Case C-27/23 Hocinx : Business as usual in equal treatment of frontier workers with an alarming twist

Abstract

Case C-27/23 Hocinx can be seen as a follow-up to the 2020 C-802/18 Caisse pour l’avenir des enfants case. For a second time around, the legislation of Luxemburg provided for differential conditions for the award of its family allowances, between workers resident in Luxemburg and non-resident (frontier) workers. The Court found for indirect discrimination on the basis of nationality under Article 7(2) of Regulation 492/2011 and Article 45 TFEU. This not a surprising outcome and in fact is fully consistent with previous case law. There is, however, a part of the judgment which certainly raises eyebrows and causes concern. Regulation 883/2004 (and its Implementing Regulation 987/2009) has been disregarded, despite the conditions for its applicability being clearly fulfilled. What is even more vexatious is the treatment of Article 67 of Regulation 883/2004, where the Court seems to overlook its own previous rich line of case law. Although the Court has once more sent the signal that practices which restrict equal treatment of frontier workers will not get past its scrutiny, the relationship between Regulation 492/2011 and Regulation 883/2004 is not treated appropriately.

1. Introduction and facts

The case of Hocinx concerns the issue of equal treatment of workers where the legislation of a Member State prescribes differential conditions for the award of a social security benefit ¹ /social advantage ² between resident and non-resident (frontier) workers in the competent Member State. ³ While the conclusion reached by the Court is not novel, the manner in which it is reached is surprising, if not alarming. The treatment of Regulation 883/2004 ⁴ in this judgment contradicts earlier case law – potentially compromising important rights guaranteed by this Regulation. The judgment is heavily focused on Regulation 492/2011 on free movement of workers, ⁵ to the detriment of Regulation 883/2004 on the coordination of social security systems without a (good) justification.

The applicant in Hocinx claimed family allowances from the competent authority in Luxemburg in respect of a child placed under his care by virtue of a Belgian court order. Both were resident in Belgium, but the worker was in employment in Luxemburg and, as such, was a frontier worker. ⁶ Thus Luxemburg was the competent Member State to provide family allowances under Regulation 883/2004. Regulation 883/2004 operates under the principle of ‘exclusivity’ (or ‘unicity’) of applicable legislation, where only a single Member State is competent to award social security benefits. ⁷ The rules determining which Member State is competent are to be found in Article 11(3) of Regulation 883/2004, which provides as a general rule, ⁸ that the competent Member State is the one of employment/self-employment (lex loci laboris). Family benefits (like the family allowances of Luxemburg) generally follow these rules on competence. ⁹

Although initially granted to the applicant, Luxemburg stopped and withdrew (with retroactive effect) the family allowances in question. The applicant challenged this decision. Under the applicable legislation in Luxemburg, persons who have custody of children placed under their care by virtue of a court order and are resident in Luxemburg are entitled to family allowances. ¹⁰ However, non-resident (frontier) workers in Luxemburg are only entitled to family allowances in respect of ‘children born within marriage, children born outside marriage and adopted children of the person’. ¹¹ Accordingly, it was not possible for non-resident workers (such as the applicant in question) to claim family allowances for children placed under their care by a court order, in contrast with resident workers.

The referring court inquired whether such difference in treatment was compatible with EU law, namely Article 45 TFEU, Article 7(2) of Regulation 492/2011, Article 67 of Regulation 883/2004 and Article 60 of Regulation 987/2009. ¹² The referring court also made note in its order of reference of a previous judgment concerning frontier workers’ equal treatment in the area of family allowances (the Caisse pour l’avenir des enfants judgment). ¹³

The case note will be structured as follows. The Opinion of Advocate General Szpunar in Hocinx will be analysed first (section 2), alongside the important case – Caisse pour l’avenir des enfants – which set an important precedent to the Hocinx case. The judgment of the Court in Hocinx will be subsequently analysed (section 3), highlighting main points of accord and disagreement with the Advocate General and the Caisse pour l’avenir des enfants judgment. The Court's treatment of Regulation 883/2004 (as a whole) will then subsequently analysed (section 4), followed by the Court's flimsy reasoning in refusing to apply Article 67 of Regulation 883/2004 (section 5). In section 6, the regulatory effect of Article 67 will be examined in order to distinguish it from Article 7(2) of Regulation 492/2011. Section 7 will focus on another interesting aspect of the judgment, namely whether the child shall be regarded as ‘family member’ of the worker and thus be an (indirect) recipient of equal treatment in accordance with Regulation 492/2011 and Regulation 883/2004. The penultimate section (section 8) will place the judgment in the broader context of related equal treatment cases and debates in the area of export of family benefits, while section 9 will conclude the analysis.

2. The Opinion of Advocate General Szpunar and the Caisse pour l’avenir des enfants judgment

The Advocate General viewed the present case as a follow-up to the Caisse pour l’avenir des enfants case, decided in 2020, which concerned the same family allowances. ¹⁴ In his Opinion he inquired whether the judgment of the Court could be transposed in the present case.

In Caisse pour l’avenir des enfants, the legislation of Luxemburg conferred a direct right to family allowances to children resident in Luxemburg. However, for frontier workers, the right to family allowances was conferred on the (working) parent. While all children resident in Luxemburg were entitled to the family allowances in question, the frontier workers could only claim family allowances for biological or adoptive children. Thus the frontier worker (applicant) in question was unable to claim family allowances in respect of the child of his wife from a previous marriage, with which he did not have a biological (or adoptive) link, but nevertheless was living in the same household. This differential treatment was examined under the equal treatment provision of Article 7(2) of Regulation 492/2011 and Article 67 of Regulation 883/2004.

The Court viewed that the benefits in question were falling in the material scope of both Regulations 492/2011 and Regulation 883/2004, as ‘social advantages’ and ‘social security benefits’ (as family benefits) respectively. Noting that ‘it is not inconceivable that Regulation No 883/2004 can apply in conjunction with Article 7(2) of Regulation No 492/2011’, ¹⁵ the Court found that the legislation in question gave raise to indirect discrimination which was not justifiable. ¹⁶ The Court highlighted that despite the different personal and material scope of the two Regulations, they can be applied together in cases concerning free movement of workers. ¹⁷ The differential conditions for entitlement between resident and non-resident (frontier) workers were declared incompatible with both Article 7(2) of Regulation No 492/2011 and Article 67 of Regulation 883/2004. The Court performed an analysis of compatibility of the legislation of Luxemburg with both Article 7(2) of Regulation No 492/2011 and Article 67 of Regulation 883/2004 and reached its conclusion using Article 67 ‘read in conjunction’ with Article 7(2). ¹⁸

Returning to the Opinion of Advocate General Szpunar in Hocinx, he considered the scope of this case as identical with the Caisse pour l’avenir des enfants case, thus applying the two Regulations (883/2004 and 492/2011) together (given that the family allowances in question were the same ones). ¹⁹ First, he concluded that the child of the applicant shall be regarded as a ‘member of the family’ of the frontier worker in question for the purposes of granting the family allowance in question. ²⁰ In reaching this conclusion he proposed a reading of the term ‘member of the family’ broader than the one in Directive 2004/38, ²¹ taking into account the rules on equal treatment guaranteed by Regulation 883/2004 (Article 4) and Article 7(2) of Regulation 492/2011, noting that these provisions ‘give concrete expression, in their respective fields, to the principle of equal treatment laid down in Article 45(2) TFEU’. ²² The Advocate General also considered the Charter of Fundamental Rights to be important in terms of securing the ‘best interests of the child’ ²³ as well as Regulation 2019/1111 ²⁴ in terms of ensuring cross-border recognition of the Belgian court decision (which placed the child under the care of the applicant) in Luxemburg. ²⁵ The conclusion that the child is a family member of the worker in question is crucial for the applicability of Article 7(2) of Regulation 492/2011 (since the child is an indirect recipient of equal treatment), ²⁶ but also for Article 67 of Regulation 883/2004. ²⁷

Examining whether the legislation in question gave raise to indirect discrimination between workers resident in Luxemburg and non-resident (frontier) workers, the Advocate General found that while ‘all children forming part of the household of a worker resident in Luxembourg’ can claim family allowances, children placed by court order under the care of a worker not resident in Luxemburg cannot do so. ²⁸ The differential treatment based on residence (inside or outside the territory of Luxemburg) gave raise to indirect discrimination. ²⁹ Such discrimination was therefore incompatible with Article 45 TFEU and Article 7(2) of Regulation 492/2011, ‘read in conjunction with Article 67 of Regulation No 883/2004 and Article 60 of Regulation No 987/2009’. ³⁰

3. The Court's ruling in Hocinx

The Court delivered a remarkably short judgment, in which the Court's ratio was worded in less than 20 paragraphs, where it reached the same conclusion as the Advocate General, namely that the legislation of Luxemburg was indirectly discriminatory. In contrast, however, with the Advocate General, the Court found for indirect discrimination only based on Article 7(2) of Regulation 492/2011 and Article 45 TFEU, not Article 67 of Regulation 883/2004.

The Court, relying upon the Caisse pour l’avenir des enfants case, reiterated that the family allowances in question fell into the category of ‘social and tax advantages’ and ‘social security benefits’ (namely ‘family benefits’). ³¹ Since workers resident in Luxemburg could claim these family allowances in respect of children placed under their custody by a court order, while non-resident workers were unable to do so, the Court found indirect discrimination on the basis of nationality. ³² The Court of Justice did not examine any possible justifications, since the referring court did not ‘set out any legitimate objective that might justify such indirect discrimination’. ³³

In terms of whether the child in question shall be regarded as a member of the applicant's family, the Court conducted no analysis in a manner similar to the Advocate General. According to the Court, however, Luxemburg was obliged to attach the same legal value to the Belgian court judgment as with an equivalent national decision on the basis of Regulation 2019/2011 on the cross-border recognition of decisions on the topic of institutional/foster care of a child. ³⁴ As such, the fact that the court order placing the child under the care of the frontier worker was rendered by a Belgian court and not of one of Luxemburg did not alter the finding for indirect discrimination. ³⁵

Lastly, the Court noted that whether the frontier worker provides for the upkeep of the child or not can be a relevant criterion for the award of the family allowances in question only if the same criterion exists in respect of resident workers. ³⁶

The judgment is neither astonishing nor noteworthy in terms of outcome in respect of finding indirect discrimination on the basis of Regulation 492/2011 and Article 45 TFEU. In fact, the case (to an extent) follows the decision in Caisse pour l’avenir des enfants.

The Hocinx judgment is, however, noteworthy in terms of the treatment of Regulation 883/2004 and the manner in which it views the relationship of this Regulation with Regulation 492/2011. The Court declared that Article 67 of Regulation 883/2004 is inapplicable to the proceedings and, as such, rendered its judgment only using Article 7(2) of Regulation 492/2011 (and Article 45 TFEU). Moreover, despite references to Regulation 883/2004, the operative part of the judgment omits any references to that instrument, focusing instead solely on Regulation 492/2011, indicating that Regulation 883/2004 was inconsequential to the outcome of the case.

Given that the two Regulations, 492/2011 and 883/2004, have been applied in conjunction with each other numerous times in the past, ³⁷ it is questionable why the Hocinx judgment chooses not to follow suit and sidestep Regulation 883/2004 (almost) entirely for the benefit of Regulation 492/2011.

4. Non-applicability of Regulation 883/2004 (and Implementing Regulation 987/2009)

Within the judgment there is a mention of the principle of equal treatment in social security law, as enshrined in Article 4 of Regulation 883/2004, as well as the conclusion that the family allowances in question are ‘family benefits’, thus within the material scope of Regulation 883/2004. ³⁸ The operative part of the judgment, however, is solely based on Regulation 492/2011 and Article 45 TFEU, which attests to the finding that Regulation 883/2004 was not decisive in the outcome of the case.

First, it is unknown why the Court mentions that the benefit in question is a ‘family benefit’ within the meaning of Article 3(1)(j) of Regulation 883/2004, since the Court had already concluded that it is a ‘social advantage’ for the purposes of Article 7(2) of Regulation 492/2011. The classification as a family benefit is not crucial for the classification as social advantage, since the latter term is broader than the former. ³⁹

Second, the mention of principle of equal treatment enshrined in Article 4 of Regulation 883/2004 is also of no added value as to the conclusion of the Court regarding equal treatment as enshrined in Article 45 TFEU and Article 7(2) of Regulation 492/2011.

It is not incorrect that the Court refers to these two Articles of Regulation 883/2004, since the family allowances in question are indeed family benefits and the legislation in question is incompatible with the principle of equal treatment enshrined in Article 4 of Regulation 883/2004. However, it is incomprehensible that the Court fails to follow up on them in the operative part of the judgment. ⁴⁰

Attempting to read between the lines, the message of the Court is bewildering and as such leaves ample room for further questions. Is the Regulation applicable or not? The Court neither said that it is applicable nor that it is not, it only said that Article 67 of this Regulation is not applicable. If the Regulation (except its Article 67) is applicable, then why has the Court not followed up on this finding in the operative part of the judgment? ⁴¹ If the Regulation is not applicable at all, then why does the Court reference it twice? The search for answers to such questions is a difficult task.

Despite the Court's convoluted message there is no doubt that Regulation 883/2004 is applicable, since all elements relating to the personal, material and territorial scope are fulfilled. ⁴² As mentioned above, the Court did recognize that the family allowances in question are family benefits, thus within the material scope of Regulation 883/2004. ⁴³ The personal scope is also fulfilled, since the applicant, as an EU migrant worker, is firmly within the situation of Article 2(1) of Regulation 883/2004. ⁴⁴ Obviously, the territorial scope is also fulfilled, since the applicant is a frontier worker in Luxemburg, resident in Belgium, two Member States of the EU. The Advocate General in his Opinion clearly demonstrated how the Regulation is applicable in the present case, being entirely consistent with the Caisse pour l’avenir des enfants case, in which Regulation 883/2004 was central to the outcome of the case.

Therefore, although the Court was clear only with regard to the fact that Article 67 of Regulation 883/2004 is not applicable (see section 5), the findings of the Court seem to be made in complete disregard of the Regulation as a whole, not just Article 67. The sidestepping of Regulation 883/2004 (and of Implementing Regulation 987/2009) is not just worrisome in a formal or symbolical sense, since it comes with a series of legal obligations, some of which are clearly distinct from the ones imposed by Regulation 492/2011.

5. Non-applicability of Article 67 of Regulation 883/2004 (and Article 60 of Implementing Regulation 987/2009)

Given the precedent set by the Caisse pour l’avenir des enfants case, in which the legislation was declared incompatible with both Article 67 of Regulation 883/2004 and Article 7(2) of Regulation 492/2011, it was only natural that the referring court raised a preliminary ruling under both provisions.

The Court in the Caisse pour l’avenir des enfants case examined the case utilizing both Article 67 of Regulation 883/2004 and Article 7(2) of Regulation 492/2011, despite the order of reference referring a question only under the latter. As such, it was a conscious choice of the Court to scrutinize the legislation in question under both instruments. Moreover, reading Article 67 ‘in conjunction with’ Article 7(2) suggests that the latter can be seen as an interpretative tool in securing the objectives of the former. This is logical, given that equal treatment for family benefits is specifically guaranteed by Regulation 883/2004, which is underrun by the principle of equality of treatment (a general principle of the Regulation, in Article 4). Article 67 is the specific rule applicable to family benefits which ensures equality of treatment for families in a cross-border situation. ⁴⁵ Article 7(2) of Regulation 492/2011 is, however, a ‘catch-all’ provision of ‘general application’ when it comes to equal treatment of workers in social advantages. ⁴⁶ As such, it is only natural that the Court, in Caisse pour l’avenir des enfants, applied Article 67 of Regulation 883/2004 and Article 7(2) of Regulation 492/2011 in conjunction with each other, given their complemental role in securing equality of treatment of workers as required also by primary law, Article 45(2) TFEU.

The finding of the Court in Hocinx therefore contradicts Caisse pour l’avenir des enfants directly in terms of the (non-)applicability of Article 67 of Regulation 883/2004. Paragraphs 24 and 25 of the Hocinx judgment are important in shedding light in the rationale behind this decision. Specifically:

The present case concerns only the question whether a Member State may apply different award conditions to a resident worker and a non-resident worker as regards the grant of [a family] allowance (…). ⁴⁷

The question referred for a preliminary ruling cannot be viewed in the light of Article 67 of Regulation No 883/2004 and Article 60 of Regulation No 987/2009, since those provisions relate not to the situation of the worker himself or herself but to the situation of the members of the worker's family residing in another Member State. ⁴⁸

On the point raised in paragraph 24, the exact same finding in Caisse pour l’avenir des enfants did not prohibit the Court from applying Article 67 of Regulation 883/2004. ⁴⁹ Substantively, this is a textbook case for the application of Article 67, since it prohibits differential award conditions for a family allowance based on the place of residence of the person entitled to the benefit (the worker). ⁵⁰

On the point raised in paragraph 25, the Court, in refusing to resolve the cases under Article 67 of Regulation 883/2004, states that the facts relate not to the worker himself but to the members of his family residing in another Member State (meaning the child). This is also in direct contradiction to previous case law, which held that family benefits ‘cannot be regarded as payable to an individual in isolation from his or her family circumstances’. ⁵¹ Article 67 grants the possibility to apply for family benefits to ‘all the ‘persons concerned’ (…) including the parents of the child for whom the benefits are claimed.’ ⁵² The term ‘persons concerned’ has been interpreted broadly to also include the spouse and all family members. ⁵³ As Advocate General Pikamäe noted in the Finanzamt Österreich case, family benefits follow a ‘global approach’ where ‘entitlement to family benefits does not apply to one parent alone, but to the family’. ⁵⁴ The Court of Justice in the same case confirmed the Advocate General's view. ⁵⁵ Therefore, regardless of which person is entitled, receives or forms the entitling basis for the benefit, family benefits are of collective nature, provided for the whole family and not strictly tied to a specific person, such as the worker or the child. ⁵⁶ As such, the grant of the family allowance relates to the worker as much as it relates to the child. Moreover, this (same) fact did not prohibit the Court from resolving the case under Article 67 of Regulation 883/2004 in the Caisse pour l’avenir des enfants case. ⁵⁷ The change of heart in Hocinx is inexplicable and indefensible, at least given the absence of any (convincing) justification.

Moreover, the Advocate General in his Opinion also had recourse to Article 67 of Regulation 883/2004 and Article 60 of Regulation 987/2009 – in addition to Article 7(2) Regulation 492/2011 – and used them in conjunction with each other. ⁵⁸ In short, the two provisions of the two Regulations are not mutually exclusive – on the contrary, as the Caisse pour l’avenir des enfants and the Advocate General in Hocinx demonstrated, they can be used together to achieve equal treatment guaranteed under EU primary law (Article 45(2) TFEU).

Nevertheless, even if the justification of the Court were defensible, Regulation 883/2004 applies not only to workers, but also their family members, as these are defined by (Luxemburg) national law. ⁵⁹ Therefore, if the child is to be regarded as a family member of the worker under Luxemburg law, then the Regulation is applicable. In fact, the Regulation applies to all EU nationals, irrespective of economic activity status and their family members.

6. The regulatory effect of Article 67 of Regulation 883/2004 and (Article 60 of Regulation 987/2009)

The regulatory effect of Article 67 of Regulation 883/2004 (but also Article 60 of Regulation 987/2009, which provides more detail and elaboration to the former) is to subject the whole family to the legislation of one Member State. ⁶⁰ In fact, Article 67 of Regulation 883/2004 employs a legal fiction, namely subjecting the whole family to the legislation of the competent Member State (‘as if they were residing in the [competent] Member State’). Families are not penalized should some or all family members reside outside the competent Member State, since they are treated ‘as if’ they are resident in the competent Member State. Article 60 of Regulation 987/2009 further substantiates this point, emphasizing (in the same spirit) that in the situation where entitlement depends on residence in the competent Member State that all involved persons shall be deemed as resident in this Member State. ⁶¹

Article 67 seeks to prevent Member States from providing differential amount of benefits dependent on their place of residence. ⁶² As a result, had the Court chosen to apply such articles to the present case, the whole family would be deemed as resident in the competent Member State (Luxemburg) and thus be entitled to the family allowances in question. Any differences in conditions for entitlement or award of the family allowances in question would be rendered obsolete, since both the frontier worker and the child should be treated as resident in Luxemburg.

Implementing Regulation 987/2009 stipulates additional duties incumbent upon the authorities in which an application for family benefits is made. For example, the authority in question is required to ‘examine the application on the basis of the detailed information supplied by the applicant, taking into account the overall factual and legal situation of the applicant's family’. ⁶³ Did the Luxemburg authorities discharge their duties for such an examination before refusing the family allowances in question? It is unknown from the facts and the information in the judgment of the Court.

Basing the outcome of the case solely on Regulation 492/2011 and not on Regulations 883/2004 and 987/2009 can send a questionable signal to national authorities in terms of honouring their obligations stemming from these two legal instruments, which confer very concrete substantive and procedural rights.

Moreover, Article 7(2) of Regulation 492/2011 prohibits direct and indirect discrimination in the area of social and tax advantages. Indirect discrimination can be justified if Member States can prove that it is appropriate for securing a legitimate objective and not going beyond what is necessary to achieve this objective. ⁶⁴ Member States have been successful in the past in justifying such indirectly discriminatory treatment. ⁶⁵ On the other hand, Article 67 of Regulation 883/2004 is absolute, and as such if national legislation breaches it, then it is not possible to justify such a breach.

7. Definition of ‘family member’

Apart from sidestepping Regulations 883/2004 and 987/2009, the judgment does not touch upon the issue of whether a child placed under care by virtue of a court order shall be regarded as a ‘family member’ of the worker. Indeed, the referring court did not refer a question as to whether a child placed under the care of a frontier worker under a court order of another Member State must be regarded as a family member of said worker. It solely asked whether the fact that resident workers could claim family allowances in respect of children placed in their care under a court order while non-resident workers could not, was compatible with EU law. Of course, the Court could potentially reformulate the question referred if it deemed it necessary and answer the question, ⁶⁶ but it chose not to do so.

Whether the child in question is a family member is crucial for the purposes of Regulation 492/2011 since the child is an indirect recipient of equal treatment. ⁶⁷ The term ‘family member’ was previously deemed to have the same meaning as in Article 2(2) of Directive 2004/38, meaning the ‘spouse or partner with whom the EU citizen has contracted a registered partnership, the direct descendants who are under the age of 21 or are dependants, and the direct descendants of the spouse or partner’. ⁶⁸

According to the Advocate General, the issue of whether children placed in in care by a court order can be regarded as a family member of the worker under Luxemburg law is not relevant to the proceedings. ⁶⁹ However, what is relevant in the eyes of the Advocate General is whether Member States in their national definitions, which define the members of a family, fulfil their equal treatment duties in the context of free movement of workers. ⁷⁰ Thus, as mentioned in section 2, he proposed a reading broader than the one in Article 2(2) of Directive 2004/38. Hence, according to the Advocate General, the child should have been regarded as a member of the family and as such benefit from equal treatment.

The Court did not perform such an analysis, however, and focused only on the issue of indirect discrimination. Since the Court reached its conclusions solely under Regulation 492/2011, it should have engaged with the definition of ‘member of family’ in the context of free movement of workers, just as the Advocate General did. The Court could either uphold the more restrictive reading following the Caisse pour l’avenir des enfants case, or side with the broader reading of the Advocate General, which is also sound, based on previous case law of the Court. ⁷¹ Refusing to engage with the definition of ‘family member’ in Directive 2004/38 is inconsistent with the Caisse pour l’avenir des enfants case but also past case law. ⁷²

Had the case been examined solely under Regulation 883/2004, such refusal to engage with the definition of ‘family member’ could have been more easily justified. Defining which persons are regarded as family members is a prerogative of Member States’ national law under Regulation 883/2004. ⁷³

However, this inconsistency with previous case law was not necessarily negative in terms of protecting the rights of the applicant. The Court held that by virtue of Regulation 2019/1111, the decision of the Belgian court should be regarded as of the same legal value as a decision taken in the Luxemburg legal order. Having already established incompatibility of national law with Article 7(2) of Regulation 492/2011, it would be unnecessary for the Court to comment on the definition of family in the law of Luxemburg. The automatic recognition of the placement decision of the Belgian court in Luxemburg, coupled with the existence of indirect discrimination, shall suffice in ensuring that the applicants in question are entitled to the family allowances in question.

On a final note, had the judgment been viewed under Regulation 883/2004, it also would be possible for the Court to utilize the general principle of assimilation of facts, enshrined in Article 5(b) of Regulation 883/2004, to reach the same conclusion (the recognition of the judgment of the Belgian court in Luxemburg). ⁷⁴

8. The bigger picture: the perceived unfairness of (unlimited) export of family benefits

The outcome of Hocinx could easily be foreseen on the basis of the Caisse pour l’avenir des enfants case. Overall, in both instances, Luxemburg attempted to restrict the export of its family allowances to another Member State with recourse to indirectly discriminatory practices, limiting entitlement for non-resident workers compared to the conditions applicable to resident workers. ⁷⁵ There is a long-standing, EU-wide, controversy surrounding the perceived unfairness in the exportation rules of family benefits. This discussion heated up in the run-up to the Brexit referendum in 2016, ⁷⁶ but also afterwards in Germany, Ireland, Denmark, the Netherlands and Austria. ⁷⁷ There was a call for an indexation (or adjustment) mechanism, to the cost of living of the country in which the family benefits are exported to. This discussion even resulted in a declaration by the European Commission, committing itself to table a proposal for the reform of Regulation 883/2004. This reform would allow Member States to index family benefits to the cost of living in the Member State where they are exported to. This declaration was made in the context of the EU-UK ‘New Settlement’. ⁷⁸ The EU-UK New Settlement, however, never materialized following Brexit, and thus the Commission never tabled such a proposal.

In the Caisse pour l’avenir des enfants case, Luxemburg raised the argument that it exports almost half of its family benefits. ⁷⁹ Recent data confirm this, with countries such as Luxemburg, Austria, Germany and Switzerland exporting a large share of their family benefits to another EU/EFTA Member State and/or the United Kingdom. ⁸⁰ Luxemburg for example, raised the issue that unlimited export of this magnitude can lead to ‘unreasonable burden for the Luxembourg family benefits system’. ⁸¹ The Polish Foreign Affairs Minister in 2014 wondered that ‘If Britain gets our taxpayers, shouldn’t it also pay their benefits? Why should Polish taxpayers subsidise British taxpayers’ children?’ ⁸²

The core of arguments raised by (some) Member States related to the perceived lack of financial fairness and fair burden-sharing among Member States stemming from the export rules on family benefits in Regulation 883/2004. ⁸³ Exporting family benefits to another Member State can be viewed as subsidizing families in living in another Member State, hence subsidizing ‘foreign’ family policy.

Indexation was seen by some Member States as the solution to correct such perceived unfairness in the unlimited export of family benefits, with Austria implementing an indexation mechanism when exporting its family benefits to other EU Member States. Ultimately, the Court of Justice put an end to the aspirations of Austria and (other Member States) envisaging national indexation mechanisms restricting export of family benefits with its Commission v. Austria (Indexation des prestations familiales) judgment. ⁸⁴ EU-wide mechanisms of indexation of family benefits, such as the one envisaged by the UK-EU New Settlement, were also declared incompatible, in relation not only to Regulation 883/2004 and Regulation 492/2011 but also to Article 45 TFEU. ⁸⁵

9. Concluding remarks

Returning to the judgment in Hocinx, it seems that Luxemburg attempted for a second time (following the 2020 Caisse pour l’avenir des enfants case) to restrict export of its family benefits by introducing differential entitlement conditions in its national law for resident and non-resident workers. While resident workers could claim family allowances in respect of children placed under their care by a court order, non-resident (frontier) workers could not. It is certainly positive that the Court did not succumb to the indirectly discriminatory practices of Luxemburg and pointed out the problematic nature of the legislation at hand in relation to Regulation 492/2011 and Article 45 TFEU. This was a correct finding and consistent with previous case law.

What is difficult to justify and comprehend, however, is the treatment of Regulation 883/2004. While two mentions to Regulation 883/2004 can be observed in the judgment, it is clear that the Regulation was inconsequential in the outcome of the case without a (good) reason. Moreover, Article 67 of Regulation 883/2004 was incorrectly deemed as not applicable. Past judgments could illuminate the way in which Regulation 883/2004 can be read in conjunction with Regulation 492/2011 in a synergistic manner, something which was – unexpectedly and regrettably – not followed in the present case.

Nevertheless, precipitated conclusions must not be drawn with regard to the future role of Regulation 883/2004. As demonstrated, the Court had, prior to this judgment, carefully crafted a coherent line of case law where the two Regulations have been applied in conjunction with each other. It would be not just precipitous but also presumptuous to deduce from a single judgment that Regulation 883/2004 has been relegated to a secondary role. The Court will have a chance to clarify its approach soon, in the context of two (separate) infringement decisions lodged against Germany and Italy, which have both resulted in a referral to the Court of Justice. ⁸⁶ The Commission referred the two Member States, alleging in both instances a failure to fulfil the obligations arising from Article 45 TFEU, Regulation 492/2011 and Regulation 883/2004 in the context of family benefits.

Overall, the judgment is still positive, in terms of not allowing Member States to restrict access to family benefits to non-resident (frontier) workers in comparison to resident workers. However, the flimsy reasoning regarding the non-applicability of Article 67 of Regulation 883/2004 and the treatment of this Regulation more broadly raise many critical questions and can be a point of further deliberation and inquiry – should it continue in future judgments.