Opinion of the Advocate-General
I - Introduction
1 In these proceedings the College van Beroep Studiefinanciering, Netherlands (hereinafter the `College') is seeking a ruling from the Court on the relevance of the place of residence of a worker and members of his family in determining the scope of the rule of equal treatment with regard to social advantages contained in Article 7(2) of Council Regulation (EEC) No 1612/68 of 15 October 1968 on freedom of movement for workers within the Community (OJ, English Special Edition 1968 (II), p. 475). First, the court making the reference asks whether work in a subordinate position in a family firm can be regarded as employment for the purposes of Article 48 of the EC Treaty and Regulation No 1612/68. A second question concerns whether, under Article 52 of the EC Treaty, the right of non-discrimination with regard to social advantages can exist even where these are granted to self-employed persons.
II - The facts of the case and the questions referred by the national court
2 The case pending before the national court concerns a challenge to the decision adopted by the Netherlands authority which manages study finance, the Hoofddirectie van de Informatie Beheer Groep (hereinafter `IBG'), to refuse to grant Chantal Meeusen, a Belgian national residing in Belgium, entitlement to receive benefits under the Netherlands law on study finance despite the fact that her parents, also Belgians residing in Belgium, had always worked in the Netherlands.
3 Although they had worked in the Netherlands since 1976, Mr and Mrs Meeusen, Chantal's parents, decided in 1980 to reside in Essen, in Belgium, not far from the Netherlands border. The father, Petrus Meeusen, is the director-general of Inpechem Inspectors BV, a limited company which he set up and of which he is the sole shareholder. The company, whose registered office is in Rotterdam, specialises in transporting liquids and employs some 20 people. The plaintiff's mother is an employee of the company. Mr and Mrs Meeusen have always received an income in the Netherlands and pay taxes to the Netherlands revenue authority. They come under the Netherlands general social security scheme, in accordance with the law in that country, which refers to the place of work of the person concerned.
4 On 14 October 1993 Chantal Meeusen applied to the IBG for a grant to study chemistry at the Provinciaal Hoger Technisch Instituut voor Scheikunde, Antwerp. From November 1993 to March 1994 she received a basic grant, which, under the Netherlands study finance law, the Wet op de Studiefinanciering (hereinafter the `WSF'), is given direct to students who are over 18 years of age irrespective of their income. By decision of 2 October 1994 the IBG reversed its decision and at the same time required Chantal Meeusen to repay the money she had already received. The grant was withdrawn on the grounds that, since Chantal did not have Netherlands nationality and was not resident in the Netherlands, she was not covered by the WSF. That law applied to Netherlands nationals and to some categories of foreigners, including nationals of Member States of the Community, provided they resided in that country.
The decision of 2 October 1994, upheld by the IBG following a complaint by Chantal Meeusen, was challenged by her before the court making the reference. According to the College, entitlement to the grant, although not available to non-resident foreigners under the national legislation, might, by virtue of the Community provisions on freedom of movement for workers, be open to a foreigner who was a national of another Member State. In the proceedings which gave rise to the present reference, the IBG submitted that the Community legislation does not protect frontier workers who do not reside in the Netherlands. Since according to the Court a study grant awarded by a Member State to the children of workers is a social advantage within the meaning of Article 7(2) of Regulation (EEC) No 1612/68, the College for its part wonders whether that provision applies also where both the worker and his family reside in a State other than the State of employment and to which the persons concerned pay their taxes and contributions. However, it starts by disclosing its doubts as to whether the mother is an employee. If the provisions relating to the protection of employees do not apply, the College asks the Court to rule on the applicability of the provisions on freedom of establishment.
5 The College therefore referred the following questions for a preliminary ruling:
`1A Does a situation such as that in the present case, in which the plaintiff's mother is employed by the limited company of which her husband is the director and sole shareholder, preclude her from being regarded as a migrant worker within the meaning of Article 48 of the EC Treaty and of Regulation (EEC) No 1612/68?
If Question 1A is answered in the negative:
1B In the Bernini judgment (C-3/90, [1992 ] ECR I-1071) the Court held that study finance awarded by a Member State to children of workers constitutes a social advantage to a migrant worker, as provided for in Article 7(2) of Regulation (EEC) No 1612/68, where the worker continues to support the child. In such a case the child may rely on Article 7(2) in order to obtain study finance under the same conditions as are applicable to children of national workers, and in particular without any further requirement as to place of residence. Does this rule equally apply if the migrant worker must be regarded as a frontier worker?
1C Does the rule of law in Bernini, as stated in Question 1B above, also apply if the child of a migrant worker, as in the present case, has never lived in the Netherlands?
2. Must Article 52 of the EC Treaty be interpreted in such a way that the safeguard provided for under the rule laid down in Bernini, as mentioned above in Question 1B, also applies to the child of a national of a Member State who pursued activities in another Member State as a self-employed person?
To what extent is it also decisive in that connection that the child has never been resident in the Netherlands, and that the parent is not resident in the country in which the activity as a self-employed person is pursued?'
III - Relevant Community provisions
6 So far as employees are concerned, the principle of non-discrimination is set out in general terms in Article 48(2) of the Treaty, according to which freedom of movement for workers `entail[s] the abolition of any discrimination based on nationality between workers of the Member States as regards employment, remuneration and other conditions of work and employment'.
Under Article 7(2) of Regulation No 1612/68 `[a worker who is a national of a Member State] shall enjoy the same social and tax advantages as national workers'.
7 So far as self-employed persons are concerned, Article 52 of the Treaty states: `Within the framework of the provisions set out below, restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State shall be abolished by progressive stages in the course of the transitional period.'
IV - Study finance under the legal system of the Kingdom of the Netherlands
8 In the Netherlands, the provisions relating to study finance are contained in the WSF, which has been in force since 1 October 1986. First, provision is made for a basic grant, awarded irrespective of parental income (Article 16). A supplementary grant may also be awarded, which is dependent on parental income (Articles 18 and 20). The amount of the basic grant and the supplementary grant vary depending on whether or not the student is living with his or her parents. Under the present regime grants are paid direct to students. Under the previous system the parents of a student aged 18 to 27 could receive family allowances. More needy students could also obtain a study grant calculated on the basis of the family income.
9 According to Article 7 of the WSF, that law applies only to: `a. students who possess Netherlands nationality;
b. students who do not possess Netherlands nationality but are resident in the Netherlands and are treated as Netherlands nationals as regards study finance under provisions contained in conventions concluded with other States or in a decision adopted by an organisation governed by public international law which is binding on the Netherlands;
c. students who do not possess Netherlands nationality but are resident in the Netherlands and belong to a category of persons specified by or under a regulation issued by the public authorities who are treated as Netherlands nationals as regards study finance'.
V - Question 1A
10 The national court seeks initially to ascertain whether Chantal Meeusen's mother may be regarded as an employee for the purposes of the application of the Community provisions which guarantee workers equal treatment as regards social advantages. The Court's case-law regards as a social advantage, at least in some cases, the payment of study grants to the children of workers. The first question is intended, more specifically, to ascertain whether the activity engaged in by the wife of the sole owner of a company, where the company concerned is family-owned, can be regarded as employment for the purposes of the application of the provisions on freedom of movement for workers, in particular Article 48 of the Treaty and the relative implementing provisions contained in Regulation No 1612/68.
11 We are thus faced in this case with the difficult problem of distinguishing between the personal and professional aspects of an occupational activity pursued in a family context. Family collaboration can take a different form from work under contract, or may fall outside the contractual context altogether. For this reason the national legal systems seek to protect the rights of family members working in a family firm. This also explains how it is that work performed in a family firm may be characterised in a number of different ways within the same legal system. As is stated in the order for reference, `in Netherlands law the question whether there is a relationship of employment has received various replies according to the sector of national law concerned (social security law, fiscal law, civil law)'.
12 There is no reason, however, so far as an activity pursued in a `family' firm is concerned, to depart from the criteria laid down by the Court for the application of the provisions protecting Community workers. Community case-law has in fact defined the concept of `Community worker' in a way which is different from the way in which it is defined within the national legal systems. (1) A person is regarded as an employee if `for a certain period of time [he] performs services for and under the direction of another person in return for which he receives remuneration'. (2) It must, however, be an `effective and genuine activity', as opposed to a marginal one. (3) It is therefore necessary, on the basis of the above-mentioned case-law, to examine how the activity pursued fits into the organisation of the firm and ascertain whether that activity is performed under the authority of another person who is entrusted with overall responsibility for the management of the firm. The question is therefore one which is to be resolved on the basis of the facts, and the various formal categorisations laid down for particular purposes under Netherlands law are irrelevant. The College states that it has found that the work performed by Mrs Meeusen is effective work. The national court must also ascertain whether that work is performed under the direction of other persons.
I shall merely observe that the amount of time devoted to her husband's firm and the type of activities in which she engages there lead one to believe that these activities do indeed fit into a more general coordinated framework. According to the information provided by the plaintiff and by the court making the reference, the activity performed by Mrs Meeusen appears to constitute employment according to the Community definition of that term. (4)
13 However no significance can be attached to other criteria even if some store is set by them in certain of the national legal systems. In particular, it does not appear to be relevant that the economic risk falls more or less directly also on the wife of the head of the firm. I think therefore that the Commission's suggestion that account should be taken of the matrimonial regime chosen by Mr and Mrs Meeusen (about which, moreover, no details are given) should not be followed. In the Commission's view the question of definition with which we are concerned should, in the case of separation of property, be dealt with and resolved in the same way as for all employment relationships. If Mr and Mrs Meeusen were subject to the community-property regime, however, and were therefore co-owners of the firm, the rule established in the Asscher case, in which the Court did not accept that the salaried director of a company of which he was also the sole shareholder was pursuing his activity in a relationship of subordination, should apply by analogy. (5) In that case the Court rightly denied that the subordinate status formally linked to being an `employee' was effective in view of the type of activity actually being performed. The observation that neither Mr nor Mrs Meeusen could be in a relationship of subordination with respect to their joint ownership of all the shares is therefore of no relevance. To reason in this way would be to confuse the property aspect with the actual nature of the occupational relationships within the organisation of the firm. The view put forward by the Netherlands Government (at the hearing also) that there could never be a subordinate relationship between a husband and wife is also irrelevant because it confuses the personal aspect with that of the organisation of the firm. The fact that either the husband or the wife is responsible for organisation and coordination does not mean there is any hierarchy within their personal relationships.
VI - Question 1B and 1C
14 If, as I think, Question 1A should be answered in the affirmative, it is necessary also to examine parts B and C. Community case-law has recognised in Echternach and Moritz and Bernini that assistance to cover tuition and maintenance costs for secondary and higher education should be regarded as social advantages for the purposes of Article 7(2) of Regulation No 1612/68, provided, as is made clear in the Bernini judgment, that the worker continues to support his child. (6) First, in Question 1B the national court asks whether the worker is entitled to the same social advantages as those enjoyed by national workers even if he resides in a place other than that in which he pursues his occupation. If Question 1C is answered in the affirmative, it also asks whether such a social advantage must be granted even where the child who would receive it has never resided in the State which is required to pay the social benefit sought. The two questions therefore relate to the relevance of the place of residence in determining the applicability of the rules guaranteeing Community workers equality in the enjoyment of social advantages.
15 I would say at once that in my view frontier workers, who are moreover expressly mentioned in the preamble to Regulation No 1612/68, are entitled not to be discriminated against as regards the enjoyment of the social advantages granted by the Member State to which they pay their taxes and social security contributions. In the view of the Court the provisions of Article 48 of the Treaty and of Article 7 of Regulation No 1612/68 prohibit not only overt discrimination on grounds of nationality but also all disguised forms of discrimination which, through the application of other criteria, ultimately achieve the unlawful result of unequal treatment. (7) The judgments to which I refer take account of the fact that specification of certain requirements on which entitlement to enjoy certain rights may depend in reality has the object or effect of favouring the citizens of one State over another. The Court has also made it clear that the compatibility with the Treaty of national provisions which make the enjoyment of social advantages subject to residence requirements must be determined by applying appropriate tests of reasonableness. The situation of frontier workers is specifically considered in the Meints case, again as regards enjoyment of social advantages (in that case what was concerned was an allowance granted on a one-off basis to agricultural workers when their contracts of employment were terminated in particular circumstances). In that case the Court held that `unless it is objectively justified and proportionate to its aim, a provision of national law must be regarded as indirectly discriminatory if it is intrinsically liable to affect migrant workers more than national workers and if there is a consequent risk that it will place the former at a particular disadvantage'. (8) Recently too, in Commission v Luxembourg, the Court held that a Luxembourg provision which made the grant of maternity benefits dependent on the mother having resided in the country for a year prior to the birth of the child was incompatible with the Treaty. (9) In some cases there may be objective reasons for taking residence into account. In Sotgiu the Court held that in order to assess the separation allowance it was necessary to see whether at the time when the workers concerned took up their employment they were residing in the territory of the State in question or abroad. (10)
16 The Netherlands and German Governments have argued that the provisions on freedom of movement are designed essentially to promote the integration of Community workers. In their view therefore, if the worker and his family have chosen not to reside and so not to become integrated into their State of employment they cannot claim from that State the social advantage concerned in this case. In this connection the Netherlands Government cites the fifth recital in the preamble to the regulation, which sets out the objective of eliminating obstacles to the freedom of movement for workers: one of the ways of achieving this is to grant the worker the right `to be joined by his family and the conditions for the integration of that family into the host country'. Even the Echternach and Moritz judgment pointed (in paragraph 20) to the frankly ancillary value of the principle of equality of treatment as compared with the objective of integrating the worker into the host country. The German Government cites other case-law to this effect. (11) The case-law, which appears at first glance to seek a wide application of the prohibition of discriminatory treatment in the field of social advantages, ultimately supports, it is claimed, the opinion put forward by the two governments in question. In particular, in the view of the Netherlands Government, the facts in this case differ from those in Echternach and Moritz in that the advantage provided by the award of a study grant to be paid abroad `has nothing to do with a worker exercising his right to be joined by his family and the conditions for the integration of that family into the host country'. It is further argued that study finance constitutes in the Netherlands legal system a right enjoyed by the student himself, falling outside the relationship that links him to the family. By reasoning in this way the Netherlands Government ends up by forgetting the existence of the Bernini case, which specifically concerns Netherlands study grants, and the fact that the statements made by the Court in that judgment contradict the views now held by Germany and the Netherlands. It is necessary, however, to examine more closely the arguments put forward by each of those governments. The German Government observes that, as compared with the protagonists in the present case, the persons who were claiming Community social advantages in the Bernini case had closer links with the Netherlands State. Mrs Bernini's parents, it says, were migrant workers; Mrs Bernini herself, although she was residing in Italy at the time of the case, had previously worked and resided in the Netherlands, whereas in the case of the Meeusens there is no question of integration and there is therefore no reason to ensure equality of treatment. The Netherlands Government adopts the same position; in its view the decisive factor is that Mrs Meeusen chose to maintain her residence in Belgium. The present case, it claims, is one in which the worker concerned has no intention of becoming integrated into the State of employment.
17 What can be said of these arguments? In the case before us, it is true, the requirements of integration do not seem to be relevant. The Meeusens move easily between the State in which they work and the State where they live together with their daughter. Their situation, one might say, provides a striking example of the mobility of workers in practice. It is of no consequence, from this point of view, that, as has already been stated during the proceedings, the plaintiff resided in the Netherlands until the age of five or, as Mr Meeusen stated at the hearing, that since the summer of 1997 Chantal Meeusen has been residing in the Netherlands (without however changing her plans to study in Belgium).
18 The fact is, however, that the problem before the Court must be posed and resolved in the context of a mobile frontier worker and not that of a worker who must be encouraged to put down roots in the country in which he works. The relevant requirement, as the Commission rightly pointed out, is therefore that of coordination between the various systems of social advantages provided for by the Member States: all the more so, I should say, when, as in this case, those advantages are at least in part compensatory to the extent that they are funded by contributions paid by the workers themselves.
The Community legislation in the field which concerns us is, in fact, based on the criterion of coordination. Regulation (EEC) No 1408/71 of the Council of 14 June 1971 on the application of social security schemes to employed persons and their families moving within the Community (OJ, English Special Edition 1971 (II), p. 416) lays down, in implementation of Article 51 of the EC Treaty, the provisions needed in order to coordinate the detailed rules for the payment of social security benefits in the categories referred to in that instrument of secondary legislation. The same criterion was adopted by the Community legislature also in respect of the category of social advantages provided for in Article 7(2) of Regulation No 1612/68, a category which is more general than that covering the benefits specifically determined by Regulation No 1408/71. (12) In my view there is justification for applying the principle of non-discrimination, as laid down in general terms in Article 48 of the Treaty and in Article 7(2) of Regulation No 1612/68, in a case such as the one before us. The social security benefit in question has, as I have observed earlier, unquestionably the character of a compensatory advantage, although there is a residence condition except for Netherlands nationals. In this way, as the Commission observes, inequality of treatment between frontier workers is introduced , depending on their nationality. Eliminating such discrimination means ensuring that a worker who is exercising his freedom of movement is not deprived of the advantages accorded to a worker who stays put. This in my view is a solution which complies with both the principles of the Treaty and the Community legislation which fall to be interpreted here.
19 In the Bernini case, the Court acknowledged that certain study grants came within the category, broadly defined in its case-law, of social advantages within the meaning and for the purposes of Regulation No 1612/68. (13) The question had been put with specific reference to the provisions of the WSF which provide for benefits granted directly to the students and thus not directly linked to an employment relationship. The Court held that the benefits in question may be granted to a worker only when he continues to support the child. (14) Having regard to the objectively compensatory nature of the grants and to the condition that the children be genuinely dependent on the parent, the case-law has thus placed study grants made directly to students on the same footing as that other instrument of social security, family allowances. Study grants and family allowances have the common characteristic of constituting financial action in support of the upbringing, maintenance and education of children.
The factors which are in any event of importance are two in number: the compensatory nature of the advantages in question and the fact that the prohibition on discrimination derives its justification in this context from requirements relating rather to coordination of systems than to integration. In determining whether there is an entitlement to equal treatment in a case such as the one before us, it will be necessary, I should make clear, to examine the financing system established in the State of employment as compared with the other systems to which it is theoretically possible to have recourse and then to evaluate the consequences that failure to award the grant might entail. (15) On the basis of the considerations set out above, a comparison should be made between the two systems, as suggested by the Commission, taking into account all the different types of finance provided for. It is necessary to take into account both the family allowances granted to workers and the grants paid directly to students. This comparison should moreover be undertaken in concrete terms, bearing in mind the options actually available to workers and members of their families (contrary to what is proposed in the written observations submitted by the Netherlands Government which, in examining the Belgian legislation applicable in theory, fails to take into account the fact that, in this case, that legislation did not in fact apply, see below).
20 In the case before us, therefore, the Netherlands system of financing has necessarily to be compared with that of Belgium, since the Meeusen family are Belgian nationals and Belgium is where they reside. It is clear from the documents before the Court that Chantal Meeusen is not entitled, under the legal system of either country, to receive a study grant awarded on the basis of the family income. As regards, on the other hand, financing which is not means-tested, accorded in the form of study grants or family allowances, Chantal Meeusen cannot qualify for this precisely because of her particular family circumstances. Belgian law does not apply in this case since non-means-tested benefits, granted in the form of family allowances to workers covered by the social security scheme, cannot be paid to Mr and Mrs Meeusen, who do not pay taxes to the Belgian revenue authority; (16) nor is Chantal Meeusen entitled to the basic Netherlands study grant since the WSF imposes a residence requirements on foreigners.
How can the negative conflict thus be resolved? The most clear and convincing answer seems to me to attribute decisive importance to the fact that the worker contributes to the financing of the social security system to which he is affiliated.
VII - Question Two
21 I do not consider it necessary to consider the second question, to which in any event the answers given above to Question 1B and 1C would apply.
VIII - Conclusion
22 In the light of the foregoing I propose that the Court should reply to the national court as follows:
1A In determining whether a worker who is employed by a limited liability company of which her husband is the director-general and sole shareholder may be regarded as a migrant worker within the meaning of Article 48 of the EC Treaty, general criteria should be applied in order to establish whether the work performed is subordinate or autonomous, and how the occupation concerned fits into the organisation of the firm.
1B and 1C Children of workers who do not reside in their State of employment, even where such children do not live in their parent's State of employment, may have recourse to the study grants awarded by a Member State which, having regard inter alia to their compensatory nature, constitute social advantages within the meaning of Article 7(2) of Regulation (EEC) No 1612/68.
(1) - See judgments in Case 66/85 Lawrie-Blum [1986] ECR 2121, paragraph 16; Case 197/86 Brown [1988] ECR 3205, paragraph 21 and Case C-3/87 Agegate [1989] ECR 4459, paragraph 35.
(2) - Judgment in Case 66/85, cited above, paragraph 17 and Case C-107/94 Asscher [1996] ECR I-3089, paragraph 25.
(3) - See judgment in Case 53/81 Levin [1982] ECR 1035, paragraph 21.
(4) - See judgments in Case 66/85, cited above, paragraphs 16 and 17, and Case C-107/94, cited above, paragraph 25.
(5) - Case C-107/94, cited above, paragraph 26.
(6) - See judgments in Joined Cases 389/87 and 390/87 Echternach and Moritz [1989] ECR 723, paragraph 34 and C-3/90 Bernini [1992] ECR I-1071, paragraph 24.
(7) - See judgment in Case C-237/94 O'Flynn [1996] ECR I-2617, paragraph 17. It was on that basis that it was held that indirect discrimination resulted from making any reimbursement of expenses paid by a migrant worker subject to the condition that burial or cremation take place in the country, paragraph 23. In the judgment in Case C-27/91 Le Manoir [1991] ECR I-5531, paragraph 10, it was held to be incompatible with the Treaty to make entitlement to reductions in an employer's social contributions dependent on the employer taking on trainee workers who came within the State education system, on the basis of the ground that the vast majority of the trainees still came under the national education system of their respective States of origin.
(8) - Judgment in Case C-57/96 [1997] I-6689, paragraph 45.
(9) - Judgment in Case C-111/91 [1993] ECR I-817, paragraph 7.
(10) - Judgment in Case 152/73 [1974] ECR 153, paragraph 11.
(11) - Judgments in Case C-308/89 Di Leo [1990] ECR I-4185, paragraph 9 and in Case 235/87 Matteucci [1988] ECR 5589, paragraph 16.
(12) - As regards the relationship between Article 7(2) and Regulation No 1408/71, see the article by Lyon-Caen, A.: `La sécurité sociale et le principe de l'égalité de traitement dans le traité et le règlement No 1408/71', in La sécurité sociale en Europe. Egalité entre nationaux et non nationaux, Lisbon, 1995, p. 45, and Gouloussis, D.: Instruments internationaux sur l'égalité de traitement en matière de sécurité sociale, idem, p. 91 et seq.
(13) - The term `social advantages' as defined by the settled case-law of the Court includes `all those which, whether or not linked to a contract of employment, are generally granted to national workers primarily because of their objective status as workers or by virtue of the mere fact of their residence on the national territory' (judgment in Case 207/78 Even and ONPTS [1979] ECR 2019).
(14) - See paragraph 25 of the Bernini judgment, cited above, which also quotes in this connection paragraph 13 of the judgment in Case 316/85 Lebon [1987] ECR 2811. Such a condition must be viewed in the context of the compensatory nature of the social advantages concerned. It is not relevant therefore to state, as the Netherlands Government does, that in the Netherlands entitlement to study finance is regarded as a legal situation which concerns only the student and has therefore nothing to do with the parents. The compensatory nature of the benefit is recognised in the Bernini judgment in the statement that study finance may be regarded as a social advantage only if the worker continues to support the child. Referring to this criterion, the Netherlands Government points out that in the case now before it it is necessary to establish whether the plaintiff is indeed being supported by her mother, on whose status as an employee the applicability of the regulation depends, and not the father, who is not an employee and whose situation would not be taken into account under the domestic provisions concerned.
(15) - The Member States have, moreover, different systems for awarding grants. A survey of the situation in the various Member States can be found in Rossi, F.P.: I diritti della famiglia europea nell'ordinamento comunitario di sicurezza sociale, Milan, 1996, p. 90 et seq.
(16) - Under the Belgian legal system the award of allowances and benefits for studies is governed by the Law of 19 July 1979. Under Article 2 of the Law of 19 July 1971 allowances are paid to students who are pursuing studies at institutions run, subsidised or recognised by the State. The award of study grants depends on the level of income of the student or of the persons on whom he or she may be dependent. There are also family allowances which are received by workers who have dependent children under 25 years of age.
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