Abstract
The article examines the scope and limits of the single-state principle in EU social security law. Article 11(1) of Regulation 883/2004 provides that a person shall be subject to the legislation of ‘a single Member State only’. This is commonly understood to give the conflict rules in Title II exclusive effect, designating one competent Member State whose legislation applies to the exclusion of all others. The article submits, first, that precluding non-competent Member States from granting benefits exceeds what is necessary to ensure freedom of movement for workers under Article 48 TFEU. Second, drawing a distinction between the powers of national authorities and the rights of individuals, the article argues that while non-competent Member States may not levy compulsory contributions on individuals subject to the legislation of another Member State, individuals may still claim benefits under national law, applied in accordance with applicable EU law. Third, the article rejects an expansive interpretation of the Treaty provisions on freedom of movement that would require non-competent Member States to grant contributory benefits to persons over whom they lack the power to levy contributions. EU law permits – but does not require – non-competent Member States to provide protection to persons not subject to their legislation under Regulation 883/2004.
Keywords
Introduction
This article examines the extent to which the social security legislation of several Member States may apply simultaneously to individuals exercising their right to freedom of movement within the internal market. 1 Regulations 883/2004 and 987/2009 establish a system of coordination concerning in particular the determination of the applicable legislation. 2 The central question is whether Member States not designated as competent under the conflict rules in Title II of Regulation 883/2004 retain any residual powers in the field of social security. This key issue of coordination has gained renewed relevance in today's digital labour market, where technological developments enable work to be performed remotely across borders. 3 Consider, for instance, a migrant worker residing in one Member State while pursuing activity as an employed person in another. Where the legislation of the State of employment applies pursuant to Article 11(3)(a) of Regulation 883/2004 (lex loci laboris), may the worker claim social security benefits from the State of residence? Conversely, may the State of residence levy social security contributions on the worker's income alongside the State of employment whose legislation has been designated as applicable?
At first glance, the answer to these questions may seem obvious. Article 11(1) of Regulation 883/2004 expressly provides that a person shall be subject to the legislation of ‘a single Member State only’. The single-state principle thus ‘excludes, in principle, any possibility of several national schemes being applied concurrently for the same period’. 4 Yet the case law of the European Court of Justice (ECJ) paints a more nuanced picture. EU law not only permits, but sometimes even requires, non-competent Member States to grant benefits in accordance with their own laws to individuals subject to the legislation of another Member State. 5 This line of case law has drawn criticism in legal scholarship, in particular for being difficult to reconcile. 6 Rennuy observes that ‘[t]he ECJ's position has changed every two decades’. 7 Jorens notes that ‘it seems that the European Court of Justice “commutes” between different point of views’. 8
Beneath the doctrinal debate lies a deeper constitutional question: does Title II of Regulation 883/2004, which under Article 48 TFEU is confined to the coordination of national social security systems, exhaustively determine the conditions under which Member States may apply their own legislation? Commentators tend to read the case law in absolute terms, assuming that the single-state principle in Article 11(1) of Regulation 883/2004 must be interpreted rigidly, so that only the legislation of the competent Member State applies to the exclusion of all others. From such an all-or-nothing perspective, any action by a non-competent Member State to grant benefits or levy contributions under national law would appear to contravene a perceived prohibition imposed by EU law, thereby rendering the case law seemingly contradictory where dual coverage is nevertheless permitted.
This article questions the assumption that the single-state principle is intended to be absolute. Article 48 TFEU empowers the EU to adopt only such measures as are ‘necessary’ to provide freedom of movement for workers, and does not deprive national legislatures of the power to organize their social security systems. 9 The different schemes of both competent and non-competent Member States coexist, each giving rise to different claims on different institutions under national law. 10 The sole objective of Regulation 883/2004 is to ensure the coordination of those schemes to guarantee the effective exercise of freedom of movement of persons. 11 Any limitation on a Member State's national regulatory autonomy – whether in the form of a duty to apply its legislation or to refrain from doing so – must, in principle, contribute to the establishment of the greatest possible freedom of movement under Article 48 TFEU. 12
Against this background, the article seeks to clarify the scope and limits of the single-state principle in EU social security law, as well as the exclusive effect of the conflict rules under Title II of Regulation 883/2004. It does so from both a theoretical and a practical perspective, structured around two research questions. Section 2 examines the powers of national authorities and the extent to which non-competent Member States may apply their legislation to individuals subject to the legislation of another Member State. It argues that national authorities generally retain the power to apply their own legislation, except with regard to levying compulsory contributions. Section 3 examines the rights of individuals and the extent to which they may claim benefits from non-competent Member States. It argues that direct rights may arise by virtue either of national law alone or of national law supplemented, where necessary, by EU law. Yet individuals cannot rely on their primary right to free movement under EU law to challenge national eligibility criteria that directly or indirectly require them to be subject to a Member State's legislation under Regulation 883/2004. Section 4 concludes by summarizing the article's key findings.
The Powers of National Authorities
The Single-State Principle
The first research question concerns the extent to which non-competent Member States may apply their legislation to individuals who are subject to the legislation of another Member State under Title II of Regulation 883/2004. The answer depends on an interpretation of Article 11(1), which provides that a person shall be subject to the legislation of ‘a single Member State only’. It is settled case law that the interpretation of a provision of EU law requires consideration not only of its wording but also of its context and the objectives and purpose pursued by the act of which it forms part. 13 Regulation 883/2004 must therefore be interpreted, as far as possible, in such a way as not to affect its validity and in conformity with primary EU law as a whole and, in particular, with the Treaty provisions on freedom of movement. 14
At the outset, the term ‘only’ in Article 11(1) of Regulation 883/2004 may appear to exclude the application of any legislation other than that of the competent Member State. Since the exercise of public authority presupposes the applicability of national law, such an interpretation suggests that the single-state principle effectively deprives the national authorities of non-competent Member States of the power to act. As a result, individuals would be entitled to claim benefits solely under the legislation of the competent Member State. This literal interpretation arguably finds some support in the context and purpose of Article 11(1). Title II gives effect to the single-state principle 15 by setting out a complete and uniform set of conflict rules 16 designed to identify the Member State to which individuals are to be considered most closely connected in specific situations. 17 The objective is to ‘avoid the simultaneous application of several national legislations and the difficulties that may arise as a result’. 18 The exclusive application of the competent Member State's legislation offers a simple, clear and accessible framework for individuals, businesses and authorities alike.
Yet an interpretation of Article 11(1) of Regulation 883/2004 that entirely precludes non-competent Member States from applying their legislation would constitute a significant interference with national regulatory autonomy. The legal basis of Regulation 883/2004 is embedded in the principle of free movement of persons. 19 Article 48 TFEU empowers the EU to adopt only such measures in the field of social security as are ‘necessary’ to provide freedom of movement for workers. According to settled case law, that provision provides for a system of coordination and does not detract from the power of Member States to organize their social security systems. 20 In the absence of harmonization at EU level, it remains for national legislatures, in compliance with applicable EU law, to determine the policy objectives they wish to pursue and to set the conditions for entitlement to benefits. 21 While other secondary aims of EU social security law such as fair burden-sharing and administrative manageability cannot be disregarded, 22 the precise reach of limitations on national regulatory autonomy must be determined by reference to the objective of ensuring the effective exercise of free movement of persons under Article 48 TFEU, in accordance with the principles of conferral, subsidiarity and proportionality under EU constitutional law. 23
Thus the single-state principle in Article 11(1) of Regulation 883/2004 cannot be construed as an end in itself but only as a means to avoid the complications arising from the simultaneous application of multiple national legislative systems and the unequal treatment that may result from partial or total overlap of applicable legislation for persons exercising their right to free movement. 24 Several provisions of Regulation 883/2004 indicate that the single-state principle is not intended to operate as an absolute rule. Article 10, for instance, only precludes the overlapping of benefits of the same kind for one and the same period of compulsory insurance, while Article 14 permits voluntary or optional insurance in more than one Member State under certain conditions. Title III further provides detailed rules on aggregation and pro rata calculation effectively requiring Member States to provide invalidity and old-age benefits concurrently, 25 while Article 68 lays down priority rules for overlapping entitlements to family benefits.
The primary concern in cases of positive conflicts of law, where a non-competent Member State seeks to apply its legislation alongside that of the competent Member State, is to prevent workers and employers from having to make contributions to more than one Member State. 26 Such an increase in the overall financial burden would impede free movement by discouraging employers from hiring migrant workers and providing cross-border services. The mere payment of benefits, by contrast, does not raise the same concerns. If, for instance, a Member State decides to grant a family benefit to any parent of a child residing on its territory to ensure a reasonable standard of upbringing, denying that benefit to parents who work in another Member State would be at variance with the purpose of contributing to the establishment of the greatest possible freedom of movement, provided the benefit is granted in accordance with the principle of equal treatment and without any duty to contribute. 27 Regulation 883/2004 must be interpreted in light of the objective laid down in Article 48 TFEU, which entails that migrant workers must not lose entitlement to benefits as a consequence of exercising their right to free movement. 28
An interpretation of Article 11(1) of Regulation 883/2004 that allows non-competent Member States to apply their own legislation thus strikes a better balance between effective social security coordination and national regulatory autonomy than a rigid single-state principle. This is, however, conditional on national authorities exercising their residual powers in compliance with the primary right to free movement under EU law. Such an approach also clarifies the underlying logic of EU social security law and offers a coherent basis for interpreting longstanding case law. 29 The following analysis proceeds in three steps. Section B outlines the basic principles of coordination developed by the ECJ under Regulation 3/58, read in conjunction with the limited legislative powers conferred on the European Economic Community under Article 51 EEC. 30 Section C examines how the Court adjusted these principles with regard to compulsory contributions under Regulation 1408/71. 31 Section D demonstrates how recent case law under Regulation 883/2004 continues this line of reasoning by interpreting the single-state principle under Article 11(1) in light of the right to free movement under Article 48 TFEU.
Nonnenmacher: National Regulatory Autonomy as Point of Departure
The issue of whether non-competent Member States retain any residual powers once a competent Member State has been designated arose shortly after the entry into force of the very first EU social security instrument, Regulation 3/58.
In Nonnenmacher, the question was whether the Netherlands could apply its legislation to grant a widow's pension to one of its residents despite France being the competent Member State to apply its legislation under Regulation 3/58. While Ms Nonnenmacher satisfied all national eligibility criteria for a Dutch widow's pension, her late husband's employment in France had made him subject to French law at the time of his passing. Since the applicable French legislation only provided such pensions to widows with disabilities, the referring court sought clarification on whether Article 12 of Regulation 3/58, which subjected workers to the legislation of their State of employment (lex loci laboris), precluded the simultaneous application of the more favourable Dutch legislation.
Unlike Article 11(1) of Regulation 883/2004, Regulation 3/58 did not expressly provide that workers were to be subject to the legislation of ‘a single Member State only’. The ECJ was therefore tasked with interpreting the specific conflict rule in light of its broader context and purpose. The Court held that while the wording of Article 12 of Regulation 3/58 required the competent Member State to apply its legislation, it did not expressly preclude other non-competent Member States from applying theirs.
32
Having emphasized that freedom of movement constitutes ‘the foundation, the framework and the limits’ of EU social security law, the Court noted that a restriction on the freedom of the national legislature in the form of a prohibition against simultaneous application should only be presumed where it would be ‘clearly contrary to the spirit of the Treaty’ and concluded: For the foregoing reasons, Article 12 of Regulation No 3 does not prohibit the application of the legislation of a Member State other than that in which the person concerned works, except to the extent that it requires that person to contribute to the financing of a social security institution which is unable to provide him with additional advantages in respect of the same risk and of the same period. Consequently it is permissible for States, other than that in the territory of which the insured person is employed, to provide or not to provide for the grant of rights to benefits in favour of that person even if he enjoys, in respect of the same risk and period, similar rights under the legislation of the State in which he works.
33
To sum up, when first faced with the issue of simultaneous application of multiple legislations, the Court adopted a cautious approach firmly grounded in the coordinative function of Regulation 3/58. Its point of departure was the premise of national regulatory autonomy under Article 51 EEC (now Article 48 TFEU), which granted the Community limited powers in the field of social security. Non-competent Member States were precluded from applying their legislation only where this would amount to a restriction on freedom of movement. In the Court's view at the time, this was the case, exceptionally, where simultaneous application would increase the charges on workers and employers without providing any supplementary protection. This initial tolerance of dual compulsory contributions was, however, set to change following the adoption of Regulation 1408/71.
Ten Holder: Prohibiting Dual Compulsory Contributions
Article 13(1) of Regulation 1408/71 introduced the single-state principle now found in Article 11(1) of Regulation 883/2004, expressly providing that individuals must be subject to the legislation of ‘a single Member State only’. 36 According to the explanatory memorandum to the Commission's proposal, the provision's aim was to define the purpose of the conflict rules with regard to compulsory insurance following the Nonnenmacher doctrine developed under Regulation 3/58. 37 This legislative amendment prompted the ECJ to revisit its earlier case law on dual compulsory contributions.
In Perenboom, the Court ruled that Article 13(1) of Regulation 1408/71 precludes non-competent Member States from levying compulsory contributions, regardless of whether they provide supplementary protection. The question was whether the Netherlands could calculate contributions based on income earned while one of its residents was temporarily working in Germany and subject to German legislation under Article 13(2)(a) (lex loci laboris). The Court held that requiring individuals to pay contributions under the legislation of multiple Member States while being insured under only one contravened the single-state principle in Article 13(1). 38 Mr Perenboom was immune from any duty to contribute under the legislation of his State of residence while being subject to the legislation of his State of employment. Income earned in Germany could therefore not be factored into Dutch contribution calculations. 39
In Ten Holder, the Court went a step further by ruling that Article 13(1) of Regulation 1408/71 also excludes simultaneous insurance under multiple legislations. The case concerned a migrant worker who sought to join the social security scheme of the Netherlands, her State of residence, despite Germany being the competent Member State to apply its legislation under Article 13(2)(a) (lex loci laboris). The Court held that the conflict rules ‘divest the legislature of each Member State of the power to determine the ambit and conditions for the application of its national legislation’, so that, once the competent Member State has been designated, only the legislation of that Member State is applicable. 40 Since Ms Ten Holder could not be simultaneously insured in the Netherlands, she was not entitled to benefits under Dutch law. These findings were reiterated in the similar case of Luijten. 41
The ECJ's apparent shift from a broad principle of national regulatory autonomy under Regulation 3/58 to a rigid single-state principle under Regulation 1408/71 has sparked scholarly debate. 42 Taken at face value, the Court's statements in Ten Holder might seem to suggest that the single-state principle now found in Article 11(1) of Regulation 883/2004 entirely precludes non-competent Member States from applying their legislation even for the sole purpose of granting benefits to migrant workers. While such a prohibition against overlapping benefits would partly serve the objective of avoiding administrative complications, in particular for national authorities, it exceeds what is necessary to ensure freedom of movement under Article 48 TFEU. In its more recent case law, therefore, the Court has reaffirmed that non-competent Member States retain the power to grant benefits under national law. 43 Although some commentators question whether permitting non-competent Member States to grant benefits is truly compatible with the Ten Holder doctrine, a closer reading of the case law reveals a largely consistent and nuanced approach to the role of non-competent Member States, in accordance with the limited powers conferred by Article 48 TFEU.
In Nonnenmacher, the ECJ pinpointed the central premise of EU social security law: while the coordination framework adjusts national social security schemes in cross-border situations, it does not eliminate their coexistence. 44 Any limitation on the regulatory autonomy of national legislatures – whether in the form of a duty on national authorities to apply their legislation or to refrain from doing so – must, in principle, be justified by the objective of contributing to the establishment of the greatest possible freedom of movement for workers under Article 48 TFEU. With regard to the competent Member State, the Court found that the aim of ensuring continuous social security coverage for migrant workers justified a duty on national authorities to apply their legislation. 45 The conflict rules now set out in Title II of Regulation 883/2004 thus effectively ‘replace’ the national connecting factors that would otherwise apply under the legislation of the competent Member State. 46 For non-competent Member States, however, the Court drew a distinction between benefits and contributions. Benefits do not restrict freedom of movement, whereas contributions may, depending on their compulsory nature and the scope of the additional protection they provide. 47
In Ten Holder, the Court did not abandon these basic principles of coordination but adopted a stricter approach to compulsory contributions. The case involved a migrant worker excluded from affiliation to the contributory scheme of her State of residence because she already received comparable benefits from the competent Member State. Since contributory schemes are financed directly through contributions from insured persons and/or their employers, the outcome in Ten Holder appears to follow logically from Perenboom. If the Court had invalidated the national exclusion rule – even at Ms Ten Holder's request – she would have become affiliated with multiple contributory schemes. This, in turn, would have enabled the non-competent Member State to levy contributions under national law alongside those of the competent Member State, contrary to the objective of precluding dual compulsory insurance under Article 13(1) of Regulation 1408/71. Since the non-competent Member State was precluded from levying compulsory contributions under the single-state principle, Ms Ten Holder was not entitled to contributory benefits under national law.
This link between the national authorities’ inability to levy compulsory contributions under EU law and the individual's ineligibility for contributory benefits under national law emerges from the opinion of Advocate General Sir Gordon Slynn in Ten Holder, where he specifically cautioned against conflating benefits and contributions in this way. While he accepted that the Court's interpretation of Article 13(1) of Regulation 1408/71 in Perenboom precluded compulsory insurance in more than one Member State, he maintained that there was ‘nothing in the Regulation which precludes a person from being granted social security benefits in another Member State at his option or on a voluntary basis’. 48 In support, he cited the judgment in Petroni, where the Court had held that applying the coordination rules under Regulation 1408/71 so as to reduce the amount of a benefit acquired under national law alone would run counter to the objective of free movement and thus be incompatible with Article 51 EEC (now Article 48 TFEU). 49
The Court, however, rejected the Advocate General's proposed distinction between benefits and contributions within contributory schemes. While Regulation 1408/71 must not result in the loss of rights under national law, that principle does not confer on individuals an unconditional right to social security coverage ‘regardless of the obligations to contribute or of any other costs which may result therefrom’. 50 As the Court has underlined in later case law, imposing a duty on non-competent Member States to provide contributory benefits to individuals from whom they cannot levy contributions would upset the financial balance of contributory schemes and potentially undermine the objective of fair burden-sharing that underpins EU social security law. 51
In light of the above, the Ten Holder doctrine should not be seen as a departure from the central tenets of the Nonnenmacher doctrine, but rather as an adaptation of these basic principles of coordination in response to the revised legal framework introduced under Article 13(1) of Regulation 1408/71. While the ECJ's initial tolerance of dual compulsory contributions under Regulation 3/58 appears understandable from the perspective of individual workers, the resulting increase in the overall financial burden could discourage employers from hiring migrant workers and providing cross-border services. In order to safeguard the effective exercise of free movement of persons through the coordination of national social security systems, the legislature clarified that a person must be subject to the legislation of ‘a single Member State only’. The Court responded by adopting a stricter interpretation of the single-state principle that detracts from the power of non-competent Member States to levy compulsory contributions. 52
Bosmann: Drawing the Lines Together
In recent years, the ECJ has consistently reaffirmed that non-competent Member States retain the power to apply their legislation in order to grant benefits to individuals subject to the legislation of another Member State. The Court has further clarified that the Ten Holder doctrine under Regulation 1408/71 did not depart from the basic premise of national regulatory autonomy underpinning the Nonnenmacher doctrine under Regulation 3/58.
In Bosmann, the ECJ ruled that a Member State may still grant benefits under national law even if it is not competent to apply its legislation under Title II of Regulation 1408/71. The case concerned a migrant worker residing in Germany whose entitlement to German child benefits was suspended after she took up employment in the Netherlands, where she had no equivalent right to benefits. As German law provided child benefits solely on the basis of residence, the referring court asked whether Article 13(2)(a) (lex loci laboris) precluded the simultaneous application of the German legislation. The Court held that although the Netherlands was the competent Member State, ‘the application of provisions from another system of legislation is not thereby always precluded’. 53 Having emphasized the objectives of free movement and the improvement of standard of living and conditions of employment underlying EU social security law, 54 the Court concluded that the conflict rules in Title II neither required nor prohibited Germany from granting benefits when it was not the competent Member State. 55 National authorities were thus permitted under EU law and required under national law to grant the benefit in question. 56
The ECJ's interpretation in Bosmann aligns with the Ten Holder doctrine. 57 In rejecting the German Government's argument that Ten Holder and Luijten precluded the referring court from granting benefits to Ms Bosmann, the Court stressed that those judgments must be read ‘in their specific contexts’. 58 Whereas Dutch law had excluded Ms Ten Holder from affiliation with the contributory scheme in her State of residence, the German child benefit was financed through general taxation and was not conditional on employment or insurance. 59 Since Ms Bosmann met all national eligibility criteria under German law, the power to grant the non-contributory child benefit derived not from EU law but from Germany's own legislation. The Court's reasoning in Bosmann thus echoes its four-decade-old reasoning under the Nonnenmacher doctrine, while taking due account of the prohibition on dual compulsory contributions under the Ten Holder doctrine. Provided that non-competent Member States do not make entitlement to benefits conditional upon compulsory contributions, there is no free movement justification for prohibiting more favourable treatment of migrant workers. Another interpretation would go beyond the objective of Regulation 883/2004 and exceed the purpose and scope of Article 48 TFEU.
In subsequent case law, the ECJ further established that the sole decisive criterion for the simultaneous application of multiple legislations is whether the non-competent Member State provides benefits without imposing a corresponding duty to contribute under national law. In Hudzinski and Wawrzyniak, the Court ruled that the Bosmann doctrine is neither limited to the State of residence nor confined to cases where individuals cannot claim benefits from the competent Member State, as had been the case for Ms Bosmann. 60 In Franzen and Others, the Court confirmed that the Bosmann doctrine extends to all types of social security benefits, moving beyond the family benefits at issue in Bosmann and Hudzinski and Wawrzyniak. 61 In Rechtsanwaltskammer Wien, the Court clarified that the Bosmann doctrine also applies to benefits acquired through voluntary contributions. 62
Only once has the ECJ found that a non-competent Member State was precluded from granting benefits. In B., the question was whether a Czech citizen residing in France could claim family benefits under Czech law, which reportedly provided such benefits to anyone with a registered address in the Czech Republic. The Court observed that France was the competent Member State under Article 13(2)(f) of Regulation 1408/71 (lex loci domicilii) and noted that a non-competent Member State may grant benefits only if there are ‘specific and particularly close connecting factors between the territory of that State and the situation at issue, on condition that the predictability and effectiveness of the application of the coordination rules of Regulation No 1408/71 are not disproportionately affected’. 63 Since the existence of a registered address alone did not establish a sufficient link to Czech territory, the national authorities were precluded from granting the benefit. 64
The judgment in B., delivered by a three-judge chamber without the opinion of an Advocate General, has received mixed reception by scholars. 65 The Court inferred the requirement of ‘specific and particularly close connecting factors’ from a context-specific passage in Hudzinski and Wawrzyniak. 66 Neither this requirement nor the B. judgment has been cited by the Court since, leaving its precedential value uncertain. The Court's reasoning appears to rest on the Member States’ national interest in limiting their social security schemes to persons who are neither subject to their legislation under Regulation 883/2004 nor otherwise meaningfully connected to their territory. While this objective is clearly legitimate from the perspective of national legislatures, it remains unclear how the mere granting of benefits by a non-competent Member State could disproportionately affect the predictability and effectiveness of EU social security law. The conflict rules require the competent Member State to apply its legislation and preclude non-competent Member States from levying compulsory contributions. While any social security scheme must necessarily be subject to limits, it is for national legislatures to define the relevant connecting factors outside the scope of Title II of Regulation 883/2004.
An alternative reading of B., consistent with the broader trajectory of case law and more compatible with primary EU law, suggests that the Court did not really seek to detract from the power of national authorities to grant benefits, but rather to delineate the role of EU law in relation to the individual's right to benefits under national law. It is settled case law that Member States have a margin of discretion in choosing the measures capable of achieving the aims of their social policy. 67 Even assuming that the refusal to grant the benefit in question amounted to a restriction on free movement, the national authorities could arguably have relied on the requirement of a ‘real link’ between the applicant and the society as an overriding reason of general interest. 68 In the circumstances of the main proceedings, EU law would thus likely not have required the Czech Republic to grant family benefits where neither the parents nor the children were actually residing on its territory.
To conclude, the contemporary Bosmann doctrine confirms that the national authorities of non-competent Member States generally retain the power to apply their legislation to individuals subject to the legislation of another Member State under Title II of Regulation 883/2004. The single-state principle limits national regulatory autonomy only to the extent necessary to ensure freedom of movement under Article 48 TFEU by detracting from the power of non-competent Member States to levy compulsory contributions. National authorities are thus permitted under EU law and may, depending on the circumstances, be required under national law to grant benefits. Any interpretation to the contrary appears incompatible with primary EU law and would risk calling into question the validity of Article 11(1) of Regulation 883/2004.
The Rights of Individuals
The Principle of Inviolability of National Rights
The second research question is to what extent individuals may claim benefits from non-competent Member States. While national authorities generally retain the power to apply their legislation to individuals subject to the legislation of another Member State under Title II of Regulation 883/2004, the mere possibility to grant benefits under EU law does not in itself create an enforceable right for individuals or a corresponding duty for national authorities under national law. The principles of free movement and equal treatment under primary EU law become relevant only where a non-competent Member State, in the exercise of its national regulatory autonomy, provides protection beyond what is required by the conflict rules set out in Title II.
A proper understanding of how EU law safeguards individual social security rights begins with the ECJ's seminal ruling in Petroni. In that judgment, the Court laid the groundwork for what may be regarded as a structural principle of EU social security law, according to which the coordination rules now set out in Regulation 883/2004 may not operate to the detriment of social security rights that an individual has been able to acquire under national law. 69 The case concerned whether national authorities could apply the rules on pro rata calculation under Regulation 1408/71 in order to grant a benefit of a lower amount than that to which the person concerned was entitled on the basis of national law. The Court emphasized that Article 51 EEC (now Article 48 TFEU) empowered the legislature to adopt only such measures as were necessary to ensure freedom of movement for workers. 70 That objective would not be achieved if workers were to lose social security advantages guaranteed by the legislation of a single Member State. 71 Article 46(3) of Regulation 1408/71 was therefore incompatible with primary EU law to the extent to which it imposed a reduction in the amount of the benefit acquired under national law alone. 72
The principle of inviolability of national rights under EU social security law entails that, in the absence of a specific legal basis under national law, non-competent Member States cannot rely on Article 11(1) of Regulation 883/2004 as such to deny benefits to individuals who otherwise satisfy all national eligibility criteria. A contrary interpretation would mean that the single-state principle itself deprives individuals of their right to benefits under national law solely for having exercised their right to free movement under EU law. Such an outcome would undermine the objectives pursued by Regulation 883/2004 and go beyond what is necessary under Article 48 TFEU, which seeks to help establish the greatest possible freedom of movement for persons. 73
Yet the principle of inviolability of national rights does not resolve all outstanding issues between migrant workers and non-competent Member States. In an effort to reduce public expenditure, several Member States have introduced national provisions restricting access to benefits for individuals residing or working in other Member States. Because such measures effectively target migrant workers and nationals of other Member States, the question arises whether they may be challenged on the basis of the right to equal treatment. While EU law respects the autonomy of Member States in organizing their social security systems, national legislation must always comply with applicable EU law and in particular with the Treaty provisions on free movement. 74
Article 45(2) TFEU expressly prohibits ‘any discrimination’ based on nationality as regards employment, remuneration and other conditions of work and employment. While primary EU law cannot guarantee that cross-border activities will be neutral in terms of social security, it is settled case law that national legislation is compatible with Articles 45 and 48 TFEU only if it does not place a worker at a disadvantage compared with those who pursue all their activities in the Member State in which it applies. 75 Such a disadvantage constitutes indirect discrimination within the meaning of the Treaty, irrespective of whether the Member State is required or simply permitted to apply its legislation. Such national measures may therefore only be justified by overriding reasons in the public interest in accordance with the principle of proportionality. 76
The following analysis demonstrates how individuals may invoke their primary right to free movement under EU law to claim benefits from non-competent Member States. The main barrier arises from the ECJ's interpretation of Articles 45 and 48 TFEU, read in conjunction with the system of coordination established by Regulation 883/2004. The right to freedom of movement cannot be relied upon to invalidate national eligibility criteria that directly or indirectly require that an individual be subject to a Member State's legislation under Title II. As a result, individuals cannot claim affiliation to the contributory schemes of non-competent Member States – that is, schemes funded wholly or partially through contributions from affiliated persons and/or their employers – because such affiliation entails a duty to contribute, which national authorities cannot enforce under the single-state principle in Article 11(1). Nor may individuals challenge national affiliation requirements in non-contributory schemes that reflect the conflict rules set out in Title II. EU social security law does not require non-competent Member States to extend the scope of their national law to individuals not subject to their legislation. Only where national legislatures exercise their regulatory autonomy to provide protection beyond the scope of Title II do the principles of free movement and equal treatment become relevant in assessing the compatibility of national eligibility criteria.
Hudzinski: Non-Competent Member States Must Respect Primary EU Law
In Hudzinski and Wawrzyniak, the ECJ ruled that primary EU law remains applicable even where the Member State is not competent to apply its legislation under Title II of Regulation 883/2004. The case concerned posted workers claiming non-contributory child benefits from Germany, even though Poland was the competent Member State under Article 14 of Regulation 1408/71. While the workers satisfied the primary eligibility criterion of being subject to unlimited tax liability in Germany, they did not possess a direct right to child benefits under German law, which excluded entitlement for persons receiving comparable benefits abroad. The Court held that the contested national provision amounted to indirect discrimination and imposed a disproportionate restriction on the free movement of workers under Articles 45 and 48 TFEU. 77 Rather than merely reducing the benefit by the amount received abroad, the provision entirely excluded entitlement, placing migrant workers at a disadvantage compared with those who had worked in only one Member State. The posted workers were thus entitled to child benefits under national law, as supplemented by primary EU law. 78
These findings were reaffirmed in Rechtsanwaltskammer Wien, which concerned the right to benefits accrued through voluntary contributions made to a non-competent Member State. The case involved a lawyer who, despite having reached the statutory retirement age in Austria, was denied early retirement pension by the Vienna Bar Association because he refused to cease practicing law in other Member States. The Court ruled that a requirement to give up the right to practise law both domestically and abroad constituted a disproportionate restriction on the free movement of individuals who had not yet reached the statutory retirement age in other Member States where they remained professionally active. 79 The lawyer was thus entitled to benefits under national law, as supplemented by EU law, despite being subject to the legislation of another Member State under Title II of Regulation 883/2004.
The ECJ's application of primary EU law to non-competent Member States has sparked renewed debate among scholars. 80 At first glance, Hudzinski and Wawrzyniak may seem to depart from Ten Holder, where the Court considered the compatibility of a comparable national provision excluding recipients of foreign benefits. 81 Yet the devil is in the detail. In Ten Holder, the migrant worker claimed affiliation with the contributory scheme of her State of residence, notwithstanding that the legislation of her State of employment applied under Title II of Regulation 1408/71. Had the Court invalidated the national exclusion rule, she would have become simultaneously affiliated with the contributory schemes of both the competent and the non-competent Member State. In Hudzinski and Wawrzyniak, by contrast, the child benefits were financed from general taxation and granted to individuals subject to tax liability without any duty to make contributions. As there was no risk of dual compulsory contributions, the single-state principle did not preclude simultaneous affiliation with such a non-contributory scheme.
Furthermore, while non-competent Member States may perceive the ECJ's proportionality review as encroaching upon their national regulatory autonomy, it must be borne in mind that Regulation 883/2004 does not replace national connecting factors where the Member State is not competent to apply its legislation under the conflict rules in Title II. Since social security benefits can neither be financed nor granted to everyone, national legislatures must decide who has a sufficiently close connection to be covered by their society's safety net. Yet that margin of discretion cannot undermine the fundamental freedoms of EU law. 82 The ECJ has consistently held that ‘the fact that a matter falls within the competence of the Member States does not alter the fact that, in situations covered by European Union law, the national rules concerned must have due regard to the latter’. 83 If national legislation were immune from review outside the scope of Title II, a non-competent Member State could in theory restrict access to supplementary benefits to its own nationals. Such an outcome would contravene the prohibition of discrimination on grounds of nationality in Article 18 TFEU, which finds specific expression in the field of social security in Article 45 TFEU and Article 4 of Regulation 883/2004. 84
To sum up, non-competent Member States retain the power to grant benefits under national law but must exercise that residual power in compliance with applicable EU law. A contrary interpretation would mean that the single-state principle in Article 11(1) of Regulation 883/2004 effectively deprives individuals of their primary right to free movement, which would go beyond the objective of Regulation 883/2004 and exceed the purpose and scope of Article 48 TFEU. Any national measure that discriminates against individuals on the basis of their exercise of the right to freedom of movement must be justified by overriding reasons in the public interest and comply with the principle of proportionality. 85 As will be examined below, however, such overriding reasons typically arise in the context of contributory schemes, where non-competent Member States lack the power to levy contributions.
Van Den Berg: No Duty to Provide Protection Beyond the Scope of Title II
The question of whether the principle of the inviolability of national rights in Petroni has limits first arose before the Court in Ten Holder. As noted above, the central issue was whether a migrant worker could be simultaneously affiliated with multiple social security schemes. Advocate General Sir Gordon Slynn argued that, although a non-competent Member State could not require a person to be compulsory insured under the single-state principle in Article 13(1) of Regulation 1408/71, workers should remain free to join an additional scheme on a voluntary basis. 86 The Court rejected this view, noting that primary EU law does not confer on individuals an unconditional right to social security coverage ‘regardless of the obligations to contribute or of any other costs which may result therefrom’. 87
Such an interpretation of Articles 45 and 48 TFEU, read in conjunction with the coordination framework established by Regulation 883/2004, is consistent with the objective of contributing to the establishment of the greatest possible freedom of movement. Had the Court recognized an individual right to ‘opt-in’ to the contributory schemes of non-competent Member States, the resulting increase in the overall financial burden could have discouraged employers from hiring migrant workers and providing cross-border services. A duty on national authorities to grant contributory benefits without the corresponding power to levy contributions would also upset the financial balance of contributory schemes and potentially undermine the objective of fair burden-sharing under EU social security law. 88 Because national law generally conditions entitlement to contributory benefits on the payment of compulsory contributions – which non-competent Member States cannot enforce under the single-state principle in Article 11(1) of Regulation 883/2004 – individuals have no right to claim these benefits under primary EU law.
This line of reasoning was confirmed by the ECJ in van den Berg and Others, which raised the question of whether migrant workers employed under low-income ‘mini-job’ contracts and insured only against occupational injuries in Germany, their State of employment, could claim contributory old-age pensions and non-contributory child benefits from the Netherlands, their State of residence. The workers argued, unsuccessfully, that the refusal by Dutch authorities to grant them the benefits on the ground that they were subject to German legislation under Title II of Regulation 1408/71 deprived them of essential social security protection solely for having exercised their right to free movement.
In the first part of the judgment, the ECJ assessed the compatibility of a national provision introduced under Dutch law in 1998 that excluded from affiliation those subject to the legislation of another Member State by virtue of a treaty, convention or a decision of an international public law organization. 89 The Court reiterated its key findings in the Nonnenmacher-Ten Holder-Bosmann line of case law. While the conflict rules divest the legislature of each Member State of the power to determine at its discretion the ambit and the conditions for the application of its national legislation, the single-state principle does not deprive a non-competent Member State of the possibility of granting, under certain conditions, benefits under national law. 90
The Court clarified, however, that the residual power of non-competent Member States to grant benefits under EU law does not create a right for the individual, nor a corresponding duty for national authorities under national law. Primary EU law cannot guarantee to a worker that transferring his or her activities to another Member State will be neutral in terms of social security. 91 This applied even in the absence of any protection in the State of employment, as this was merely the consequence of the application of the legislation of the competent Member State under Regulation 1408/71 (now Regulation 883/2004). 92 A duty on the State of residence to grant benefits in those circumstances could result in the exclusive application of the law of the Member State with the most advantageous rules. This would undermine the system of coordination, upset the balance struck by the TFEU and interfere with the financing of national social security systems. 93
Importantly, the Court made no distinction between contributory and non-contributory benefits in this regard. National eligibility criteria that require a person to be subject to a Member State's legislation reflect the underlying logic of EU social security law. The conflict rules in Title II of Regulation 883/2004 determine the Member State to which an individual is most closely connected as a matter of EU law and effectively replace national connecting factors that would otherwise apply under the legislation of the competent Member State. Outside the scope of Title II, however, non-competent Member States retain the power – but have no duty under EU law – to apply their legislation. Only where a Member State chooses to provide protection to individuals not subject to its legislation under Regulation 883/2004 do the principles of free movement and equal treatment become relevant when assessing the compatibility of national eligibility criteria. An alternative interpretation risks triggering the application of the most favourable legislation, potentially endangering the financial stability of social security systems irrespective of their funding method.
In the second part of the judgment, the ECJ examined the period before the contested national rule on applicable legislation for the contributory old-age pension scheme came into force.
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The Court clarified the relationship between the Ten Holder and Bosmann doctrines. In the absence of a clear legal basis to exclude the individual from affiliation under national law, the principle of inviolability of national rights, as established in Petroni and upheld in Bosmann, would appear to require Dutch authorities to grant the contributory benefit in question. The Court observed, however, that there remains an intrinsic link between the national authorities’ power to levy contributions and the individual's right to benefits within contributory schemes, as established in Ten Holder: In ruling that the Member State which is not competent under Article 13 of Regulation No 1408/71 cannot make the right to family allowance contingent on insurance, the Court has merely made explicit the principle of single applicable legislation as it applies to migrant employees. Article 13(2)(a) of Regulation No 1408/71 provides that a person employed in the territory of one Member State is to be subject to the legislation of that State even if that person resides in the territory of another Member State. It follows that, under the principle of single applicable legislation, the Member State where the migrant worker resides cannot require that worker to be insured without undermining the system of coordination under Article 48 TFEU. Such an insurance obligation, which entails the payment of contributions, required by a Member State that is not competent, under Article 13 of Regulation No 1408/71 could result in the migrant worker being obliged to contribute to social security systems in two different Member States, which would be contrary to the principle of single applicable legislation which the EU legislature intended to establish.
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Conclusions
This article has examined the extent to which the social security legislation of several Member States may apply simultaneously to individuals exercising their right to freedom of movement within the internal market. Its aim has been to clarify the scope and limits of the single-state principle in EU social security law, as well as the exclusive effect of the conflict rules under Title II of Regulation 883/2004. The article approached the topic from both a theoretical and a practical perspective by addressing two research questions: first, the extent to which non-competent Member States may apply their legislation to individuals subject to another Member State's legislation (the powers of national authorities); and second, the extent to which individuals may claim benefits from non-competent Member States (the rights of individuals).
From a constitutional perspective, the article has shown that the ECJ's approach to the role of non-competent Member States has remained largely consistent over time, notwithstanding certain adjustments regarding compulsory contributions. By striking a careful balance between the national interests of Member States and the fundamental freedoms of individuals, the Court has upheld a legal framework that remains faithful to the overarching goal of enhancing integration and solidarity across the internal market, while adhering strictly to the constitutional boundaries established by the Treaties. The single-state principle in Article 11(1), like Regulation 883/2004 as a whole, serves merely to facilitate freedom of movement rather than to exhaustively govern the applicability of national legislation. Precluding non-competent Member States from exercising their national regulatory autonomy to grant benefits to persons subject to the legislation of another Member State would exceed what is necessary under Article 48 TFEU to ensure freedom of movement for workers.
The practical implications for the application of Regulation 883/2004 may be summarized as follows. First, in line with its coordinative function, the social security systems of competent and non-competent Member States coexist, each creating different claims on different institutions under national law. Second, national authorities retain the power to grant benefits, although the single-state principle in Article 11(1) detracts from the power of non-competent Member States to levy compulsory contributions. Third, individuals may claim benefits from non-competent Member States to the extent that they hold direct rights by virtue either of national law alone or of national law supplemented, where necessary, by EU law. Fourth, individuals cannot rely on their primary right to free movement under EU law to challenge national eligibility criteria that directly or indirectly presuppose that the Member State is competent under Regulation 883/2004. The inability of national authorities to levy compulsory contributions, justified by the objective of free movement, has a spill-over effect on substantive rights: individuals cannot claim dual affiliation with contributory schemes, even if national law alone would confer such a right. As a result, they are not entitled to contributory benefits from non-competent Member States under national law.
Footnotes
Acknowledgements
The views expressed in this contribution are personal and cannot be attributed to the EFTA Court. I wish to thank my supervisor, Professor Tarjei Bekkedal, my colleagues at the University of Oslo, the anonymous referees and others who provided valuable comments. Any errors or shortcomings are solely my own.
Funding
The author disclosed receipt of the following financial support for the research, authorship and/or publication of this article: This work was supported by the Norges Forskningsråd (grant number 325328).
Declaration of Conflicting Interests
The author declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.