OPINION OF ADVOCATE GENERAL
WATHELET
delivered on 5 March 2014 ( 1 )
Case C‑103/13
Snezhana Somova
v
Glaven director na Stolichno upravlenie ‘Sotsialno osiguryavane’
(Request for a preliminary ruling from the Administrativen sad Sofia-grad (Bulgaria))
‛Social security for migrant workers — Requirement to bring insurance to an end in order to benefit from an old-age pension — Possibility of waiving the rule on the aggregation of periods of contribution and insurance — Retroactive contributions — Overlapping of periods of insurance in two Member States — Stopping payments and recovery of repayments — Requirement to pay interest — Principles of equivalence and effectiveness’
I – Introduction
1.
The present request for a preliminary ruling, lodged at the Court Registry on 4 March 2013 by the Administrativen sad Sofia-grad (Bulgaria), concerns the interpretation of Articles 48 TFEU and 49 TFEU and of 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, in the version amended and updated by Council Regulation (EC) No 118/97 of 2 December 1996, ( 2 ) as amended by Regulation (EC) No 1992/2006 of the European Parliament and of the Council of 18 December 2006 ( 3 ) (hereinafter ‘Regulation No 1408/71’) and, more specifically, Articles 12, 46 and 94 thereof.
2.
The request for a preliminary ruling arose in the context of a dispute between Mrs Somova, a Bulgarian national, and the Glaven director na Stolichno upravlenie ‘Sotsialno osiguryavane’ (the Director-General of the Sofia Social Security Office, hereinafter ‘SUSO’).
3.
In the dispute Mrs Somova seeks the annulment of the decision of SUSO’s Director-General of 2 December 2011 confirming three notices issued by SUSO staff which stated that, as from 5 July 2007, the award to Mrs Somova of an old-age pension in Bulgaria infringed Article 94(1) of the Bulgarian Social Insurance Code (Kodeks za sotsialnoto osiguriavane, hereinafter ‘the KSO’) and consequently demanded the repayment of the sums paid to Mrs Somova together with interest.
4.
Article 94(1) of the KSO, in the version in force with regard to self-employed persons during the period from 27 December 2005 to 31 December 2011, made the award of an old-age pension subject to the requirement that contributions cease to be paid.
5.
However, according to the contested decision, on the date on which she was awarded her old-age pension, Mrs Somova had not ceased paying social security contributions in Austria where she was working and where she was insured from October 1995 to December 2000 and from January 2001 to July 2011 under the scheme for self-employed persons under the Austrian Federal Law on Social Insurance.
6.
The national court asks the Court, inter alia, whether a provision of national law, such as Article 94(1) of the KSO, infringes the freedom of persons benefitting from an old-age pension in one Member State to pursue a self-employed activity in another Member State in accordance with Article 49 TFEU, which guarantees freedom of establishment.
II – Legal framework
A – EU law
7.
Article 12 of Regulation No 1408/71 provides:
‘1. This regulation can neither confer nor maintain the right to several benefits of the same kind for one and the same period of compulsory insurance. However, this provision shall not apply to benefits in respect of invalidity, old age, death (pensions) or occupational disease which are awarded by the institutions of two or more Member States, in accordance with the provisions of Articles 41, 43(2) and (3), 46, 50 and 51 or Article 60(1)(b).
2. Save as otherwise provided in this regulation, the provisions of the [legislation] of a Member State governing the reduction, suspension or withdrawal of benefits in cases of overlapping with other social security benefits or any other form of income may be invoked even where such benefits were acquired under the legislation of another Member State or where such income was acquired in the territory of another Member State.
…’
8.
According to Article 45(1) of the regulation:
‘Where the legislation of a Member State makes the acquisition, retention or recovery of the right to benefits, under a scheme which is not a special scheme within the meaning of paragraph 2 or 3, subject to the completion of periods of insurance or of residence, the competent institution of that Member State shall take account, where necessary, of the periods of insurance or of residence completed under the legislation of any other Member State, be it under a general scheme or under a special scheme and either as an employed person or a self-employed person. For that purpose, it shall take account of these periods as if they had [been] completed under its own legislation.’
9.
Article 46(2) of Regulation No 1408/71 provides:
‘Where the conditions required by the legislation of a Member State for entitlement to benefits are satisfied only after application of Article 45 ..., the following rules shall apply:
(a)
the competent institution shall calculate the theoretical amount of the benefit to which the person concerned could lay claim [if] all periods of insurance and/or of residence, which have been completed under the legislation of the Member States to which the employed person or self-employed person was subject, [had] been completed in the State in question under the legislation which it administers on the date of the award of the benefit. ...
(b)
the competent institution shall subsequently determine the actual amount of the benefit on the basis of the theoretical amount referred to in the preceding paragraph in accordance with the ratio of the duration of the periods of insurance or of residence completed before the materialisation of the risk under the legislation which it administers to the total duration of the periods of insurance and of residence completed before the materialisation of the risk under the legislations of all the Member States concerned.’
10.
Article 94(2) of Regulation No 1408/71 provides as follows:
‘All periods of insurance and, where appropriate, all periods of employment or residence completed under the legislation of a Member State before 1 October 1972 or before the date of [the regulation’s] application in the territory of that Member State or in a part of the territory of that State shall be taken into consideration for the determination of rights acquired under the provisions of this regulation.’
B – Bulgarian law
11.
Article 4 of the KSO provides:
‘(3) Insurance against invalidity by reason of illness and against old-age and death shall be compulsory for:
…
5.
persons other than employees who work and who receive monthly remuneration greater than or equal to the minimum wage, after the deduction of such expenses as are recognised by regulation, where they are not insured on any other basis during the month in question;
6.
persons other than employees who work and who are insured on another basis during the month in question irrespective of the amount of remuneration they receive.
…’
12.
By judgment No 5 of the Konstitutsionen sad (Constitutional Court) of 29 June 2000, ( 4 ) the obligation for pensioners who are self-employed to pay contributions was declared to be contrary to the Bulgarian constitution. Self-employed pensioners may, however, insure themselves voluntarily against the three risks set out in Article 4(3) of the KSO.
13.
In the version applicable to self-employed persons during the period from 27 December 2005 to 31 December 2011, Article 94 of the KSO, entitled ‘Date of award of a pension’ provided, in paragraph 1 thereof:
‘Pensions shall be awarded from the date on which entitlement is acquired and, in the case of old-age pensions, from the date on which insurance comes to an end, provided that an application accompanied by the requisite documents is lodged within six months of the acquisition of entitlement or, where appropriate, the date on which insurance comes to an end. In the event that the documents are lodged later than six months after the date on which entitlement is acquired or, where appropriate, the date on which insurance comes to an end, the pension shall be awarded from the date on which the documents are lodged.’
14.
The obligation to bring insurance to an end imposed by Article 94 of the KSO was repealed, with regard to self-employed persons, with effect from 1 January 2012.
15.
Paragraph 9 of the transitional and final provisions of the KSO provides:
‘…
(3)
In calculating the period of insurance for the purposes of retirement, account shall also be taken of any period during which the person concerned was of the age referred to in Article 68(1) and (2) but during which a further five years’ contributions were still required in order for entitlement to a pension to be acquired and during which insurance contributions were paid calculated on the basis of the minimum guaranteed remuneration of self-employed persons determined in accordance with the law on financing compulsory State insurance on the day on which such contributions were paid, provided that such period is not included as a period of insurance pursuant to any other provision of this Code.
…
(5)
In respect of periods of insurance acquired under the provisions of paragraph 3, entitlement to a pension shall arise on the day on which the relevant social contributions are paid or on the day on which the schedule for the payment of the relevant social contributions by instalments is approved.’
III – The dispute in the main proceedings and the questions referred for a preliminary ruling
16.
By application dated 18 January 2007, Mrs Somova applied for an old-age pension, declaring that she had not been insured since 4 June 1996. That application was rejected by notice of 6 February 2007 on the ground that Mrs Somova, who had paid contributions in Bulgaria from 18 January 1967 to 31 May 1996, ( 5 ) did not meet the requirements relating to age and the length of the contribution period laid down by Bulgarian law.
17.
On 22 June 2007, Mrs Somova applied for an old-age pension on the basis of paragraph 9 of the transitional and final provisions of the KSO, in the version in force in 2007. Paragraph 9 required, in order for entitlement to an old-age pension to arise, that the contributions for the missing period be paid, that period being, in Mrs Somova’s case, two years, six months and seventeen days. By notice of 5 July 2007, following an application by Mrs Somova, a schedule was established for the payment by instalments of the missing contributions.
18.
That same day, Mrs Somova’s daughter, acting as her representative, certified in writing that Mrs Somova had not worked after 4 June 1996 and that she had not been insured on 5 July 2007.
19.
By notice of 11 July 2007, an old-age pension at the minimum rate was awarded to Mrs Somova, with effect from 5 July 2007. That rate was adjusted on several occasions.
20.
Following an application for an old-age pension which Mrs Somova made in 2011 to the competent Austrian social security body, on 20 September 2011 SOSU received from that body forms E 001/AT and E 205/AT. Those forms indicated that Mrs Somova had been affiliated to the Austrian social security scheme from October 1995 to December 2000 and from January 2001 to July 2011 under the scheme for self-employed persons under the Austrian Federal Law on Social Insurance. During the periods in question Mrs Somova had been working as a farmer.
21.
SUSO inferred from the forms that, on 5 July 2007, the date on which she had been awarded her old-age pension, Mrs Somova had not ceased paying social security contributions. For that reason, by three notices, SUSO annulled the notice awarding an old-age pension to Mrs Somova together with the notices increasing the amount of her pension and demanded the repayment, together with interest, of the sums paid pursuant to those notices.
22.
Mrs Somova challenged the latter notices by administrative action. Her claim was rejected by the contested decision of 2 December 2011 of the Director-General of SUSO. The Director-General took the view that the declaration that social insurance had come to an end did not relate solely to social insurance in Bulgaria since, under Article 84a of Regulation No 1408/71, Mrs Somova was required to inform the Bulgarian social security body about her affiliation in another Member State. Moreover, according to the SUSO’s Director-General, account should have been taken, pursuant to Articles 44(2) and 45 of that regulation, of Mrs Somova’s period of insurance in Austria, without, however, applying paragraph 9 of the transitional and final provisions of the KSO.
23.
According to Mrs Somova, the fact that she was insured at the time when she applied for a pension in Bulgaria is irrelevant, since her social security cover was provided in another Member State.
24.
In those circumstances the Administrativen sad Sofia-grad, before which Mrs Somova had brought an action, decided, in the interests of resolving the dispute, to stay the proceedings and refer the following questions to the Court for a preliminary ruling:
‘1.
In the circumstances [of the case in the main proceedings], should the first paragraph of Article 48 [TFEU] and Article 49 [TFEU] be interpreted as permitting a provision of national legislation, such as [that at issue in the main proceedings], [namely] Article 94(1) of the [KSO], whereby insurance is required to have come to an end in order to grant an old age pension to a national of a Member State who at the time of applying for a pension is working as a self-employed person in another Member State and falls within the scope of application of [Regulation No 1408/71]?
2.
Should Article 94(2) of Regulation No 1408/71, in conjunction with subparagraph (a) of the first paragraph of Article 48 TFEU, be interpreted as permitting an exception to the rule on aggregating periods of insurance in relation to periods completed in another Member State before the regulation was applied by the Member State to which the application for a pension is made, where the said provision affords the person insured the right to choose whether he or she specifies such periods for aggregation purposes and to assess the need for aggregation if, purely according to the law of the State to which the application is made, the period completed is insufficient to create entitlement to a pension and a sufficient period of time can only be achieved by paying insurance contributions?
In those circumstances, does subparagraph (a) of the first paragraph of Article 48 TFEU permit the application of Article 46(2) of Regulation No 1408/71 on the aggregation of periods of insurance following commencement of the application of the regulation to be waived at the discretion of the party insured where that party does not specify periods of insurance completed in another Member State in his or her application for a pension?
3.
Should Article 12(1) of Regulation No 1408/71 be interpreted as permitting recognition of periods of insurance as a result of paying insurance contributions as provided for under Bulgarian law in Article 9(3) [of the transitional and final provisions of the KSO], where, as in the circumstances appertaining in the main proceedings, such recognised periods of insurance overlap with periods of insurance completed under the law of another Member State?
4.
Should Article 12(2) of Regulation No 1408/71 be interpreted as permitting a Member State to stop payments and demand the refunding of all payments of an old age pension granted to a national of that Member State under national law if the conditions laid down in the regulation only existed at the time that the pension was granted and, as a result of considerations based solely on national law according to which the insurance of the party concerned in another member State had not come to an end by the time that the pension was granted, a period of insurance was recognised under national law due to payment of insurance contributions without taking into account periods of insurance which were being completed in another Member State at the time that the pension was granted and without considering whether a different amount of the pension should have been assessed?
If the refunding of pension payments is permissible, does it then follow from the principles of equivalence and effectiveness derived from EU law (‘EU law’) that interest is due even where the national law of the Member State does not make provision for payment of interest in the case of repayment of a pension granted pursuant to an international treaty?’
IV – The procedure before the Court
25.
Written observations have been submitted by the Bulgarian Government, Ireland and the European Commission. The Bulgarian Government and the Commission presented oral argument at the hearing on 9 January 2014.
V – Analysis
A – The admissibility of the questions referred for a preliminary ruling
26.
Ireland submits that the reference for a preliminary ruling is inadmissible.
27.
It argues that the questions referred, which the national court must resolve in the dispute in the main proceedings, are of a purely internal nature and that their resolution requires neither the application nor the interpretation of EU law. Ireland submits, in particular, that the order for reference provides insufficient information about the factual and legal circumstances of the case in the main proceedings to indicate clearly how EU law could influence the outcome of the dispute.
28.
I consider, on the contrary, that the questions referred for a preliminary ruling are admissible.
29.
Whilst it is true that the dispute in the main proceedings essentially concerns the requirement imposed by Article 94(1) of the KSO for the payment of contributions to be brought to an end in order for an old-age pension to be awarded in Bulgaria, the circumstances of the dispute between Mrs Somova and SOSU’s Director-General do not constitute a purely internal situation within a Member State. Indeed on the date on which Mrs Somova applied for an old-age pension in Bulgaria she was working as a self-employed person in Austria and was thus exercising her right to freedom of establishment under Article 49 TFEU. ( 6 )
30.
Moreover, the national court states that the periods of Mrs Somova’s insurance in Bulgaria and Austria overlapped, in particular ( 7 ) during the period of two years, six months and seventeen days which was taken into account, as a result of the payment of supplementary contributions, as a period of insurance for the purposes of Bulgarian law pursuant to paragraph 9(3) of the transitional and final provisions of the KSO. Such a situation is governed by Regulation No 1408/71.
B – The substance of the questions referred for a preliminary ruling
1. The first question
a) Arguments
31.
In its written observations, the Bulgarian Government expressed the view that Article 94 of the KSO does not create any obstacles to the exercise of freedom of establishment guaranteed by Article 49 TFEU. It points out that Regulation No 1408/71 provides for the coordination, not the harmonisation of social security schemes and that the requirement that insurance be brought to an end as a basis for the award of an old-age pension is applied in a non-discriminatory fashion to everyone subject to Bulgarian law.
32.
Under the Bulgarian scheme, the award of an old-age pension is conditional upon retirement from employment or self-employed activity, since the pension serves to replace the income derived from occupational activity. It points out in this connection that, in view of the disparities existing between the schemes and legislations of the Member States in this field, establishing oneself in another Member State may, depending on the case, be more or less advantageous or disadvantageous for the person concerned, according to the combination of national rules applicable pursuant to Regulation No 1408/71. ( 8 )
33.
At the hearing on 9 January 2014, in response to the written and oral questions put to it by the Court, the Bulgarian Government confirmed that the obligation to bring insurance to an end imposed by Article 94(1) of the KSO, in the version in force at the time when the old-age pension was awarded to Mrs Somova, ( 9 ) implied an obligation to cease any occupational activity. It stated that the obligation in question was a purely formal requirement, that it was sufficient if insurance was stopped for a single day and that occupational activity could be resumed the following day whereupon income from occupational activity and old-age pension could be combined.
34.
It added that the requirement had no particular purpose and even that it satisfied no interest and had no logical basis.
35.
As the Bulgarian Government stated, it was because the Bulgarian authorities were aware that the requirement might cause problems in cross-border situations that they had repealed it with regard to self-employed persons with effect from 1 January 2012 and were considering its repeal with regard to employees.
36.
The Commission submits that, pursuant to Article 94(1) of the KSO, once a given worker has reached retirement age in accordance with Bulgarian law, he or she cannot go and work in another Member State where the retirement age is greater without foregoing the right to a pension in Bulgaria. According to the Commission, since the national rule at issue results in the denial of Bulgarian pensions to persons of retirement age who decide to work on a self-employed basis in another Member State, it constitutes a barrier to the exercise of the right of free movement.
37.
At the hearing on 9 January 2014, the Commission stated that, in its opinion, the case-law of the Court relating to Article 49 TFEU precluded national provisions such as Article 94(1) of the KSO since they could make the exercise of the freedom of establishment more difficult or impossible, even if the provision in question applied without distinction on grounds of nationality. It added that the obligation to suspend the occupational activity they pursue in another Member State exposed self-employed persons to the risk of not being able to resume that activity.
b) Assessment
38.
By its first question the national court asks the Court whether the first paragraph of Article 48 TFEU and the first and second paragraphs of Article 49 TFEU preclude the application of a national measure of a Member State, such as Article 94(1) of the KSO, which makes the right to an old-age pension in that Member State subject to the requirement to cease paying social security contributions relating to an occupational activity pursued in that Member State or indeed in another Member State.
39.
The national court suggests that the requirement to cease paying contributions, which implies an obligation to interrupt occupational activity, if only for one day, as the Bulgarian Government confirmed at the hearing, can, in practice, have consequences which restrict freedom of establishment, in particular, because there is no certainty that persons working in another Member State who interrupt their occupational activity will be able to resume it again afterwards.
40.
I would point out that, according to the national court, an insured person retained the right to pursue an occupational activity after the award of an old-age pension and could combine an old-age pension with paid work. There is, therefore, no necessary or direct connection between the payment of such a pension under Bulgarian law and the cessation of gainful employment. Those facts were confirmed at the hearing by the Bulgarian Government.
41.
It is also clear from the documents before the Court that, pursuant to Article 4(3) of the KSO, pensioners who are in employment must have social security cover and are therefore required to pay social security contributions, although, following judgment No 5 of the Konstitutsionen sad, that obligation has been held to be contrary to the Bulgarian constitution for pensioners who work as self-employed persons. Consequently, such pensioners now have a choice as to whether to continue paying social security contributions in Bulgaria. Where a pensioner pays social security contributions (as an employee or self-employed person) his or her pension is increased proportionately. ( 10 )
42.
Moreover, it is common ground that Mrs Somova worked as a self-employed person in Austria and was insured as a result with the competent Austrian social security body during the period from October 1995 to December 2000 and from January 2001 to July 2011. It is also common ground that, on the date on which her Bulgarian pension was awarded, that is to say, 5 July 2007, Mrs Somova was subject, pursuant to Article 13(2)(b) of Regulation No 1408/71, to the Austrian social security scheme and that she had not ceased paying contributions to the social security scheme of that Member State.
i) Is this a case of discrimination or a restriction?
43.
It is settled case-law that, in the absence of harmonisation in the field at EU level, it is for the legislation of each Member State to determine both the conditions governing the right or duty to be insured with a social security scheme and the conditions for entitlement to benefits. Nevertheless, whilst Article 48 TFEU leaves in being differences between the Member States’ social security systems and, consequently, in the rights of persons working in the Member States, it is not, however, in dispute that, in exercising their powers, Member States must none the less comply with EU law. ( 11 )
44.
Consequently, the fact that a national rule, such as that at issue in the main proceedings, concerns the conditions for the award of an old-age pension, does not exclude the application of the FEU Treaty rules, in particular those relating to the free movement of persons. ( 12 )
45.
It is also settled case-law that all of the provisions of the FEU Treaty relating to freedom of movement for persons are intended to facilitate the pursuit by European Union nationals of occupational activities of all kinds throughout the European Union, and preclude measures which might place such nationals at a disadvantage when they wish to pursue an economic activity in the territory of another Member State, even if they apply without regard to the nationality of the workers concerned. ( 13 ) Consequently, the provisions of the Treaty relating to freedom of movement for persons militate against any measure which, even though applicable without discrimination on grounds of nationality, is capable of hindering or rendering less attractive the exercise by European Union nationals of the fundamental freedoms guaranteed by the Treaty. ( 14 ) Any restriction, even minor, of those freedoms is prohibited, ( 15 ) provided that the alleged restriction is not too indirect and uncertain. ( 16 )
46.
It follows that the Bulgarian legislature has the right to set the conditions for the award of old-age pensions in that Member State provided that those conditions do not discriminate on grounds of nationality and do not limit or constitute a restriction on freedom of movement.
47.
It appears, subject to verification by the national court, that the provision at issue applies without distinction, in law or fact, to Bulgarian nationals and nationals of other Member States and is therefore not discriminatory. On the other hand, it does appear to constitute a restriction on free movement and, in the present case, on freedom of establishment.
48.
Indeed, it is clear from the documents before the Court that, under Article 94(1) of the KSO, a very brief, formal interruption, even of a single day, in the payment of contributions is sufficient in order to obtain the award of a pension. ( 17 ) However, whilst such an interruption in the payment of contributions in Bulgaria might seem simple and appear to have no consequences for the pursuit or resumption of an occupational activity, particularly for self-employed persons who have a choice as to whether or not to resume the payment of contributions, it might be difficult, or even impossible, to do the same in another Member State. Given the long and onerous administrative steps that an interruption in the payment of contributions could entail in another Member State, a worker in Mrs Somova’s position might, in order to obtain an old-age pension in Bulgaria, be obliged to cease her occupational activity for a longer, indeterminate period of time and so jeopardise her ability to continue working.
49.
As the national court states, interrupting the payment of contributions in another Member State is likely to expose pensioners to job insecurity and doing so could leave pensioners with no guarantee of resuming work or finding other work. Moreover, even after a pensioner has returned to the job market, a compulsory break such as this will disrupt his or her work history and career progression and be likely to have a real and direct impact on the benefits that he or she may derive from occupational activity. ( 18 )
50.
The alternative is equally pernicious in that, without interrupting the payment of contributions and occupational activity in the other Member State, a pensioner will not be able to combine professional income with a Bulgarian old-age pension.
51.
I would recall that, at the hearing, the Bulgarian Government intimated that the abandoning of this requirement for self-employed persons was linked to the realisation that it could create problems in cross-border situations.
ii) Can the restriction be justified?
52.
It is settled case-law that national measures which constitute restrictions on free movement may be allowed only if they pursue a legitimate objective in the public interest, are appropriate for the purpose of ensuring the attainment of that objective, and do not go beyond what is necessary to attain the objective pursued. ( 19 )
53.
The national court is of the view that the requirement to interrupt insurance imposed by Article 94(1) of the KSO does not pursue an objective in the public interest. I would point out, moreover, that at the hearing on 9 January 2014, the Bulgarian Government indicated that the purpose of this purely formal requirement was unknown, or possibly inexistent. The Bulgarian Government even added that the requirement satisfied no interest and had no logical basis, that the provision in question had been repealed with regard to self-employed persons with effect from 1 January 2012 and that the possibility of its repeal with regard to employees was under consideration in Bulgaria.
54.
It is, therefore, manifestly clear that the requirement at issue is not justified by any public interest objective that the measure in question is capable of achieving.
55.
In light of the foregoing, the answer to the first question referred for a preliminary ruling should be that Article 49 TFEU precludes a legislative provision of a Member State such as Article 94(1) of the KSO which makes the right to an old-age pension in that Member State subject to the requirement to cease paying social security contributions.
2. The second question
a) Arguments
56.
According to the Bulgarian Government, by this question the national court is asking, in substance, whether Article 94(2) of Regulation No 1408/71 permits derogation from the rule on aggregating contribution periods in respect of periods of insurance completed in another Member State prior to the date on which the Member State in which an application for a pension is made implemented the regulation, where the period completed under the sole jurisdiction of the Member State in which the pension is requested is insufficient to give rise to entitlement to a pension without the retroactive payment of social contributions.
57.
In its written observations the Bulgarian Government submits that Regulation No 1408/71 does not allow insured persons falling within its scope any choice as to which legislation should apply unless it expressly so provides.
58.
According to the Bulgarian Government Article 94(2) of Regulation No 1408/71 gives retroactive effect to that regulation by requiring the Member States to take into account all periods of insurance, employment or residence completed under the legislation of a given Member State before 1 October 1972 or before the date of its application in the territory or in a part of the territory of that Member State where it is necessary to do so for the determination of rights to a particular type of benefit. The Bulgarian Government submits that Article 94(2) was adopted in order to prevent the loss of pension rights and to ensure the acquisition and maintenance of such rights for all, including with regard to periods of insurance completed before the date of application of the said regulation. That implies that the aggregation of periods of insurance must be carried out, first and foremost, in accordance with the rules on aggregating periods of insurance laid down in that regulation and that it is only after that that a person whose contribution period is insufficient should be able to choose the option, provided for in national law, of retroactive payment of the missing contributions.
59.
At the hearing on 9 January 2014, the Bulgarian Government maintained that, in so far as the provisions of Regulation No 1408/71 are directed toward the Member States and their administrative authorities, insured persons ought to be able to choose whether or not to rely on the provisions of the regulation. Indeed, according to that government, if an insured person chooses not to rely on the regulation, a national administrative authority cannot apply it to that person of its own accord. The Bulgarian Government submits that the observations made by Ireland and the Commission to the effect that insured persons cannot oppose the application of Regulation No 1408/71 contradict the purpose of that regulation, which is to confer an advantage on insured persons, and the very meaning of the concept of an individual right.
60.
Ireland considers that the wording of Article 94(2) of Regulation No 1408/71 is clear and unambiguous: the wording of the provision is by its very nature mandatory inasmuch as it provides that all periods of insurance completed under the legislation of a Member State before the date of application of the regulation in the territory of that Member State ‘shall be taken into consideration’ for the determination of rights acquired under the provisions of Regulation No 1408/71. Consequently, the terms of that provision cannot, according to Ireland, be interpreted as conferring on applicants the right to decide that relevant periods of insurance should not be taken into consideration during the process of aggregation. It submits that, if Regulation No 1408/71 conferred on individuals the right to disregard period of insurance, that would give rise to complications likely to jeopardise the coordination of national schemes and thus also the objectives of the internal market.
61.
The Commission considers that, in accordance with Article 94(2) thereof, Regulation No 1408/71 applies to the present case. It submits that the application of the system of conflict rules established by that regulation depends solely on the objective situation in which the worker in question finds himself or herself. Insured persons falling within its scope cannot take issue with those conflict rules and have no right to disregard them.
b) Assessment
62.
By its second question, the national court asks the Court whether Article 94(2) of Regulation No 1408/71 allows insured persons the option of disregarding periods of insurance completed in another Member State before the date of the application of the regulation in Bulgaria. In substance, that question raises the question whether Article 94(2) of the regulation is binding or not. ( 20 )
63.
It is settled case-law that, where Regulation No 1408/71 gives insured persons within its scope a right of choice as to the legislation applicable, it does so expressly. ( 21 )
64.
Article 94(2) of Regulation No 1408/71 states that ‘[a]ll periods of insurance … completed under the legislation of a Member State before 1 October 1972 or before the date of [the regulation’s] application in the territory of that Member State … shall be taken into consideration for the determination of rights acquired under the provisions of this regulation’. ( 22 ) Like Ireland, I consider that the wording of Article 94(2) of the regulation is both unequivocal and binding.
65.
The binding nature of that provision is clear from the words ‘shall be taken into consideration’ used in the English version, but also from the other language versions. ( 23 ) The provision leaves no discretion to the Member States or to the competent authorities or to insured persons. It follows that, in the case in the main proceedings, it is necessary, in order to determine Mrs Somova’s pension rights in Bulgaria, to take into consideration the periods of insurance completed under Austrian law before the date of the application of Regulation No 1408/71 in Bulgaria. ( 24 )
66.
That assessment is not, I believe, called into question by the fact that in one judgment, namely Habelt, the Court held that, under Article 94(2) of Regulation No 1408/71, the persons concerned ‘may rely on’ ( 25 ) the inclusion, for the determination of rights pursuant to the regulation, of all periods of insurance, employment or residence completed under the legislation of a Member State before the date of application of the regulation. Indeed, the use of that expression is probably due to the particular circumstances of the matter under consideration in that judgment, in which the benefit of Regulation No 1408/71 as regards the taking into account of periods of insurance or residence completed in another Member State had been denied the persons in question.
67.
Therefore, I consider that, under Article 94(2) of Regulation No 1408/71, all periods of insurance, employment or residence completed under the legislation of a Member State before the date of application of the regulation must be taken into account for the determination of rights acquired pursuant to the provisions of the regulation, including rights relating to the right to an old-age pension of employees and self-employed persons who have been subject to the legislation of two or more Member States.
68.
It follows that Mrs Somova’s entitlement to an old-age pension in Bulgaria should have been established by reference to the aggregation, pursuant to Article 45 of Regulation No 1408/71, of periods of insurance completed in Bulgaria and Austria rather than on the basis of paragraph 9 of the transitional and final provisions of the KSO.
69.
Moreover, I would point out that, according to the Administrativen sad Sofia-grad, ‘the periods completed in Austria are sufficient to make up the shortfall in the insurance period under national law, without there being any need to recognise any period under the provisions of paragraph 9 of the transitional and final provisions of the KSO’. That implies that the aggregation and apportionment rules set out in Article 46(2) of Regulation No 1408/71 are applicable to the calculation of Mrs Somova’s old-age pension, since the aggregation of her periods of insurance in Bulgaria and in Austria pursuant to Article 45 of the regulation suffices to secure her right to an old-age pension in Bulgaria.
70.
I consider that Articles 45 and 46(2) of Regulation No 1408/71 are also binding in nature ( 26 ) and that an insured person may not waive their application by failing to mention in an application for an old-age pension periods of insurance completed in another Member State.
71.
Consequently, I consider that Articles 45, 46(2) and 94(2) of Regulation No 1408/71 are mandatory and binding in nature and do not permit insured persons to waive the application of the aggregation and apportionment rules for periods of insurance completed in another Member State before the date of implementation of that regulation in the Member State in which the application for an old-age pension is submitted.
3. The third question
a) Arguments
72.
The Bulgarian Government observes that, in accordance with Article 12(1) thereof, Regulation No 1408/71 can neither confer nor maintain the right to several benefits of the same kind for one and the same period of compulsory insurance. It takes the view that, notwithstanding the exceptions for which it provides, Article 12(1) of Regulation No 1408/71 precludes the recognition of contribution periods resulting from the payment of retroactive contributions pursuant to national law where such recognised contribution periods overlap with periods of insurance completed under the law of another Member State.
73.
The Commission submits that, in light of the answer which it proposes to the second question referred for a preliminary ruling, there is no need for a separate answer to this question.
b) Assessment
74.
The third question referred by the Administrativen sad Sofia-grad concerns the question whether Article 12(1) of Regulation No 1408/71 is to be interpreted as precluding the recognition of periods of insurance resulting from the payment of retroactive contributions, under paragraph 9(3) of the transitional and final provisions of the KSO, where, as in the case in the main proceedings, such recognised contribution periods overlap with periods of insurance completed under the legislation of another Member State.
75.
In view of my reply to the second question regarding the mandatory and binding nature of Articles 45, 46(2) and 94(2) of Regulation No 1408/71, I consider it unnecessary to give a separate answer to the third question. Indeed, as the Administrativen sad Sofia-grad confirms, the periods of insurance which Mrs Somova completed in Austria are sufficient to make up the shortfall in the insurance period she required in order to be entitled to an old-age pension under Bulgarian law, without there being any need to recognise any period under the provisions of paragraph 9(3) of the transitional and final provisions of the KSO. Consequently, by virtue of the application, in particular, of the aggregation rule laid down in Article 45 of Regulation No 1408/71, reliance on paragraph 9(3) of the transitional and final provisions of the KSO is neither necessary nor permissible.
4. The fourth question
a) Arguments
76.
According to the Bulgarian Government, Article 12(2) of Regulation No 1408/71 authorises Member States to stop further payment and to demand the repayment of all old-age pension payments made to their nationals under national law where, on the date on which the application for old-age benefits was made, the applicant had not fulfilled his or her duty to disclose periods of insurance completed in the territory of another Member State. It submits that, where a contribution period completed aboard is disclosed at a later date, the pension must be re-calculated by reference to the contribution history certified and recognised by the other Member State.
77.
The Commission considers that, in view of its answers to the first and second questions, the first part of the fourth question has already been answered. The second part of the fourth question concerns the recovery of debts and, given the answers which it has already proposed, is irrelevant.
b) Assessment
78.
The fourth question asked by the Administrativen sad Sofia-grad concerns the question whether Article 12(2) of Regulation No 1408/71 permits the recovery of the sums paid to Mrs Somova by way of old-age pension on the ground that those benefits overlap with other income received in Austria. Indeed, it is apparent from Article 12(2) of Regulation No 1408/71 that provisions on reduction laid down in the legislation of a Member State may, in principle, ( 27 ) be invoked against persons who receive a benefit from that Member State if they can claim other social security benefits or receive other income of any kind, in particular, under the legislation of another Member State.
79.
It is clear from the oral submissions made by the Bulgarian Government at the hearing that Bulgarian law permits the combination of gainful employment with an old-age pension. That being so, I consider that Article 12(2) of Regulation No 1408/71 does not apply to the overlapping of Mrs Somova’s earned income in Austria and an old-age pension in Bulgaria.
80.
I would add, for the sake of completeness, that, in view of my answers to the second and third questions, I consider that Mrs Somova’s old-age pension should have been calculated by reference to the aggregation and apportionment rules set out in Articles 45 and 46(2) of Regulation No 1408/71. Moreover, it appears from the indications given by the Administrativen sad Sofia-grad, subject to verification by that court, that a pension awarded pursuant to those provisions of Regulation No 1408/71 would be no different from that determined under SOSU’s notice of 11 July 2007. ( 28 )
VI – Conclusion
81.
In light of the foregoing, I propose that the Court should answer the first, second and fourth questions referred by the Administrativen sad Sofia-grad as follows:
(1)
Article 49 TFEU precludes a legislative provision of a Member State such as Article 94(1) of the Bulgarian Social Insurance Code (Kodeks za sotsialnoto osiguriavane) which makes the right to an old-age pension subject to the requirement to cease paying social security contributions.
(2)
Articles 45, 46(2) and 94(2) of 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, in the version amended and updated by Council Regulation (EC) No 118/97 of 2 December 1996, as amended by Regulation (EC) No 1992/2006 of the European Parliament and of the Council of 18 December 2006, are mandatory and binding in nature and do not permit insured persons to waive the application of the aggregation and apportionment rules for periods of insurance completed in another Member State before the date of implementation of that regulation in the Member State in which an application for an old-age pension is submitted.
(3)
Article 12(2) of Regulation No 1408/71 in the version amended and updated by Regulation No 118/97, as amended by Regulation No 1992/2006, does not apply to the overlapping of earned income and the social security benefits in issue in the case in the main proceedings.
( 1 ) Original language: French.
( 2 ) OJ 1997 L 28, p. 1.
( 3 ) OJ 2006 L 392, p. 1.
( 4 ) Case 4/2000, DV No 55 of 2000.
( 5 ) That is to say, for 33 years, 11 months and 17 days, based on the documents drawn up by Mrs Somova’s Bulgarian employers in connection with her affiliation to the social security scheme and her remuneration.
( 6 ) The national court considers that the matter of compliance with the requirement to bring insurance to an end might be capable of influencing her decision to establish herself in another Member State, pursuant to Article 49 TFEU, because of the risk that she might not be able to continue working as a self-employed person after bringing her insurance to an end.
( 7 ) The national court also states that Mrs Somova’s period of insurance had been aggregated in those same Member States between October 1995 and May 1996, without, however, specifying how that might have occurred.
( 8 ) Case C-208/07 von Chamier-Glisczinski [2009] ECR I-6095, paragraph 85.
( 9 ) That is to say, the version in force from 27 December 2005 to 31 December 2011, which applies to the facts of the case in the main proceedings.
( 10 ) It seems to me that these provisions of Bulgarian law tend to encourage pensioners to work and to pay contributions.
( 11 ) See, to that effect, Case C-18/95 Terhoeve [1999] ECR I-345, paragraphs 33 to 35, and Case C‑282/11 Salgado González [2013] ECR, paragraphs 35 to 37 and the case-law cited.
( 12 ) See, to that effect, Terhoeve, paragraph 35, and Case C-368/98 Vanbraekel and Others [2001] ECR I-5363, paragraph 42.
( 13 ) Case C-415/93 Bosman [1995] ECR I-4921, paragraph 96; Terhoeve, paragraph 39; Case C-190/98 Graf [2000] ECR I-493, paragraph 23; Case C-224/01 Köbler [2003] ECR I-10239, paragraph 74; Case C-232/01 Van Lent [2003] ECR I-11525, paragraph 16; Case C-109/04 Kranemann [2005] ECR I-2421, paragraph 26, and Case C-208/05 ITC [2007] ECR I-181, paragraph 33.
( 14 ) See, to that effect, Case C-442/02 CaixaBank France [2004] ECR I-8961, paragraph 11, and Case C-379/09 Casteels [2011] ECR I-1379, paragraphs 21 and 22 and the case-law cited.
( 15 ) See, to that effect, Case C-212/06 Gouvernement de la Communauté française and Gouvernement wallon [2008] ECR I-1683, paragraph 52.
( 16 ) Graf, paragraph 25.
( 17 ) Provided that all the other conditions, in particular those relating to age and the length of the contribution period, are fulfilled.
( 18 ) For example, a loss of grade or seniority such as might affect the career progression or salary scale of the person in question, or a loss of holiday entitlement, or the loss of economic and commercial relations in the case of self-employed persons, and so on.
( 19 ) Bosman, paragraph 104. See also Case C‑589/10 Wencel [2013] ECR, paragraph 70.
( 20 ) The national court considers that if Article 94(2) of Regulation No 1408/71 is not binding in nature, Mrs Somova was under no obligation to mention the period of insurance which she completed under Austrian law when she made her application in 2007 for an old-age pension in Bulgaria.
( 21 ) Case 227/81 Aubin [1982] ECR 1991, paragraph 19, and Case C-345/09 van Delft and Others [2010] ECR I-9879, paragraph 54. In paragraph 52 of the judgment in van Delft and Others, the Court held that ‘the conflict rules laid down by Regulation No 1408/71 are thus mandatory for the Member States, a fortiori it cannot be accepted that insured persons falling within the scope of those rules can counteract their effects by being able to elect to withdraw from their application. The application of the system of conflict rules established by Regulation No 1408/71 depends solely on the objective situation of the worker concerned.’
( 22 ) I would observe that, in 2007, Mrs Somova applied for an old-age pension in Bulgaria, where she had previously worked as an employee. I take the view that, notwithstanding the fact that Article 94 of Regulation No 1408/71, entitled ‘Transitional provisions for employed persons’, does not expressly mention, in paragraph 2 thereof, periods of ‘self-employment’, the Court held, in paragraph 25 of its judgment in Case C-28/00 Kauer [2002] ECR I-1343, that ‘[a]s regards Article 94(2) of Regulation No 1408/71, it must be borne in mind that the expression period of insurance used in that provision is defined in Article 1(r) of Regulation No 1408/71 as meaning periods of contribution or periods of employment or self-employment as defined or recognised as periods of insurance by the legislation under which they were completed …’. Indeed, Council Regulation (EEC) No 1390/81 of 12 May 1981 extending to self-employed persons and members of their families Regulation No 1408/71 (OJ 1981 L 143, p. 1) extended to self-employed persons the system introduced for employed persons in the original version of the regulation. I would add that Article 95 of Regulation No 1408/71, in the version applicable to the dispute in the main proceedings, entitled ‘Transitional provisions for self-employed persons’, provides, in paragraph 2 thereof, that ‘[a]ll insurance periods and, where appropriate, all periods of employments, of self-employment or of residence completed under the legislation of a Member State ... shall be taken into consideration for the determination of rights acquired under this regulation’. To my mind, that provision has the same legal substance as Article 94(2) of the same regulation.
( 23 ) See, in particular, the wording ‘се вземат предвид’ in the Bulgarian version, ‘wordt rekening gehouden’ in the Dutch version, ‘est prise en considération’ in French, ‘se tomará en cuenta’ in Spanish, ‘é preso in considerazione’ in Italian, ‘será tido em consideração’ in Portuguese, ‘λαμβάνεται υπόψη’ in Greek, ‘sunt luate în considerare’ in Romanian, ‘figyelembe kell venni’ in Hungarian, ‘otetaan huomioon’ in Finnish, ‘skall beaktas vid’ in Swedish, ‘skal tages i betragtning’ in Danish, ‘werden … berücksichtigt’ in German, ‘sa zohľadnia’ in Slovak, ‘se berou v úvahu’, in Czech, ‘ņem vērā’, in Latvian and ‘jest uwzględniany’ in Polish.
( 24 ) See, by analogy, Case C-290/00 Duchon [2002] ECR I-3567, paragraph 23. See also Case C-227/89 Rönfeldt [1991] ECR I-323, paragraph 16; Case C-275/96 Kuusijärvi [1998] ECR I-3419, paragraph 25; Case C-389/99 Rundgren [2001] ECR I-373, paragraphs 29 and 30, and Joined Cases C-396/05, C-419/05 and C-450/05 Habelt and Others [2007] ECR I-11895, paragraph 55.
( 25 ) See paragraph 55 of the judgment and also paragraph 95, which uses the expression ‘may rely on’. The Administrativen sad Sofia-grad considers that those words indicate that the Court regarded Article 94(2) of Regulation No 1408/71 to be non-binding and thus amenable to the discretion of the holder of the right. In the present matter the consequence of that would be that Mrs Somova was under no obligation to mention in her application for the award of a pension under national law the periods of insurance she had completed in another Member State before the date of application of the regulation.
( 26 ) The wording of those provisions does not confer any right to choose on insured persons who fall within their scope. See, by analogy, Delft, paragraph 57. I agree with the statement made by Ireland in its written observations that, pursuant to Article 84a(1) of Regulation No 1408/71, ‘an applicant for social security benefits may not put forward a fragmentary picture of their employment history and periods of insurance with a view to obtaining a pecuniary advantage’. As Advocate General Cruz Villalón stated in point 67 of his Opinion in Wencel, that provision ‘imposes a duty of mutual information and cooperation on the institutions and the persons covered by [Regulation No 1408/71], taking the form of a requirement to “provide the person concerned with any information required for exercising the rights conferred on them by this regulation”, in the case of the former, and a requirement to “inform the institutions of the competent State and of the State of residence as soon as possible of any changes in their personal or family situation which affect their right to benefits under this regulation”, in the case of the latter.’
( 27 ) An exception to the principle laid down in Article 12(2) of Regulation No 1408/71 is contained in Article 46b(1) of that regulation, which provides that, in the case of overlapping of benefits of the same kind, provisions on reduction laid down by the legislation of a Member State do not apply to benefits calculated in accordance with Article 46(2) of that regulation.
( 28 ) In light of my answer to the third question referred by the national court, the questions which naturally arises is whether Mrs Somova might possibly be entitled to reimbursement, under national law, of the contributions which she paid on the basis of paragraph 9 of the transitional and final provisions of the KSO. Given that Mrs Somova’s entitlement to an old-age pension in Bulgaria should have been established in accordance with the provisions of Regulation No 1408/71, rather than paragraph 9 of the transitional and final provisions of the KSO, that latter provision does not give rise to any entitlement to a pension in the present case. It follows that the payments made by Mrs Somova on the basis of that provision constitute social security payments on which there is no return. It will be for the national court to decide this question, in particular, after checking whether SUSO and Mrs Somova fulfilled the mutual duty of information and cooperation imposed on them by Article 84a of Regulation No 1408/71. I would point out that, according to SUSO, Mrs Somova deliberately concealed the periods of insurance which she had completed in Austria. Nevertheless, the national court has confirmed that none of the documents issued by the pensions department mentioned any obligation for Mrs Somova to declare periods of insurance completed in another Member State for the purposes of the taking into account of all periods of insurance, in accordance with Article 45 of Regulation No 1408/71. Furthermore, according to the national court, the application form which must be completed in order to apply for an old-age pension similarly does not set out the rights and obligations arising under the regulation.
Full & Egal Universal Law Academy