Opinion of the Advocate-General
A Introduction
1. This reference for a preliminary ruling made by the Oberster Gerichtshof of the Republic of Austria raises the question of the compatibility with Community law of national legislation under which a child entitled to maintenance who receives no payments from a parent liable to provide the maintenance can claim an advance on maintenance payments from the State only if the child is either an Austrian national or is stateless.
II Facts and procedure
2. The applicants in the main proceedings, who are minors, and their parents are German nationals. The family has been living in Austria since 1987. The parents' marriage was dissolved on 1 February 1995 and the mother was granted sole custody of the children. On 17 January 1996, the father agreed in a court settlement to pay a monthly contribution to the maintenance of the children amounting to ATS 3 500 for each of them. The children live in Austria, as do their parents.
3. Both parents are self-employed in Austria. The mother runs a bookshop selling children's books and the father is a self-employed representative selling building products.
4. On 1 September 1998, the children applied for the grant of advances on maintenance in the amount of ATS 3 500 per month on the grounds that their father had paid no maintenance since February 1998. In that respect, they claimed that they had sought to obtain enforcement of the claim for maintenance against their father but that execution had been to no avail because their father received no salary.
5. The application was dismissed by the court of first instance on the ground that the minors were of German nationality. This decision was upheld on appeal but leave to appeal on a point of law was granted. The competent chamber of the Oberster Gerichtshof (hereinafter the national court) considered that it was necessary to refer the matter to the Court of Justice for a preliminary ruling.
6. The Austrian Government and the Commission have submitted written observations to the Court. The Swedish Government intervened at the hearing. I will return to the submissions made by the parties concerned.
III The reference for a preliminary ruling
7. The national court refers to the reasoning which motivated the Austrian legislature, according to which the State is endeavouring, in enacting the Unterhaltsvorschussgesetz, to look after its young people. The draft law is a decisive step in ensuring the maintenance of minor children. The background documents to the legislation refer to the plight of mothers who because they are divorced from their husbands or have been abandoned by them or who are mothers of illegitimate children with whom the fathers wish to have little to do, are left to cope alone with their minor children and who in addition to the heavy burden of raising their children are also burdened with the difficulty of obtaining maintenance for their children from the father. That is why the State must intervene in place of the person in default of payment of maintenance in order to pay advances on account of maintenance, later seeking reimbursement from that person.
8. The legislation is based on the principle that the grant of advances must be regarded as a social benefit which is based on a substantive claim to maintenance at civil law against whomever may be liable for maintenance, whether or not a writ of execution is in existence or, for certain reasons, does not yet exist.
9. However, advances paid to the parent in whose household the child entitled to maintenance is cared for also have as their purpose, as is clear from the abovementioned reasoning of the legislature, to meet family expenses, which if advances were not granted would be borne solely by the parent caring for the child. It is for that reason, too, that advances on maintenance are financed out of the resources of the Familienlastenausgleichsfonds (Family Support Fund). Furthermore, the alleviation of subsistence concerns by the advances is also clearly intended to ensure that the parent caring for the child is able to devote him or herself more to the raising of his or her minor child by reducing the pressure to obtain the requisite financial means to fund maintenance.
10. According to the national court, in view of the requirements for entitlement to, and the purpose of, advances on maintenance, the Court of Justice could come to the conclusion that such advances are to be classified as social security benefits which qua family benefits fall within the terms ratione materiae of Regulation No 1408/71. That conclusion could, however, be challenged by citing the case-law of the Court according to which a social benefit which is intended to provide a minimum means of subsistence may indeed be a social advantage under Article 7(2) of Regulation No 1612/68. Therefore, the correct approach under Community law might be to classify advances on maintenance under Austrian law both as family benefits within the meaning of Article 4(1)(h) of Regulation No 1408/71 and as social advantages under Article 7(2) of Regulation No 1612/68.
11. However, the parents of the applicants are not workers but self-employed persons. Accordingly, there can be no question of extending social advantages, which, under Regulation No 1612/68, are awarded only to workers and to members of their families, to the applicants as children of self-employed persons. By contrast, Article 52 of the EC Treaty (now, following amendment, Article 43 EC) is a specific expression of Article 6 of the EC Treaty (now, following amendment, Article 12 EC), which, as a lex specialis, takes precedence over the general prohibition on discrimination. Article 52 of the EC Treaty precludes not only discrimination under laws imposing a nationality requirement which directly affect the exercise of activity as a self-employed person, but also provisions which might be likely to deter persons from establishing themselves in the Member State concerned, such as unequal treatment in regard to social benefits.
12. Finally, entitlement to advances on maintenance under Austrian legislation, even if it were not subsumed under the scope of application of the freedoms enshrined in the EC Treaty, particularly in this case freedom of establishment, could none the less come within the wide area protected under the first paragraph of Article 6, which also applies to matters which simply touch upon areas covered by Community law.
13. The national court has referred the following questions to the Court of Justice for a preliminary ruling:
1. Are advances on maintenance payments for minor children of self-employed persons, granted under the Austrian Federal Law on the Grant of Advances on Maintenance for Children (Unterhaltsvorschussgesetz 1985, hereinafter "UVG" current version in BGBl. p. 451), family benefits under Article 4(1)(h) of Council Regulation (EEC) No 1408/71 of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community, as amended and updated by Regulation (EEC) No 2001/83 of 2 June 1983 and amended by Council Regulation (EEC) No 3427/89 of 30 October 1989, and is Article 3 of that regulation, concerning equal treatment, therefore applicable in such a case?
2. If Question 1 is to be answered in the negative:
Are minor children who, like their parents who are self-employed in the Republic of Austria are German nationals but ordinarily resident in the Republic of Austria and who are applying for the grant of advances on maintenance payments under the Austrian Federal Law on the Grant of Advances on Maintenance for Children (Unterhaltsvorschussgesetz 1985) discriminated against as family members, contrary to Article 52 of the EC Treaty or the first paragraph of Article 6 of the EC Treaty, by virtue of the fact that entitlement to such advances is withheld from them under Article 2(1) of the UVG on the ground that they are German nationals?
IV Legal background
A Provisions of Community law
Council Regulation (EEC) No 1408/71 of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community, as amended and updated by Council Regulation (EEC) No 118/97 of 2 December 1996 (hereinafter Regulation No 1408/71).
14. The relevant provisions of this regulation provide as follows:
Article 1(10)(15)
Definitions
For the purpose of this Regulation:
(a) (e) ...
(f) (i) member of the family means any person defined or recognised as a member of the family or designated as a member of the household by the legislation under which benefits are provided or, in the cases referred to in Articles 22(1)(a) and 31, by the legislation of the Member State in whose territory such person resides;
(g) (t) ...
(u) (i) the term family benefits means all benefits in kind or in cash intended to meet family expenses under the legislation provided for in Article 4 (1) (h), excluding the special childbirth or adoption allowances referred to in Annex II;
(v) ...
Article 2
Persons covered
(1) This Regulation shall apply to employed or self-employed persons who are or have been subject to the legislation of one or more Member States and who are nationals of one of the Member States or who are stateless persons or refugees residing within the territory of one of the Member States, as well as to the members of their families and their survivors.
(2) (3) ...
Article 3
Equality of treatment
(1) Subject to the special provisions of this Regulation, persons resident in the territory of one of the Member States to whom this Regulation applies shall be subject to the same obligations and enjoy the same benefits under the legislation of any Member State as the nationals of that State.
...
Article 4(10)
Matters covered
(1) This Regulation shall apply to all legislation concerning the following branches of social security:
(a) (g) ...
(h) family benefits.
(2) (3) ...
(4) This Regulation shall not apply to social and medical assistance, to benefit schemes for victims of war or its consequences, or to special schemes for civil servants and persons treated as such.
Article 5(10)
Declarations by the Member States on the scope of this Regulation
The Member States shall specify the legislation and schemes referred to in Article 4(1) and (2), ... the minimum benefits referred to in Article 50 and the benefits referred to in Articles 77 and 78 in declarations to be notified and published in accordance with Article 97.
B Provisions of the Member State
Unterhaltsvorschussgesetz 1985 UVG current version in BGBl. p. 451 (hereinafter the UVG)
15. The provisions of the first sentence of Article 2(1) and Article 3 of the UVG, which come under the heading Conditions, provide as follows:
Article 2(1). Minor children who are ordinarily resident in Austria and are either Austrian nationals or are stateless shall be entitled to advances.
....
Article 3. Advances shall be granted
(1) where a writ of execution enforceable in Austria exists in respect of the legal claim to maintenance payments and
(2) where execution in respect of current maintenance payments (...) or, where the person in default of payment of maintenance clearly has no income or other form of regular remuneration, an execution (...) has not covered in full, in the last six months prior to the submission of that application for the grant of an advance, even one of the maintenance payments due. In that respect, maintenance arrears when recovered shall be set off against the current maintenance debt.
16. Article 4 of the UVG provides that, in certain circumstances, advances are also to be granted even where execution appears to have no prospect of success or where, for example, no entitlement to maintenance has been determined.
17. Articles 30 and 31 of the UVG provide that the public authorities are to be subrogated to the child's claims for maintenance on which advances have been made. Where the person in default of payment of maintenance makes no payments, the debts may be recovered by distraint.
V The first question
Submissions of the parties
18. The Austrian Government considers that, in connection with the first question, it is necessary to determine whether the payment at issue is a family benefit within the meaning of Article 4(1)(h) of Regulation No 1408/71. It explains that the payment is provided for in maintenance law in respect of which social need is not decisive. Advances on maintenance within the meaning of the UVG are based on the child's substantive claim against the parent who owes maintenance. The UVG provides for advance payment of this legal maintenance, whether or not a writ of execution is in existence against the parent liable for maintenance or, for certain specific reasons, does not (yet) exist. The purpose of the provision is to ensure that a child receives maintenance in full even where the parent liable for maintenance is in default of payment. Although payments are made by the public authorities to that end, they in no way constitute social benefits. Where the Federal Government makes payments, it is subrogated to the claim for maintenance under family law. Therefore, the child maintenance is financed in advance but the State merely intervenes in implementing the claim. Consequently, advances on maintenance under the Unterhaltsvorschussgesetz are not family benefits within the meaning of Article 4(1)(h) of Regulation No 1408/71 and therefore Article 3 thereof does not apply.
19. The Commission first raises the question of the scope ratione materiae of Regulation No 1408/71. It notes that the payments at issue were not notified as falling within the scope of the regulation pursuant to Article 5 thereof. However, that does not prevent them from being regarded as social security benefits provided that they satisfy the requisite criteria. According to the case-law of the Court of Justice, the classification of a benefit rests entirely on the factors relating to it, in particular its purpose and the conditions for its grant. It must be granted without any individual and discretionary assessment of personal needs to recipients on the basis of a legally defined position and concern one of the risks expressly listed in Article 4(1) of Regulation No 1408/71. In that respect, the specific branch of social benefit which can be envisaged in the present case is that of family benefits since it is possible to conclude that the benefit is by nature a social welfare benefit.
20. However, the UVG is based on a claim for maintenance at civil law. In that respect, the purpose of the benefit is one which differs from the typical purpose of family benefits, that is to say to meet family expenses. The expenses incurred in maintaining a child are neither alleviated nor offset by advances on maintenance. Therefore, the payment at issue cannot be regarded as a family benefit within the meaning of Regulation No 1408/71 and therefore Article 3 thereof cannot apply.
21. At the hearing, the Swedish Government contended, without examining the question in detail, that the advances on maintenance payments at issue should not be regarded as family benefits within the meaning of Regulation No 1408/71.
Appraisal
(a) Scope ratione materiae of Regulation No 1408/71
22. The first question referred for a preliminary ruling ultimately relates to the scope ratione materiae of the regulation. Article 4(1) of Regulation No 1408/71, which defines the scope ratione materiae thereof, provides that the regulation is to apply to all legislation concerning the listed branches of social security, including family benefits which are referred to under subparagraph (h).
It is therefore necessary to consider whether payments under the Austrian Unterhaltsvorschussgesetz are family benefits within the meaning of Article 4(1)(h) of Regulation No 1408/71.
23. Under Article 5 of the regulation, the Member States must specify inter alia, in Declarations to be notified and published in accordance with Article 97, the legislation and schemes referred to in Article 4(1) and (2), because they relate to one of the types of benefit referred to therein. It is not disputed that payments under the UVG have not been designated as such a benefit by the Austria authorities. However, it does not consequently have to be concluded that the law therefore falls outside the scope of Regulation No 1408/71.
24. In Beerens the Court of Justice ruled that:
The fact that a national law or regulation has not been specified in the declarations referred to in Article 5 of the regulation is not of itself proof that law or regulation does not fall within the field of application of the said regulation.
That is because [t]he fact that a domestic law is not mentioned in the declaration made by a Member State does not mean that that law must be deemed to lie outside the scope of the regulation, as the Court of Justice confirmed in Vigier. The communication of national provisions pursuant to Article 5 of Regulation No 1408/71 has binding effect only in a positive sense.
25. Consequently, it is necessary to consider whether the grant of advances on maintenance payments under the UVG fulfils the criteria which would indicate that such advances are a social security benefit under Regulation No 1408/71. Article 1(u)(i) defines family benefits as all benefits in kind or in cash intended to meet family expenses.
26. The Court has consistently stated that the distinction between benefits which are excluded from the scope of Regulation No 1408/71 and benefits which come within it rests entirely on the factors relating to the relevant benefit, in particular its purpose and the conditions for its grant, and not on whether the national legislation describes the benefit as a social security benefit or not. Consequently, a benefit may be regarded as a social security benefit in so far as it is granted, without any individual and discretionary assessment of personal needs, to recipients on the basis of a legally defined position and provided that it concerns one of the risks expressly listed in Article 4(1) of Regulation No 1408/71.
27. This view is reinforced by the fact that social assistance, whose grant is conditional upon an assessment of need, is excluded from the scope of Regulation No 1408/71 under Article 4(4) thereof.
28. There is not dispute that advances on maintenance payments under the UVG are granted on the basis of a legally defined position and without any discretionary decision or assessment of personal need. A claim for advances on maintenance payments exists where the condition laid down in Article 3 of the UVG is satisfied. However, it is uncertain whether the advances can be regarded, in terms of their purpose and the conditions for their grant, as a benefit relating to the risks of family benefits.
29. The literal interpretation of family expenses encompasses child maintenance. Viewed in economic terms, it is one of the original duties of parental care to ensure the maintenance of a child.
30. On an abstract level, parental care can be described as the personal care of a child in the form of various types of attention and the satisfaction of material needs which can also take the form of financial expenditure.
31. In the classic family, in which the parents and children live under the same roof, it is not always clear which parent is responsible for which aspects and to what extent. The situation is different, however, in cases such as those which prompted the legislation at issue, in which the parents of a child live apart and one parent has been granted custody. In such cases, the parent having custody assumes, to a large extent, sole responsibility for the personal care of the child and the other parent, who is liable for maintenance, essentially contributes to the maintenance of the child by making maintenance payments.
32. It must therefore be concluded that the financial maintenance of a child is to be regarded as an original family expense. Furthermore, the financial maintenance of a child is, by its nature, a payment bound by time. This aspect is reflected in the legal systems of the Member States by the special conditions relating to the judicial enforcement of outstanding maintenance claims which frequently differ from the general rules relating to the recovery of debts. This may be connected with the fact that maintenance payments must be systematically regarded as a substitute for benefits in kind. This classification is certainly not relevant in this case. Nevertheless, it should noted that a right to maintenance alone is incapable of actually safeguarding maintenance. However, an advance on maintenance financed by the State where the parent liable for maintenance fails to make maintenance payments is certainly capable of meeting family expenses.
33. The State support which a child entitled to maintenance receives directly and which the parent having custody receives indirectly through the advances on maintenance payments is provided at several levels. On the one hand, there is the procedural aspect, which consists in the execution of claim to maintenance or even, as the case may be, the recovery of a debt. This procedural aspect should not be underestimated since recovering outstanding payments from a parent liable for maintenance who is unwilling or incapable of making payment can be an arduous and time-consuming exercise. It is clear from the documents submitted by the national court that the legislature specifically intended to assist mothers, who generally have custody, in enforcing collection of maintenance for their children.
34. On the other hand, there is also a not insignificant economic aspect inherent in the advances payments on maintenance. The payment of advances has the effect of making financial resources available at the time at which they are needed. Moreover, the State bears the risk of insolvency. The Court is aware that over half the advance payments cannot be recovered from those in default of payment of maintenance. It would therefore be a simplification to dismiss the legislation on advances on maintenance as merely procedural assistance or to focus mainly on the provisional aspect of the advance financing of outstanding maintenance payments.
35. It is clear to the Court of Justice from the description of the content and purpose of family benefits that they are intended to provide social assistance for workers with dependent families in the form of a contribution by society towards their expenses.
36. Whereas the grant of child maintenance as stated above is an original family expense, the recovery of outstanding maintenance payments is not necessarily a typical family expense but rather a typical burden imposed by the special family situation of parents living apart. As a result of the interplay of the provisions on advances on maintenance the State, and therefore society, contribute towards the expenses, firstly through the procedural recovery of maintenance payments and secondly through guaranteeing the grant of maintenance. Public resources are used for both aspects and therefore it is entirely possible to conclude that society contributes to the expenses incurred by the specific family situation. It should be added that children living in this special family situation require special assistance from society, which the legislature realised in deciding to adopt the UVG.
37. The Commission objects that the advance payments serve to provide support for minor children but do not alleviate or offset expenses incurred in maintaining a child which remain unchanged at the same level. When the obligation to provide maintenance is viewed in abstract terms, that contention may be correct. When viewed in concrete terms, however, serious doubts arise as to its correctness.
38. The maintenance costs which have to be met by the parent with sole custody, with whom the child lives in the same household, are increased considerably where the parent liable for maintenance fails to make payments. The advance payments alleviate and offset this part at the time and at the place at which they are not forthcoming. Furthermore, the State bears the risk of insolvency and therefore it is possible to speak even of a net contribution by the State to family expenses in cases of non-enforceable maintenance obligations.
39. Consequently, the spirit and purpose of the rules on advances on maintenance payments is to meet family expenses as defined above. This view is underpinned by the fact that the advances on maintenance payments are financed out of the Familienlastenausgleichsfonds. Although the parties concerned referred to the judgment in Hughes and cited the following passage: [t]he method by which a benefit is financed is immaterial for the purposes of its classification as a social security benefit, the Court of Justice advanced this argument in that case to counter the objection that the benefit at issue therein was not a social security benefit since it was not subject to a contribution requirement.
40. Therefore, the financing of a benefit by the Familienlastenausgleichsfonds can indeed be regarded as an indication of whether or not advances on maintenance payments constitute family benefits. The judgment in Hughes does not preclude this.
41. Certain structural aspects of the benefit should now be examined to establish whether they underpin or undermine a classification of advances on maintenance payments as family benefits.
42. First, it must be borne in mind that advances on maintenance payments are not paid to the employed person or gainfully employed parent but to the child entitled to maintenance. However, it should not be forgotten that the advances are paid to the household in which the child lives and the sums can indeed be regarded as a benefit paid to the parent having custody. Moreover, in Hoever and Zachow, the Court ruled that the distinction between personal rights and derived rights did not in principle apply to family benefits. The fact that the child is the recipient of the payments does not therefore preclude them from being classified as a family benefit.
43. It is also contended that the right forming the object of the advance is a claim at civil law. This is decisive in respect of a State benefit. According to the case-law of the Court, an obligation under civil law to which another person is subrogated cannot be regarded as falling within the scope of Regulation No 1408/71. In support of this reasoning, reference is made to the judgment in Mouthaan in which the Court ruled that payments made by the competent trade or profession institution in respect of wages owed as a consequence of the insolvency of the employer did not constitute unemployment benefits. Subrogation to the obligations of the employer did not partake of the nature of the unemployment benefits referred to in Article 4(1)(g) of Regulation No 1408/71.
44. However, this decision does not prejudge the classification of the payment in the present case. Mouthaan concerned claims arising directly from an employment contract whereby the professional or trade institution's subrogation to the employer's obligations had to be regarded as unemployment benefit in order to open up the scope of Regulation No 1408/71. However, in that case, the trigger for payments of the benefits in question was not the applicant's unemployment but the employer's insolvency. The situation in the present case is fundamentally different.
45. The child's self-standing claim for maintenance against its parents is even if it has to be ascribed to civil law a claim under family law. Mere classification of this claim as a claim under civil law would constitute an excessively formal limitation which would not do justice to its significance in terms of family law and, consequently, to the nature of the maintenance payment as a payment intended to meet family expenses, which, although within the family, still operates in a classic manner. Therefore, even if the claim for maintenance must be assigned to civil law, the child entitled to maintenance has a personal claim against the State by virtue of the rules contained in the UVG in the event that the claim to maintenance is not fulfilled. As a consequence of the grant of the advances on maintenance payments, the child's self-standing right against the defaulting parent is transferred by subrogation to the State, which can take action against that parent in respect of that debt. It would appear logical to classify the State's standing in for a claim under family law as a family benefit.
46. Reference should also be made to the judgments of the Court in Hoever and Zachow and Kuusijärvi. In those judgments, the Court classified German child-raising allowance and Swedish parental benefits as benefits which had to be treated as family benefits within the meaning of Regulation No 1408/71. The benefit concerned was one intended to meet family expenses. Moreover, child-raising allowance was intended to enable one of the parents to devote himself or herself to the raising of a young child. The benefit was aimed at remunerating the service of bringing up a child, meeting other costs of caring for and bringing up a child and, as the case may be, mitigating the financial disadvantages entailed in giving up income from full-time employment.
47. It cannot be ruled out that advances on maintenance payments are also intended to provide the parent having custody with a certain amount of freedom to raise a child. From this angle too it would appear appropriate to classify the advances on maintenance payments as family benefits.
48. Therefore, advances on maintenance payments must be regarded as family benefits within the meaning of Article 4(1)(h) of Regulation No 1408/71.
(b) Scope ratione personae of Regulation No 1408/71
49. The scope ratione personae of Regulation No 1408/71 is laid down in Article 2 thereof. Article 2(1) stipulates that the regulation is to apply to employed or self-employed persons who are or have been subject to the legislation of one or more Member States and who are nationals of one of the Member States or who are stateless persons or refugees residing within the territory of one of the Member States, as well as to the members of their families and their survivors.
50. Article 1(f)(i) defines member of the family as any person defined or recognised as a member of the family or designated as a member of the household by the legislation under which benefits are provided.
51. In Kermaschek the Court drew a distinction between the two categories referred to in Article 2 of Regulation No 1408/71, that is to say workers, on the one hand, and the members of their family and their survivors on the other. Whereas the persons belonging to the first category can claim the rights to benefits covered by the regulation as rights of their own, the persons belonging to the second category can only claim derived rights, acquired through their status as a member of the family or a survivor of a worker, that is to say of a person belonging to the first category.
52. Taking this distinction as a basis, a child claiming a right to an advance on maintenance as a right of its own would probably not fall within the scope ratione personae of Regulation No. 1408/71.
53. However, the distinction established in Kermaschek and initially maintained in case-law was, in Cabanis-Issarte, specifically limited to the circumstances underlying Kermaschek. The distinction between rights in person and derived rights may undermine the fundamental Community law requirement that its rules should be applied uniformly, by making their applicability to individuals depend on whether the national law relating to the benefits in question treats the rights concerned as rights in person or as derived rights, in the light of specific features of the domestic social security scheme.
54. Furthermore, as regards the special case of family benefits, the Court ruled in Hoever and Zachow as mentioned above that the distinction between personal rights and derived rights does not in principle apply to family benefits.
55. For children entitled to maintenance to fall within the scope ratione personae of Regulation No 1408/71, it is merely necessary to determine that they can derive their status from one or other parent.
56. In the present case, the mother of the children, with whom they live in the same household, is self-employed. As a self-employed person subject to a branch of social security within the meaning of Article 4, she falls within the scope ratione personae of Regulation No 1408/71 and therefore so do her children.
57. Consideration should also be given, perhaps, to the fact that the father, who is liable for maintenance and gainfully employed, determines the legal position of the children. However, in the present case, it is certainly not necessary to ascertain whether the childrens father has social insurance and, if so, against which risk. It would be for the national court to ascertain such facts.
58. As a result of the foregoing, it must be concluded that the facts under consideration come under Regulation No 1408/71 both ratione materiae and ratione personae. The children entitled to maintenance can therefore assert a right to equal treatment under Article 3 of Regulation No 1408/71.
VI The second question
Submissions of the parties
59. The Austrian Government first points out that the relationship between Article 6 and Article 52 of the EC Treaty has been interpreted by the case-law of the Court as meaning that Article 52 of the EC Treaty is intended to implement the principle of equal treatment in respect of self-employed persons. Therefore, in such cases Article 52 takes precedence over Article 6.
60. It further contends that, according to the case-law of the Court, Article 52 of the EC Treaty is concerned not solely with the specific rules on the pursuit of occupational activities but also with the rules relating to the various general facilities which are of assistance in the pursuit of those activities such as, for example, access to social housing and acquisition of property. However, this is not so in the case of the legislation in question. It is not connected with any occupational activities. Finally, the holder of the claim is the child and not the person exercising freedom of establishment.
61. The Commission states that the advances on maintenance payments constitute a social advantage within the meaning of Article 7(2) of Regulation No 1612/68. By paying the advances the State assumes the risk that the maintenance payment which is due but has not been paid will remain unrecoverable. The fact that Regulation No 1612/68 is, according to the wording thereof, applicable only to employees whilst the parents of the applicant children in the main proceedings are self-employed is immaterial. That is because Article 48 of the EC Treaty (now, following amendment, Article 39 EC) and Article 52 of the EC Treaty (now, following amendment, Article 43 EC) afford, according to case-law, the same legal protection against discrimination in respect of social advantages and therefore the classification of the relevant economic activities is unimportant.
62. The imposition of a discriminatory condition such as nationality constitutes an infringement of Article 52 of the EC Treaty. This prohibition covers not only specific rules on the pursuit of occupational activities, but also any measure which, pursuant to any provision laid down by law, regulation or administrative action in a Member State, hinders nationals of other Member States in their pursuit of activities as self-employed persons by treating nationals of other Member States differently from nationals of the country concerned.
63. National legislation which provides for the grant of advances on maintenance only to children who are Austrian nationals or who are stateless and excludes the minor children of self-employed German parents working in Austria from any claim to such payments infringes Articles 6 and 52 of the EC Treaty.
64. At the hearing, the Swedish Government argued that the Austrian legislation undoubtedly discriminates against a child entitled to maintenance who does not posses Austrian nationality. On the other hand, the existence of discrimination against the parent having custody is not so apparent. However, the non-payment of maintenance by the parent liable to provide maintenance affects the parent having custody since he or she has to make up the shortfall. In practice, the nationality requirement affects parents of foreign nationality since their children generally possess foreign nationality. In that respect, it constitutes a case of indirect discrimination.
65. As regards the question whether this discrimination falls within the scope of the Treaty, it refers to Article 52 of the EC Treaty, which contains a prohibition on discrimination on grounds of nationality. The prohibition concerns not only rules on the pursuit of occupational activities but all obstacles to the pursuit by nationals of other Member States of occupational activities as self-employed persons and means that they may not be treated differently from nationals of the country concerned. The provision prohibits unequal treatment of the children of self-employed persons who are liable for their maintenance. This also follows from the judgment in Meeusen. Consequently, the nationality requirement infringes the freedom of establishment.
Appraisal
66. By its second question the national court is seeking to ascertain whether the nationality requirement in Article 2(1) of the UVG constitutes discrimination prohibited under Article 52 or Article 6 of the EC Treaty.
67. It must be concluded, as the Commission also noted, that the legislation on advances on maintenance payments at issue in this case constitutes a social advantage within the meaning of Article 7(2) of Regulation No 1612/68. On this basis, it is possible to conclude that, where the parent having custody of a child entitled to maintenance is a worker within the meaning of Article 48, entitlement to equal treatment can be derived from Article 7(2) of Regulation No 1612/68.
68. The classification of the payment as a family benefit does not preclude it from being regarded simultaneously as a social advantage since it has been acknowledged in previous case-law that a certain overlap is indeed possible in respect of social benefits which can be regarded both as social security benefits within the meaning of Regulation No 1408/71 and as social advantages within the meaning of Article 7(2) of Regulation No 1612/68, depending on the specific circumstances of the relevant case and the grant thereof.
69. Nevertheless, classification of the advances on maintenance payments as a social advantage within the meaning of Article 7(2) of Regulation No 1612/68 is at most of limited use in resolving the present case. Since the parents of the children entitled to maintenance are self-employed, it is not possible to rely directly on Article 7(2) of Regulation No 1612/68. It would appear more logical to rely on Articles 52 and 6 of the EC Treaty as the national court has already proposed since the mother with custody of the children entitled to maintenance is self-employed.
70. As has been argued by the parties concerned and established in settled case-law, Article 6 applies independently only to situations governed by Community law in regard to which the Treaty lays down no specific non-discrimination rules. Since Article 52 is essentially intended to give effect, in the field of activities as self-employed persons, to the principle of equal treatment enshrined in Article 7, this principle takes precedence in the present case. Rules of a Member State which are incompatible with this provision also infringe Article 6.
71. As regards the content and purpose of Article 52, the Court has stated as follows:
In that regard, it should be observed that Article 52 of the Treaty confers on nationals of one Member State who wish to pursue activities as self-employed persons in another Member State the benefit of the same treatment as the host States own nationals and prohibits any discrimination based on nationality which hinders the taking up or pursuit of such activities.
72. As the Court of Justice has repeatedly held, that prohibition covers not only specific rules on the pursuit of occupational activities, but also ... any measure which, pursuant to any provision laid down by law, regulation or administrative action in a Member State, or as the result of the application of such a provision, or of administrative practices, hinders nationals of other Member States in their pursuit of activities as self-employed persons by treating nationals of other Member States differently from nationals of the country concerned.
73. As the Swedish Government has clearly explained, the direct discrimination against the children on account of their nationality gives rise to indirect discrimination against the parent having custody. That is because the parents of children with foreign nationality are much more frequently nationals of other Member States than parents of Austrian children.
74. The Austrian Government raised the objection that the legislation on advances on maintenance is unconnected with the occupational activities of the parents and therefore cannot be covered by Article 52.
75. No obvious direct connection exists. However, the additional financial expenses incurred by the parent having custody where the parent liable for maintenance fails to make the payments can affect his or her occupational activities as a self-employed person. That is because the missing resources must be raised somehow from occupational activities. He or she may be subjected merely to reduced profits, be forced to withdraw business assets, or have to work more. Even in the case of a mere reduction in profits, those resources are no longer available for possible reinvestment in the business, either to procure physical resources, to create reserves or to meet personnel costs. Various possible situations are conceivable.
76. At any rate, it can be concluded that the denial of access to advances on maintenance is indeed capable of producing unfavourable effects on the occupational activities of the parent having custody. In that respect, the mother having custody is discriminated against in the present case.
77. Since the case concerns indirect discrimination, it is necessary to consider whether or not the unequal treatment can be justified. In that context, purely economic considerations are insufficient. The State's desire to limit State expenditure, therefore, is not capable of justifying the discrimination. When questioned as to possible justifications, the representative of the Austrian Government stated at the hearing that the claim for payment at issue constituted a matter covered by family law which was unconnected with freedom of establishment. Furthermore, the claim was granted to the child and not to the parent exercising freedom of establishment.
78. Those arguments must also be rejected. It has already been explained that the direct discrimination against the child entitled to maintenance gives rise to indirect discrimination against the parent having custody. However, the structural argument is also unconvincing since the payment concerned is still a State measure of support which as stated above can affect the occupational activities of the parent having custody. Moreover, since no factors have been raised which could be acknowledged as overriding reasons in the general interest, it must be concluded that there is discrimination prohibited under Article 52 of the EC Treaty.
79. Moreover, in Meeusen the Court ruled specifically that:
The principle of equal treatment thus laid down is also intended to prevent discrimination to the detriment of descendants who are dependent on a self-employed worker.
For this reason, too, the legislation on advances on maintenance payments at issue in this case must, in so far as it gives rise to direct discrimination against children entitled to maintenance, be regarded as contrary to Community law.
VII Conclusion
80. For the foregoing reasons I therefore propose that the Court should answer the questions referred for a preliminary ruling as follows:
(1) Article 4(1)(h) of Council Regulation (EEC) No 1408/71 of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community must be interpreted as covering advances on maintenance payments to the minor children of self-employed persons under the Austrian Federal Law on the Grant of Advances on Maintenance for Children so that in such a case Article 3 of Regulation No 1408/71, which contains the principle of equal treatment, is applicable.
In the alternative:
(2) Article 52 of the EC Treaty (now, following amendment, Article 43 EC) and the first paragraph of Article 6 of the EC Treaty (now, following amendment, the first paragraph of Article 12 EC) must be interpreted as precluding a situation in which minor children who, like their parents who are self-employed in Austria are German nationals but ordinarily resident in Austria and who are applying for the grant of advances on maintenance payments under the Austrian Federal Law on the Grant of Advances on Maintenance for Children are discriminated against by virtue of the fact that entitlement to such an advance is withheld from them on the ground that they are German nationals.
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