On 25 February of this year, the Court of Justice gave a ruling in the García-Nieto (C‑299/14) case, that can be seen as a last stage step in the developing law that excludes EU citizens from social assistance during their first period of staying in another Member State. As will be easy to understand, this is a politically very sensitive issue, since Member States are very concerned on so-called social tourism, i.e. that persons go to another Member State merely or predominantly in order to receive benefit in that country. This concern was a very important issue in the Brexit file.There is insufficient space here to deal with all these aspects and it is not necessary either since we will soon publish a report on this issue on this website (WP 6.2., to be completed this Spring).
The ‘old’ case law
In the past decade the Court of Justice of the EU narrowed down access to social rights for EU citizens considerably. In its initial case law on EU citizenship the Court decided that excluding foreigners from social assistance on the ground of nationality was contrary to, what is now, Article 18 TFEU (Grzelczyk judgment, Case 184/99). In the judgment no possible objective justification was discussed, but maybe the reason for this was that the Member State involved (Belgium) had not proposed such justification. Probably it had never thought that EU citizenship could have had such an impact.
Later case law became more restrictive and this is partly explained by Directive 2004/38 on the right of citizens of the Union and their family members to move and reside freely within the territory of the Member States (the Citizenship directive), that was adopted a couple of years later.
According to Article 6 of this directive, Union citizens have the right of residence on the territory of another Member State for a period of up to three months without any conditions or any formalities other than the requirement to hold a valid identity card or passport. According to Article 7 Union citizens have the right of residence on the territory of another Member State for a period of longer than three months if they: (a) are workers or self-employed persons in the host Member State; or (b) have sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host Member State during their period of residence and have comprehensive sickness insurance cover in the host Member State (..). Only after five years full equal treatment with nationals is required. Article 24 of the directive provides that the host Member State is not obliged to confer entitlement to social assistance during the first three months of residence or, where appropriate, the work seeking period, that may continue after these three months.
A landmark decision after the implementation of the directive was the Dano judgment (C-333/13). In this judgment two important issues were decided. The first one was whether a special non-contributory benefit is to be treated as social assistance for the Citizenship directive. This was a very important issue, since special non-contributory benefits, such as unemployment benefits for those who have never worked, are not treated as social assistance for the Coordination regulation for social security (Regulation 883/2004) and thus these benefits have to be paid regardless of the nationality of the claimant. The Court, however, argued that if they were not considered social assistance, EU citizens could claim these benefits and thus continue their stay in a country while being a full burden for the public finances. This was not in line with the objective of the directive and therefore they have to be treated as social assistance for the Citizenship directive
The second question was whether Ms Dano could be excluded from this benefit on ground of her nationality. The Court answered this question in the affirmative: a Union citizen can claim equal treatment with nationals of the host Member State in relation to benefit only if his/her residence in the territory of the host Member State complies with the conditions of Citizenship directive. The directive provides that the right to residence after three months is retained as long as the Union citizen and his family members do not become an unreasonable burden on the social assistance system of the host Member State. Ms Dano and her son did not have sufficient resources and therefore could not claim a right of residence in the host Member State under Directive 2004/38 (although they had a right to permanent residence according to national law, but relevant here is whether they have a right to residence according to the Citizenship directive). Therefore, they cannot invoke the principle of non-discrimination in Article 24(1) of the directive. So this case law interpreted several provisions of the directive in such a way that the escape route by claiming special non-contributory benefits was closed.
A second judgment was also an answer to a German court, and concerned the question whether the German jobseekers allowance was a separate category of benefit, i.e. benefits of a financial nature which are intended to facilitate access to the labour market of a Member State. Previously it was thought that these were not to be treated as social assistance. The Court decided that even though it had such characteristics of helping jobseekers to work, it is a form of social assistance (Case C‑67/14).
In the recent García-Nieto judgment the Court completed this approach. The claimants in this case applied for a special non-contributory benefit already within the first three months of their residence in Germany. Benefit was refused since the applicant had resided in Germany for less than three months and that, moreover, he did not have the status of a worker or self-employed person. The Court argued that a Union citizen can claim equal treatment with nationals of the host Member State under Article 24(1) of Citizenship directive only if his residence in the territory of the host Member State complies with the conditions of the directive. The applicant could base his right of residence on Article 6(1) of the directive, since this article provides that Union citizens have the right of residence on the territory of another Member State for a period of up to three months without any conditions or any formalities other than the requirement to hold a valid identity card or passport. However, in such a case, the host Member State may rely on the derogation in Article 24(2) of Directive 2004/38 in order to refuse to grant that citizen the social assistance sought.
It is quite a development, from Grzelczyk judgment to Dano and García-Nieto. The Citizenship directive is used as a basis for the new approach, but the Court of Justice had to also overcome some interpretation issues that were not solved by this directive, such as the meaning of ‘social assistance’. Also the requirement that one must have a right to residence according to the Directive before one has a right to equal treatment is an interpretation added by the Court to the system of the directive. However, it is very clear that in the present situation for Member States access to benefits by Ms Dano – who has never undertaken any initiative to seek work, but still claimed unemployment benefit – was unacceptable. The judgment drew a lot of attention in the public press in the UK.
The García-Nieto judgment, which took place after Dano is not very surprising. For EU citizenship the social rights chapter is a very interesting one, as we will further elaborate in the report 6.2. EU citizens may be excluded from social rights even though they have the right to move to another Member State and even if they come in destitute circumstances. However, after five years, they have to be treated the same as nationals, which is not the case for some other rights, such as political rights.
A third remark is that in Dano it is remarkable that unemployment benefits were not simply refused by the German benefit administration to a person who is not seeking work, but the issue is brought all the way to the Court of Justice as a matter of principle on EU citizenship. Apparently, since the German jobseekers allowance was vulnerable for access by EU citizens without work or other resources, the German court wanted to have a definite answer to whether this benefit had to be paid and used this case in which the facts do not draw much sympathy for the claimants of whom the German court had explained that they did not want to work at all. All three cases discussed here are from German court and had as effect that all ‘dangers’ for the vulnerable benefits were systematically erased by the Court of Justice and that the German system is protected against benefit tourism.
In our report 6.2 we will also go into the approaches and systems of other Member States, that react not so smoothly to EU law on EU citizenship and therefore have more problems in adjusting their system to the growing free movement of EU citizens. For the area of social rights for EU citizens, the interaction between Court of Justice, the European Union and the Member States is extremely important.