1. This request for a preliminary ruling concerns the interpretation of Article 107 of Council Regulation (EEC) No 574/72 of 21 March 1972 laying down the procedure for implementing Regulation (EEC) No 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to their families moving within the Community (OJ 1972 L 74, p.1), in the version amended and updated by Council Regulation (EC) No 118/97 of 2 December 1996 (OJ 1997 L 28, p. 1), as amended by Regulation (EC) No 1386/2001 of the European Parliament and of the Council of 5 June 2001 (OJ 2001 L 187, p. 1; ‘Regulation No 574/72’), and of Article 90 of Regulation (EC) No 987/2009 of the European Parliament and of the Council of 16 September 2009 laying down the procedure for implementing Regulation (EC) No 883/2004 on the coordination of social security systems (OJ 2004 L 284, p. 1).
2. The request has been made in proceedings between Mrs Wagener and the Bundesagentur für Arbeit - Familienkasse Villingen-Schwenningen (Federal Employment Agency - Family Allowances Office, Villingen-Schwenningen; ‘the Familienkasse’) concerning the grant of dependent child allowance in Germany. Legal context International law
3. The Agreement between the European Community and its Member States, of the one part, and the Swiss Confederation, of the other, on the free movement of persons, signed in Luxembourg on 21 June 1999 (OJ 2002 L 114, p. 6; ‘the Agreement on the free movement of persons’) came into force on 1 June 2002.
4. Article 8 of the Agreement on the free movement of persons provides that the Contracting Parties are to make provision, in accordance with Annex II to that agreement, for the coordination of social security systems.
5. Article 1 of Annex II to that agreement stated, in its original version: ‘1. The contracting parties agree, with regard to the coordination of social security schemes, to apply among themselves the Community acts to which reference is made, as in force at the date of signature of the Agreement and as amended by section A of this Annex ... 2. The term[s] “Member State(s)” contained in the acts referred to in section A of this Annex shall be understood to include Switzerland in addition to the States covered by the relevant Community acts.’
6. The original version of Section A of Annex II to the Agreement on the free movement of persons refers to 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 the members of their families moving within the Community (OJ 1971 L 149, p. 2), in the version amended and updated by Regulation No 118/97, as amended by Council Regulation (EC) No 307/1999 of 8 February 1999 (OJ 1999 L 38, p. 1) (Regulation No 1408/71), and to Regulation No 574/72. EU law Regulations (EEC) No 1408/71 and No 574/72
7. Under Article 13(2)(a) of Regulation No 1408/71, a person employed in the territory of one Member State (‘State of employment’) is to be subject, in principle, to the legislation of that State. Furthermore, in accordance with Article 73 of that regulation, an employed person subject to the legislation of that Member State is entitled, in respect of members of his family who are residing in another Member State (‘State of residence’), to the family benefits provided for under the legislation of the State of employment, as if they were residing in that State, subject to the provisions of Annex VI to that regulation.
8. Article 10(1)(a) of Regulation No 574/72 provides as follows: ‘Entitlement to benefits or family allowances due under the legislation of a Member State, according to which acquisition of the right to those benefits or allowances is not subject to conditions of insurance, employment or self-employment, shall be suspended when, during the same period and for the same member of the family, benefits are due only in pursuance of the national legislation of another Member State or in application of Articles 73, 74, 77 or 78 of [Regulation No 1408/71], up to the sum of those benefits.’
9. Article 107 of Regulation No 574/72, entitled ‘Currency conversion’, is worded as follows: ‘1. For the purposes of the following provisions: (a) Regulation [No 1408/71]: Article 12(2), (3) and (4), Article 14d(1), Article 19(1)(b), last sentence, Article 22(1)(ii), last sentence, Article 25(1)(b), penultimate sentence, Article 41(1)(c) and (d), Article 46(4), Article 46a(3), Article 50, Article 52(b), last sentence, Article 55(1)(ii), last sentence, Article 70(1), first subparagraph, Article 71(1)(a)(ii) and (b)(ii), penultimate sentence; (b) [Regulation No 574/72]: Article 34(1), (4) and (5), the rate for the conversion into a currency of amounts denominated in another currency shall be the rate calculated by the Commission and based on the monthly average, during the reference period specified in paragraph 2, of reference rates of exchange of currencies published by the European Central Bank. 2. The reference period shall be: - January for rates of conversion applicable from 1 April following, - April for rates of conversion applicable from 1 July following, - July for rates of conversion applicable from 1 October following, - October for rates of conversion applicable from 1 January following. 4. The date to be taken into account for determining the rates of conversion to be applied in the cases referred to in paragraph 1 shall be fixed by the Administrative Commission [on Social Security for Migrant Workers] on a proposal from the Audit Board. 5. The rates of conversion to be applied in the cases referred to in paragraph 1 shall be published in the Official Journal of the European Communities in the course of the last month but one preceding the month from the first day of which they are to apply. 6. In cases not covered by paragraph 1, the conversion shall be made at the official rate of exchange on the day of payment both for the payment and refund of benefits.’ Regulations (EC) No 883/2004 and No 987/2009
10. 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, and corrigendum OJ 2004 L 200, p. 1). Regulation No 574/72 was replaced by Regulation No 987/2009. Those new regulations became applicable on 1 May 2010, in accordance with Article 91 of Regulation No 883/2004 and Article 97 of Regulation No 987/2009.
11. Following the adoption of those regulations, Decision No 1/2012 of the Joint Committee established under the Agreement between the European Community and its Member States, of the one part, and the Swiss Confederation, of the other, on the free movement of persons of 31 March 2012 replacing Annex II to the Agreement on the coordination of social security schemes (OJ 2012 L 103, p. 51), provided - with effect from 1 April 2012, the date of its entry into force - for a new version of that Annex. Section A of that Annex, in the new version, refers to Regulations No 883/2004 and No 987/2009 instead of to Regulations No 1408/71 and No 574/72.
12. Under Article 67 of Regulation No 883/2004, a person is to be entitled to family benefits in accordance with the legislation of the competent Member State, including for members of his family residing in another Member State.
13. Article 68(2) of that regulation states: ‘In the case of overlapping entitlements, family benefits shall be provided in accordance with the legislation designated as having priority in accordance with paragraph 1. Entitlements to family benefits by virtue of other conflicting legislation or legislations shall be suspended up to the amount provided for by the first legislation and a differential supplement shall be provided, if necessary, for the sum which exceeds this amount. However, such a differential supplement does not need to be provided for children residing in another Member State when entitlement to the benefit in question is based on residence only.’
14. Article 87(1) of Regulation No 883/2004 lays down the following transitional provision which, in accordance with Article 93 of Regulation No 987/2009, also applies to situations governed by the latter regulation: ‘No rights shall be acquired pursuant to this Regulation for the period before its date of application.’
15. Article 90 of Regulation No 987/2009 provides as follows: ‘For the purposes of applying [Regulation No 883/2004] and [Regulation No 987/2009], the exchange rate between two currencies shall be the reference rate published by the European Central Bank. The date to be taken into account for determining the exchange rate shall be fixed by the Administrative Commission [for the Coordination of Social Security Systems].’
16. The Administrative Commission adopted Decision No H3 of 15 October 2009 concerning the date to be taken into consideration for determining the rates of conversion referred to in Article 90 of Regulation (EC) No 987/2009 (OJ 2010 C 106, p. 56). German law
17. Point 1 of Paragraph 62(1) of the Law on income tax (Einkommensteuergesetz) provides: ‘The following persons shall be entitled to child allowance in respect of children within the meaning of Paragraph 63 of the present Law: 1. persons whose permanent or normal place of residence is within the national territory …’.
18. Paragraph 65 of that law, entitled ‘Other child benefits’, provides as follows in point 2 of subparagraph (1): ‘Child allowance shall not be paid for a child who is in receipt of one of the following benefits or who would receive such a benefit if an application to that effect were made: … 2. child benefits granted outside Germany and comparable to child allowance or to one of the benefits referred to in point 1.’ The dispute in the main proceedings and the questions referred for a preliminary ruling
19. Mr and Mrs Wagener live in Germany with their three children. Mrs Wagener is unemployed. Mr Wagener has been employed in Switzerland since 1 October 2006. On the basis of that employment, he received, in Swiss Francs, family allowances for his three children during the period from October 2006 to November 2011.
20. During the same period, Mr Wagener also received dependent child allowances in Germany. Since the Familienkasse had not been informed that Mr Wagener was employed in Switzerland, those allowances had been paid in full.
21. After being informed of that fact in February 2012, the Familienkasse, by decision of 18 October 2012, cancelled those allowances with effect from October 2006 and sought to recover the amounts paid.
22. That being so, the Familienkasse found that Mrs Wagener was entitled, under Article 10(1)(a) of Regulation No 574/72, to a ‘differential’ allowance from the German State, in an amount corresponding to the difference between the German dependent child allowances and the Swiss family allowances. The Familienkasse accordingly invited Mrs Wagener to make an application to that effect.
23. However, following communication of the exact amount of the family allowances received in Switzerland, the Familienkasse, by decision of 17 October 2012, refused the application for a differential supplement to family allowances for the period from October 2006 to November 2011 as regards Mrs Wagener’s first two children, finding that the Swiss allowances were higher than the German allowances. As regards the third child, it granted Mrs Wagener a differential supplement to family allowances in the amount of EUR 39.42 for that five-year period.
24. The Familienkasse based the conversion into euros of the Swiss family benefits on an exchange rate fixed for the fourth quarter of 2012 by the Bundesagentur für Arbeit (Federal Employment Agency).
25. By objection of 8 November 2012, Mrs Wagener disputed the application of that exchange rate. By decision of 21 November 2012, the Familienkasse rejected that objection and stated that the conversion had been carried out in accordance with Article 107(1) and (2) of Regulation No 574/72.
26. Mrs Wagener thereupon brought an action before the Finanzgericht Baden-Württemberg (Baden-Württemberg Finance Court or ‘the referring court’) claiming, inter alia, that the conversion should be carried out pursuant to Regulations No 883/2004 and No 987/2009, read in conjunction with Decision No H3.
27. The referring court considers, first, that those regulations apply only from 1 April 2012 as regards the Swiss Confederation. Second, it refers to the divergent national case-law concerning currency conversion for the calculation of rights to a differential supplement to dependent child allowance. Whereas some national courts applied Article 107(6) of Regulation No 574/72, others, such as the Finanzgericht München (Munich Finance Court), relied on Article 107(1) of Regulation No 574/72 even though that provision makes no reference to Article 10 of that regulation.
28. According to the Finanzgericht München, Article 107(6) of Regulation No 574/72 is not suitable for the currency conversion of social benefits for the purposes of calculating a differential supplement to family allowances under Article 10 of that regulation since it does not specify the date on which that conversion must be carried out. Furthermore, the application of Article 107(6) of Regulation No 574/72 would make the practical procedure for the calculation by the relevant authority of the benefits received by numerous beneficiaries over an extended period more complex by obliging that authority to calculate the amount of those benefits on the basis of the date of each payment of the benefits to each individual beneficiary. Thus, there is a lacuna in EU law that should be closed through the analogous application of Article 107(1) of the regulation.
29. In those circumstances, the Finanzgericht Baden-Württemberg decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling: ‘(1) In circumstances such as those of the main proceedings, in which, on 17 October 2012, a German family benefits office granted and paid (by way of set-off) the child benefit due for the period from October 2006 to November 2011 in the amount of the difference between the family allowances payable in the Swiss Confederation and the corresponding German benefits, in accordance with Article 10(1)(a) of Regulation (EEC) No 574/2, is the conversion of Swiss family allowances from Swiss francs into euros to be carried out in accordance with Article 107(1) of Regulation No 574/72, Article 107(6) of Regulation No 574/72 or Article 90 of Regulation No 987/2009, read in conjunction with [Decision No H3]? (2) If the answer to Question 1 is that the conversion must be carried out wholly or in part in accordance with Article 107(6) of Regulation No 574/72: in the circumstances set out in Question 1, is the relevant date for the purposes of conversion the date on which the foreign benefit to be set off was paid or the date on which the domestic benefit against which the foreign benefit is set off is paid? (3) If the answer to Question 1 is that the conversion must be carried out wholly or in part in accordance with Article 107(1) of Regulation No 574/72: in circumstances such as those of the main proceedings, how must the reference period provided for in Article 107(2) and (4) of Regulation No 574/72 be determined? Is the relevant date for the purposes of conversion the date on which the Swiss institution granted or paid the family benefit to be set off? (4) If the answer to Question 1 is that the conversion must be carried out wholly or in part in accordance with Article 90 of Regulation No 987/2009, read in conjunction with Decision No H3 ...: in accordance with which provision (paragraph 2, paragraph 3(a) or paragraph 3(b)) of Decision No H3 ... and in what manner must the conversion of family benefits be carried out if the national law relating to the domestic family benefit itself provides for an exclusion of benefits (Paragraph 65(1), point 2, of the [Law on income tax]) and the benefit is granted on the basis of EU law alone? Is the relevant date for the purposes of conversion the date on which the Swiss institution granted or paid the family benefits?’ Consideration of the questions referred Question 1
30. By its first question the referring court asks, in essence, whether, in circumstances such as those of the case before it, the currency conversion of family allowances must be carried out in accordance with Article 107(1) of Regulation No 574/72, or with Article 107(6) of Regulation No 574/72, or with Article 90 of Regulation No 987/2009.
31. In this respect, it is apparent from Article 1(1) of Annex II to the Agreement on the free movement of persons, read in conjunction with Decision No 1/2012, that, in the context of the coordination of the benefits covered by that agreement, Regulations No 1408/71 and No 574/72 apply during the period from 1 June 2002 to 31 March 2012. As from 1 April 2012, on the other hand, Regulations No 883/2004 and No 987/2009 apply.
32. In the case before the referring court, it is for the German authorities to convert into euros the family benefits paid by the Swiss State in relation to the period from October 2006 to November 2011. The right to those benefits is accordingly governed by Regulations No 1408/71 and No 574/72 and, more specifically, by Articles 13(2)(a) and 73 of Regulation No 1408/71 and by Article 10(1)(a) of Regulation No 574/72, and not by Regulations No 883/2004 and No 987/2009.
33. In those circumstances, the currency conversion of those benefits must be carried out under Article 107 of Regulation No 574/72, relating to the conversion of benefits covered by Regulations No 1408/71 and No 574/72, and not on the basis of Article 90 of Regulation No 987/2009 since, according to the wording of that provision, it applies only to the application of Regulations No 883/2004 and No 987/2009.
34. In order to identify the paragraph of Article 107 of Regulation No 574/72 that applies in the case before the referring court, it must be noted that Article 107(1) of that regulation sets out the detailed rules for currency conversion solely for the purposes of the provisions expressly referred to therein (see, to that effect, Case C‑201/91 Grisvard and Kreitz EU:C:1992:368, paragraphs 23 and 25).
35. However, Article 107(1) of Regulation No 574/72 does not refer to Article 13(2)(a) of Regulation No 1408/71, or to Article 73 of that regulation, or to Article 10(1)(a) of Regulation No 574/72. Consequently, it cannot be applied in the main proceedings.
36. Since Article 107(6) of Regulation No 574/72 must, according to its wording, apply in cases not covered by Article 107(1) of that regulation, it governs the currency conversion of the benefits at issue in the main proceedings.
37. That conclusion is not affected by the argument that Article 107(6) of Regulation No 574/72 does not facilitate the currency conversion of benefits for the purposes of calculating the differential supplement to family allowances under Article 10 of that regulation.
38. Since the wording of Article 107 of Regulation No 574/72 is unequivocal as to the relationship between paragraphs 1 and 6 thereof, the arguments based on the greater convenience of the method referred to in Article 107(1) of that regulation cannot prevail against such a wording (see, to that effect, Grisvard and Kreitz , paragraphs 23 and 25).
39. As to the existence of possible questions regarding the date of currency conversion under Article 107(6) of Regulation No 574/72, it cannot justify the non-application of that provision. The reply to those questions must, on the contrary, follow from the interpretation of the provision at issue.
40. In the light of all the foregoing considerations, the answer to Question 1 is that, in circumstances such as those of the case before the referring court, the currency conversion of family allowances must be carried out in accordance with Article 107(6) of Regulation No 574/72. Question 2
41. By its second question the referring court asks, in essence, whether Article 107(6) of Regulation No 574/72 must be interpreted as meaning that the currency conversion of family allowances, such as those at issue in the main proceedings, for the purposes of calculating the differential supplement to family allowances under Article 10(1)(a) of that regulation, is to be made at the official rate of exchange for the day on which the State of employment pays those allowances or as meaning that the conversion is to be made at the official rate of exchange for the day on which the State of residence pays the supplement.
42. In this respect, Article 107(6) of Regulation No 574/72 provides that, for the payment of benefits, the currency conversion is to be made at the official rate of exchange on the day of payment.
43. In addition, it is apparent from Articles 13(2)(a) and 73 of Regulation No 1408/71, read in conjunction with Article 10(1)(a) of Regulation No 547/72, that the worker is entitled to all family allowances provided for by the legislation of the State of employment, whereas his entitlement to family allowances provided for by the legislation of the State of residence is suspended up to the amount received by way of family allowances from the first State.
44. Therefore, if family allowances provided for by the legislation of the State of employment are higher than those provided for by the legislation of the State of residence, the worker’s entitlement to the latter is suspended in its entirety. Consequently, a worker in that situation does not receive any payment from the State of residence.
45. Since the wording of Article 107(6) of Regulation No 574/72 unconditionally links the conversion of benefits to the official rate of exchange on the day of ‘payment’, it must be read as referring to the conversion of benefits which are paid by the State of employment, as that payment is made in all circumstances, whereas the benefits provided for by the State of residence are paid only in specific circumstances, and is therefore conditional and uncertain.
46. Moreover, such an interpretation guarantees the effectiveness of the rules against overlapping benefits - such as the rule laid down in Article 10(1)(a) of Regulation No 574/72 - which seek to ensure that the person entitled to benefits paid by several Member States receives a total amount of benefits which is equal to the amount of the most favourable benefit to which he is entitled under the legislation of a single Member State (see, to that effect, Case 98/80 Romano EU:C:1981:104, paragraph 24).
47. It must be noted that, in a case such as that before the referring court, the person entitled to family allowances paid by the State of employment lives in the Member State which grants the differential supplement to family allowances, with the result that the allowances paid by the State of employment are transferred to the State of residence. It is not until that benefit has been paid by the State of employment and the amount converted into the currency of the State of residence that the person concerned may be entitled to that supplement in the latter State where the amount converted is lower than the amount due by way of the same benefit under the legislation of the State of residence.
48. In the light of all the foregoing considerations, the answer to Question 2 is that Article 107(6) of Regulation No 574/72 must be interpreted as meaning that the currency conversion of family allowances, such as those at issue in the main proceedings, for the purposes of calculating the differential supplement to family allowances under Article 10(1)(a) of that regulation, must be made at the official rate of exchange for the day on which those allowances are paid by the State of employment. Questions 3 and 4
49. In the light of the answer to Question 1, there is no need to examine Questions 3 and 4. Costs
50. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.