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The references have been made in disputes between, first, Mr Hudziński and the Agentur für Arbeit Wesel – Familienkasse (Employment Agency Wesel – Department for family allowances) and, second, Mr Wawrzyniak and the Agentur für Arbeit Mönchengladbach – Familienkasse (Employment Agency Mönchengladbach – Department for family allowances) concerning the refusal to grant child benefit in Germany.
Mr Hudziński and Mr Wawrzyniak, both Polish nationals, living and working in Poland, had respectively worked as a seasonal worker and as a posted worker in Germany. Both were treated as being subject to unlimited income tax liability in Germany for that period. When they applied for the payment of child benefit (pursuant to German legislation basing entitlement to child benefits on unlimited income tax liability), the German Familienkasse rejected that application and the administrative challenge brought against that negative decision. In their respective appeals before the German Federal Finance Court, they submitted that it follows from the judgement in Case C 352/06 Bosmann the German child benefits legislation remains applicable even where, pursuant to Regulation 1408/71, the Federal Republic of Germany is not the competent Member State under Article 14a(1)(a) of that regulation, in the case of Mr Hudziński, or under Article 14(1)(a) of that regulation, in the case of Mr Wawrzyniak.
The German Federal Finance Court decided to stay the proceedings and to refer several question to the ECJ. In essence, it was asked whether Articles 14(1)(a) and 14a(1)(a) of Regulation No 1408/71 must be interpreted as precluding a Member State, which is not designated under those provisions as the competent Member State, from granting child benefits in accordance with its national law to a migrant worker engaged in carrying out temporary work within its territory in circumstances such as those at issue in the main proceedings. The referring court also asked whether EU law, in particular the rules against overlapping set out in Article 76 of Regulation 1408/71 and Article 10 of Regulation 547/72, the Treaty rules on the free movement of workers and the principle of non-discrimination, must be interpreted as precluding, in a situation such as that at issue in the main proceedings, the application of a rule of national law, which excludes entitlement to child benefits in the case where a comparable benefit must be paid in another State or would have to be paid if a claim to that effect were to be made.
As to the possibility of the granting of child benefits by a non-competent Member State, the Court first stated that it must be held that the legislation applicable to the circumstances of the appellants, as regards their entitlement to family benefits, is determined, respectively, by Articles 14(1)(a) and 14a(1)(a) of Regulation 1408/71. That is to say, Polish legislation is applicable. That being so, it should be recalled that, according to settled case-law, the objective of the provisions of Title II of Regulation No 1408/71, which determine the legislation applicable to workers moving within the European Union, is to ensure, in particular, that the persons concerned are, in principle, subject to the social security scheme of only one Member State. Moreover, primary law of the European Union cannot guarantee to an insured person that moving to another Member State will be neutral in terms of social security.
However, it immediately added that as the Court stated in paragraph 29 of Bosmann, the provisions of Regulation No 1408/71 must be interpreted in the light of Article 48 TFEU, which aims to facilitate freedom of movement for workers and entails, in particular, that migrant workers must not lose their right to social security benefits or have the amount of those benefits reduced because they have exercised the right to freedom of movement conferred on them by the Treaty. Therefore, an interpretation of Articles 14(1)(a) and 14a(1)(a) of Regulation 1408/71 permitting a Member State to grant family benefits in a situation such as that in the main proceedings, cannot be excluded because it is liable to contribute to the improvement of living standards and conditions of employment of migrant workers by affording them greater social protection than that resulting from application of that regulation, and thereby contributes to the objective of those provisions, which is to facilitate the free movement of workers.
The fact that neither the worker nor his family members are resident in the non-competent state (like this was the case in Bosmann) is irrelevant, as the connection of the situations at issue with the territory of the Member State which lacks competence and from which family benefits are claimed is the fact of subjection to unlimited income tax liability in respect of the income earned from the temporary work in that Member State. Such a connection is based on a precise criterion and may be regarded as being sufficiently close, when account is also taken of the fact that the family benefit claimed is financed by tax revenue.
As to German rules excluding entitlement to child benefits where a comparable benefit must be paid or would have to be paid if it was claimed, the Court first cleared out that the situation at issue in the main proceedings is not covered by that rule against overlapping or, moreover, by that laid down by Article 76 of Regulation 1408/71 since it does not concern a hypothetical overlapping of entitlements laid down by the legislation of the Member State of residence of the child concerned and of those resulting from the legislation of the Member State of employment designated as the competent State under that regulation. In the main proceedings, the Republic of Poland is both the Member State of residence of the child concerned and the competent Member State of employment of the posted worker. The Regulation does consequently not preclude the exclusion of entitlement.
However, the application of such a rule of national law against overlapping in a case such as that in the main proceedings, in so far as it appears to require, not a reduction in the amount of the benefit by the amount of that of a comparable benefit received in another State, but exclusion from that benefit, is such as to constitute a substantial disadvantage affecting in reality a greater number of migrant workers than settled workers who have worked exclusively in the Member State concerned, this being a matter for the referring court to ascertain. Therefore, even if it can be explained by the disparities in the social security legislation of the Member States which subsist, the mentioned disadvantage is contrary to the requirements of the primary law of the European Union on the free movement of workers.