also risk fragmenting, in an unacceptable manner, the framework of the benefits payable for dependent children. In the present case, for example, the German family allowances too would, in all probability, have to be excluded from the scope of Articles 77 and 78 of the regulation when paid to the families of handicapped persons of full age. ( ) The question could arise as to which of the ‘family allowances’ granted and declared by the various Member States pursuant to Article 5 definitely fell within the definition of Article 1(u) if they were examined in the manner advocated by the Commission.

36. I would add that the Kingdom of Spain itself did not, either in its written observations or at the hearing, challenge the fact that the benefits provided for in Real decreto legislativo 1/94 fall within the scope of Articles 77 and 78 of the regulation. Furthermore, it should be pointed out that, although in the present case this classification is irrelevant in relation to Spain, in other cases it could conversely require that Member State to pay benefits that would not be payable otherwise if they did not fall within the ambit of Articles 77 and 78.

37. Finally, it may also be observed that there is no lack of Court decisions in which, albeit implicitly, both the benefits under discussion here have been regarded as falling within the scope of Articles 77 and 78 of the regulation. ( )

38. For all these reasons, I consider that for the purpose of answering the questions referred in the present case, it is possible to consider that the two benefits, both the Spanish and the German, fall within the scope of Article 77. Moreover, that is the conclusion which the referring court also implicitly reached on the basis of its examination of the relevant provisions of national law.

IV – The first and second questions

39. The first and second questions are couched in almost identical terms and refer to two provisions (Articles 77 and 78 of the regulation) that, apart from the fact that they deal respectively with retired workers and workers’ orphans, are almost identical. Therefore, these two questions should be examined together.

40. By these questions the referring court asks whether, in circumstances such as those of the main proceedings, the administration of a Member State may lawfully refuse to pay family allowances to a former worker (or his orphans) residing abroad, when he has a right to the family allowances in the State of residence but does not draw them because he has opted to receive, ( ) from the State of residence, an alternative benefit which is incompatible with them.

41. Below I shall examine the first question, relating to Article 77: given that Articles 77 and 78 are similar, the conclusions drawn will also be applicable to the second article and thus to the second question.

42. This question is raised because, under Article 77 of the regulation, when a pensioner has a right to benefits under the law of several Member States, it is in principle for the State of residence to pay family allowances. However, this is subject to the right thereto being ‘acquired’ for the purpose of the latter State’s legislation. In essence, the referring court asks whether, in the present case, it may not be considered that the right to family allowances in Spain has been ‘acquired’, even though the allowances have not been drawn, for the applicants in the main proceedings could obtain the payment if they gave up the alternative benefits for which they have opted.

43. At first sight the question does not appear to pose any great problems in view of the wording of the provision. It could be held that, for the right to be regarded as ‘acquired’ within the meaning of Article 77 of the regulation, it is enough for a potential beneficiary to be able to obtain the benefit by applying for it. On this view, the fact that no application was made, like the fact that the beneficiary opted for an alternative benefit, would be irrelevant. In both cases the fact that the family allowances were not obtained would be the consequence of an act of will on the part of the beneficiary and the right would in any event be ‘acquired’.

44. However, it should be recalled that the Court has repeatedly held, in relation to Article 76(1) of the regulation, that a benefit is not ‘payable’ ( ) if, although he has a right thereto, the beneficiary does not receive it because, for example, he has not submitted an application. ( ) The present Article 76(2), which provides on the contrary that failure to submit an application for benefits to which there is a right permits the Member State to act as if the State to which the application should have been submitted had paid the benefits, was added subsequently by the legislator ( ) also as a response to this approach by the Court.

45. Moreover, the Court has recently made it clear that, although it is clearly no longer applicable to Article 76(1) of the regulation following the intervention of the legislature, that case-law nevertheless remains valid in relation to similar provisions which have not been amended in that field. ( )

46. Consequently, on the basis of the cited judgments of the Court the first two questions referred by the national court must be answered to the effect that the applicants in the main proceedings, who have opted in Spain for another benefit as an alternative to family allowances, have no ‘acquired’ right to family allowances in that Member State.

47. However, there are two arguments that could be used to show that the abovementioned case-law is not applicable to Article 77(1) of the regulation.

48. Firstly, it is possible to cite the lexical differences between Articles 76 and 77. As we have seen, Article 76 speaks of ‘payable’ benefits, ( ) whilst the Article 77, in the relevant part, refers to an ‘acquired’ right. This difference is also to be found in the same form in the various language versions of the provision. It could, therefore, be argued that the Court’s case-law relating to Article 76 cannot be applied to the following article because it refers to a different situation. On this view, the legislature’s choice of amending only Article 76 and not Article 77 too could be explained by the fact that the legislature did not consider it necessary to take steps in relation to the second provision.

49. Secondly, it is possible, in the alternative, to propose, in the case of Article 77 too, the application by analogy of Article 76(2) which, as we have seen, permits a Member State to act as if a benefit were actually paid in another State, provided that that did not happen merely because no application was submitted. This is the solution that has been suggested by the German Government, in particular, in its written observations, invoking in particular the comparable nature of the two situations governed by the two articles and arguing for a teleological interpretation of the paragraph added to Article 76 in 1989, in the light of the will of the legislature.

50. Even though I understand and, in part, share the concerns underling the two arguments above, the latter are, in my view, unconvincing, in particular in the light of the Court’s settled case-law.

51. So far as the first argument is concerned, the lexical differences between the two provisions under examination are not clear enough to allow them to be distinguished, one from the other, for the purpose of applying the principles of case-law. It must be observed that, in interpreting Article 76 of the regulation, the Court did not dwell long on lexical subtleties and essentially interpreted the provision in very pragmatic terms, concentrating solely on whether or not the benefit was drawn by the party concerned. ( ) Moreover, in interpreting the provision the Court has not failed to emphasise the importance of placing on it an interpretation favourable to giving effect to freedom of movement for workers. ( ) I further note that the German Government appears to have excluded the possibility of drawing such a distinction and proposed instead the second alternative, that is to say, the application by analogy of Article 76(2).

52. However, I consider that this second alternative likewise cannot be accepted. In the light of the above case-law, Article 76(2) must, to all intents and purposes, be regarded as a clause that limits a right to a benefit provided for in the regulation. As such it must be interpreted restrictively. ( ) Moreover, the Court has recently rejected the application by analogy of such a provision in a situation that was in many respects similar to the present case. ( )

53. Therefore, in concluding my examination of the first and second questions I propose that the Court answer them by declaring that, in a situation such as that in the main proceedings, a benefit payable under Article 77 or 78 of the regulation may not be refused by the authorities of a Member State in which the beneficiaries have acquired a pension entitlement based on national legislation, if provision is made in the State of residence for a comparable, higher benefit, which is, however, incompatible with another benefit for which the person concerned, having been given the choice, has opted.

V – The third question

54. By Question 3 the referring court asks whether the answer given to the first two questions must be different if the family allowances in the State of residence, although granted in principle, cannot actually be obtained because the alternative benefit incompatible therewith is obligatory, and therefore potential beneficiaries do not even have the opportunity of opting for family benefits in its place.

55. The question is asked, albeit not explicitly, supposing the Court should find that, in a situation such as that set out in the first and second questions (the right to choose between family allowances and other benefits with the party concerned choosing the latter), the State in which the occupation was carried on (in this case Germany) may refuse to pay the family allowances.

56. Since I propose that the Court reply to the contrary to the first two questions referred, the answer to be given to the third follows automatically from that proposed for the first two. If the right to German family allowances does not cease where Spanish family allowances are not drawn owing to the choice of the potential beneficiaries, a fortiori that right cannot cease where that choice does not exist. In that case, it cannot even be said that there exists a right to draw family allowances in Spain. The referring court itself pointed out that, in its view, in that situation German family allowances should continue to be paid.

57. I propose, therefore, that the Court should answer the third question by declaring that what was stated in reply to the first two questions also applies when the payment of family allowances in the State of residence, although provided for in theory, cannot be effected even if the beneficiaries have chosen to draw them.

VI – Conclusion

58. In the light of the foregoing considerations, I propose that the Court give the following answer to the questions submitted by the Sozialgericht Nürnberg:

(1) A benefit payable under Article 77 or 78 of 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 may not be refused by the authorities of a Member State in which the beneficiaries have acquired a pension entitlement based on national legislation, if provision is made in the State of residence for a comparable, higher benefit, which is, however, incompatible with another benefit for which the person concerned, having been given the choice, has opted.

(2) This also applies when payment of family allowances in the State of residence, although provided for in theory, cannot be effected even if the beneficiaries have chosen to draw them.