Report for the Hearing delivered in Case 300/84

I — Facts and written procedure

1. Facts

The plaintiff is a Roman Catholic priest belonging to the Premonstratensian (Norbertine) Order. He is a Netherlands national and comes from the Netherlands municipality of Oost-, West- en Middelbeers, in which he lived until December 1945. At that point, at the age of 22, he went to live in Postel (Belgium), a few km from the frontier between Belgium and the Netherlands and from Oost-, West- en Middelbeers, in order to continue his studies in a monastery belonging to his Order and was removed from the Register of Inhabitants of Oost-, West- en Middelbeers. In 1955, after becoming a priest, he was sent as a missionary to the Belgian Congo, now Zaire, where he remained until May 1980.

In 1977 and 1980, he spent holidays with his parents in Oost-, West- en Middelbeers and, during those periods, he again had his name entered on the Register of Inhabitants of that municipality and received welfare benefits under the Algemene Bijstandswet (General Law on Assistance, hereinafter referred to as the Assistance Law, Staatsblad 1963, p. 284). In 1977 he registered for the voluntary insurance provided for in Article 77 of the Algemene Arbeidsongeschicktheidswet (General Law on Incapacity for Work, hereinafter referred to as the Law on Incapacity, Staatsblad 1975, p. 674), which entered into force on 1 October 1976.

That provision reads as follows:

1. Persons formerly insured who are pursuing or shall pursue activities in a country which, in the opinion of the Minister and of the Minister for Development Cooperation, may be regarded as a developing country are authorized to pay contributions, on conditions and at a rate to be fixed by or under a decree, in respect of periods following the date on which they reach the age of 65 years and for which they are not insured. For the purposes of the preceding sentence, persons who were resident in the Kingdom before 1 October 1976 and after reaching the age of 15 years but who were no longer resident in the Kingdom at the abovementioned date shall be treated as persons formerly insured. 2. Persons who pay contributions in accordance with the provisions of paragraph 1 or under paragraph 1, or on whose behalf such contributions are paid, shall be regarded as being insured during the period in respect of which the contributions are paid. 3. Exceptions may be made to the provisions of this law or of any measure adopted for the implementation thereof by the decree referred to in paragraph 1.

According to that provision, any person who resided in the Netherlands before 1 October 1976 and after reaching the age of 15 years is authorized to pay voluntary contributions in respect of periods in which they were uninsured, if they pursue an activity in a State which is regarded as a developing country. Zaire is regarded as a developing country.

It is also clear from Article 77 that the detailed rules relating to such voluntary insurance are to be laid down in implementing measures. Article 77 also makes it possible to derogate in those implementing measures from the rules contained in, or adopted pursuant to, the Law on Incapacity.

The implementing measure in question is the Royal Decree of 19 November 1976 (Staatsblad, p. 622). Article 13 of that decree provides that the right to pay voluntary insurance contributions under the Law on Incapacity also applies to persons who were already pursuing an activity in a developing country on 1 October 1976 and who resided in the Netherlands after the age of 15 years. The plaintiff, who satisfied those conditions, registered with the defendant through the Centraal Missie Commissariaat [Central Commission for Missions] on 12 July 1977, for the date specified in Article 13 (2) of the decree, namely 1 August 1978.

Contributions were calculated on the basis of an income sufficient to meet subsistence costs. The Sociale Verzekeringsbank, which is responsible inter alia for implementing the voluntary insurance scheme under the Algemene Ouderdomswet [General Law on Old-Age Insurance, hereinafter referred to as the Old-Age Law] applied the same criterion in relation to the plaintiff's voluntary insurance cover under that law.

During his stay in Zaire, the plaintiff was supported by his parishioners.

The cost of travelling whilst on leave and of the abovementioned voluntary insurance under the Old-Age Law and under the Law on Incapacity was borne by the Centraal Missie Commissariaat. During his stay in Zaire the plaintiff was not liable to Netherlands income tax. Whilst he was on leave in the Netherlands income tax was deducted by the municipality of Oost-West-en-Middelbeers from the benefits awarded to him under the Assistance Law.

In January 1981, after the plaintiff's return to Europe, he became incapacitated for work as a result of back trouble contracted in Zaire. After treatment at a hospital in Antwerp, he returned initially, in March 1981, to Oost-West-en-Middelbeers, where he received invalidity benefits under the Law on Incapacity paid by the defendant in the main proceedings. However, in June 1982, the plaintiff settled on a permanent basis in Postel, on the other side of the frontier between the Netherlands and Belgium. When it became aware of that situation, the defendant decided to suspend payment of invalidity benefits on the ground that the plaintiff did not meet the residence requirement laid down in Article 10 of the abovementioned Royal Decree of 1976. That provision reads as follows:

1. Notwithstanding Article 6 of this Law, a person who is regarded as insured shall become entitled to invalidity benefits only after he has been incapacitated for work in the Netherlands for a continuous period of 52 weeks and if the incapacity for work continues after the end of that period. 2. If it can be established to the satisfaction of the professional and trade association that the person regarded as insured became incapacitated for work at a date prior to that on which he returned to the Netherlands, that person is entitled to invalidity benefits after he has been incapacitated for work for a continuous period of 52 weeks since that date, provided that the incapacity for work continues after the end of that period; however, such benefits shall in no circumstances be paid before the date on which that person returned to the Netherlands.

The plaintiff contested that decision before the Raad van Beroep, Utrecht. Since that court had serious doubts as to the compatibility with Community law of the residence requirement laid down in the provision cited above, it decided, by order of 11 December 1984, to refer the following questions to the Court of Justice for a preliminary ruling under Article 177 of the EEC Treaty:

(1) Must Article 52 or 53 of the Treaty establishing the European Economic Community or any other provision of Community law be interpreted in the sense that it is necessary to consider incompatible therewith the adoption by a Member State of legislation which inter alia offers nationals of that State the opportunity to insure themselves on a voluntary basis against the financial consequences of incapacity for work arising in the course of employment in a developing country outside the territory of the Community, if such legislation contains, for the purpose of verification, an additional condition as regards entitlement to benefits to the effect that the person concerned must, after the materialization of the contingency insured against, have resided or stayed for a continuous period of 52 weeks within the territory of that Member State alone in order to be entitled to benefits, residence or stay within the territory of another Member State after the materialization of the contingency insured against not being treated as equivalent to residence or stay in the first-named Member State? (2) May the criteria set out in Article 1 (a) (ii) of Regulation No 1408/71, including those set out in Annex I thereto, also be applied in order to determine whether a person within the meaning of Article 1 (a) (iv) carries out an activity as an employed or self-employed person under a social security scheme for residents, or does that phrase have another, independent meaning and, if so, what? (3) Does the expression self-employed person, as defined inter alia in Article 1 (a) (ii) of Regulation No 1408/71, also include a person who under a social security scheme for all residents can derive entitlement to benefits on the basis of income from work, other than income from employment or from a profession or trade engaged in on a self-employed basis within the meaning of the national legislation? (4) Does the expression self-employed person, as defined inter alia in Article 1 (a) (ii) of Regulation No 1408/71, or the phrase carries out an activity as a ... self-employed person in Article 1 (a) (iv) also include a person who can be voluntarily insured, whether continuously or otherwise, under a social security scheme for all residents who pursue an activity, even though that person cannot be regarded as an employed person or as a self-employed person within the meaning of the relevant national legislation but enjoys by virtue of such voluntary insurance the same degree of protection as a real employed or self-employed person? (5) Is legislation which in scope applies to areas outside the territory of the Community to be regarded as legislation within the meaning of Article 2 of Regulation No 1408/71? If that question is answered in the affirmative, does this mean that an employed or self-employed person who has been exclusively subject to that legislation in respect of activities pursued outside the territory of the Community may claim the protection afforded by Regulation No 1408/71? (6) If on the basis of a provision of national legislation the award of benefits to a person is refused on the ground that he was not incapacitated for work in the Member State in question for a continuous period of 52 weeks, does this mean that benefits have not been awarded by reason of the place of residence, within the meaning of Article 2 (4) of Regulation (EEC) No 1390/81? Would the answer to this question be different if the phrase incapacitated for work in the Member State in question were interpreted as meaning that the person conerned must have had a place of residence in that Member State?

The order of the Raad van Beroep, Utrecht, was received at the Court Registry on 19 December 1984.

2. Written procedure

Pursuant to Article 20 of the Statute of the Court of Justice of the European Economic Community, written observations were submitted by the Kingdom of the Netherlands, represented by E. F. Jacobs, Deputy Secretary General of the Ministry of Foreign Affairs, acting as Agent, and by the Commission of the European Communities, represented by its Legal Adviser, J. Griesmar, acting as Agent, assisted by F. Herbert, of the Brussels Bar.

Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry.

By decision of 26 November 1985, the Court assigned the case to the Second Chamber.

II — Written observations submitted to the Court

1. First question

The Netherlands Government emphasizes that the prohibition of discrimination contained in Articles 52 and 53 of the EEC Treaty does not preclude the imposition of a residence requirement because the purpose of those articles is merely to abolish existing restrictions on freedom of establishment and to prevent the establishment of new restrictions, namely national provisions which discriminate either directly or indirectly on the basis of nationality. The residence requirement at issue applies without regard to the nationality of the person conerned.

The Commission considers that, having regard to the circumstances of the case, Regulation No 1408/71 must be regarded as the lex specialis intended to guarantee both the freedom of establishment laid down in Articles 52 and 53 of the EEC Treaty and the freedom to provide services laid down in Article 59 of the same Treaty, with a view to eliminating the obstacles which could arise from the existence of unharmonized national social security schemes. Since the alleged infringement of Articles 52 and 59 is in fact linked to the right to a social security benefit, the Commission considers that the reply to the question concerning the interpretation of Articles 52 and 53 of the Treaty must be sought in the specific coordination measures contained in Regulation No 1408/71.

2. Second, third and fourth questions

According to the Netherlands Government, the combined provisions of Article 1 (a) (ii) and (iv) of Regulation No 1408/71 lay down the criteria for establishing whether a person is an employed person within the meaning of the regulation. There is no difference in content between the concepts of employed person and self-employed person in Article 1 (a) (ii) of Regulation No 1408/71, on the one hand, and the expression carries out an activity as an employed or self-employed person in Article 1 (a) (iv) on the other. Consequently, both provisions have the same meaning.

The Netherlands Government proposes that the expression self-employed person in Article 1 (a) (ii) of Regulation No 1408/71 should be interpreted, in accordance-with the provisions of Annex I to the said regulation, as meaning any person pursuing an activity or occupation without a contract of employment. That definition also covers persons whose income from work does not derive from an employment relationship or from self-employment in a trade or profession, within the meaning of the national legislation.

In the view of the Netherlands Government a person who, in the context of a social security scheme applying to all residents and covering the pursuit of all activities, is entitled to be voluntarily insured, whether or not on a continuous basis, is a person carrying out an activity as a self-employed person within the meaning of the Article 1 (a) (iv) even when such a person may not be regarded as an employed person or self-employed person within the meaning of national law, since the terms employed in that article have a specific meaning in Community law which does not necessarily correspond to the meaning given to those same terms in the context of national law.

The Netherlands Government points out that neither in regard to compulsory insurance nor in regard to continued voluntary insurance is any distinction made between employed persons, self-employed persons and those who may not be regarded as such in national law. On the other hand, in certain cases, such as the present one, a distinction is drawn in the context of the Law on Incapacity between persons compulsorily insured and those voluntarily insured, inasmuch as additional conditions are laid down for obtaining a right to benefits.

In the Commission's view, it is clear that the plaintiff is voluntarily insured under a social security scheme of a Member State... for all residents or for certain categories of residents within the meaning of Article 1 (a) (iv) of Regulation No 1408/71 and that the voluntary insurance entered into under the Law on Incapacity covers one or more of the contingencies covered by the branches dealt with in the abovementioned regulation. On the other hand, the plaintiff is not a person who had previously been compulsorily insured within the meaning of the provision cited above. The question is therefore to determine what is to be understood by the phrase if such person carries out an activity as an employed or self-employed person.

Before considering that question, the Commission points out that the national court is not seeking an interpretation of the expression employed person within the meaning of the provision at issue but is asking the Court to clarify the meaning of the expression self-employed person.

In view of the terms in which that provision is couched in the various Community languages, the Commission concludes that the term travailleur non salarié [literally: non-salaried worker] used in the French version of the regulation actually means self-employed person. Consequently, the question arises of what criteria are to be applied in order to determine whether a person is carrying out an activity as a self-employed person. In order to ascertain whether the expression self-employed in that sense covers a person voluntarily insured under a social security scheme of a Member State... for all residents or for certain categories of residents, regard must be had to the criteria laid down by the Community legislature for determining when a person compulsorily insured under a social security scheme covering all residents may be regarded as self-employed within the meaning of Article 1 (a) (ii) of the aforesaid regulation.

On the basis of the versions of Article 1 (a) (ii) in all the Community languages and having regard to the purpose of Regulation No 1390/81, the Commission considers that the definition of the expression self-employed contained in Section I of Part I of Annex I to Regulation No 1408/71 may not be limited to persons who are self-employed in a trade or profession within the meaning of national law. That interpretation is confirmed by the fact (mentioned in the national court's third question) that in Netherlands tax law the expression income from work includes income from work which is performed in economic life and which is intended to provide — or, according to the rules prevailing in society, can reasonably be expected to provide — some pecuniary advantage.

The Commission concludes that the expression self-employed person in Section I of Part I of Annex I to the regulation also covers persons who are entitled to benefits under a social security scheme for all residents on the basis of income from work carried out in economic life which is intended to provide or, according to the rules prevailing in society, may reasonably be expected to provide a pecuniary advantage. That is so even if the work is not performed by way of a trade or profession within the meaning of Netherlands law.

The Commission considers that the reply to the fourth question follows from the reply given to the preceding questions.

3. Fifth question

In the view of the Netherlands Government, the definition of the term legislation in Article 1 (j) of Regulation No 1408/71 does not contain any territorial limitation. National legislation within the meaning of the said regulation, and in particular of Article 2 thereof, may cover territories situated outside the EEC.

The Netherlands Government considers that, consequently, an employed or self-employed person who has been subject to national legislation solely in respect of activities carried out outside the territory of the EEC comes within the scope of the regulation and may therefore avail himself of the protection which it offers. However, the question whether the person concerned is actually entitled to that protection depends on the relevant provisions of the regulation. If application of those provisions expressly depends on residence in a territory forming part of the Community, the person concerned cannot claim a right to protection.

The Commission contends that the reply to that question is to be found in the judgments of the Court of 31 March 1977 (Case 87/76 Bozzone v Office de sécurité sociale ďoutre-mer [1977] ECR 687) and of 11 July 1980 (Case 150/79 Commission v Belgium [1980] ECR 2621). It can be seen in particular from the Opinions in those two cases that, if the legislation of a Member State allows persons to be insured on the basis of an activity carried out in a non-member country and awards the corresponding social benefits, there is a sufficient connection to bring the insured persons within the scope of Regulation No 1408/71 on the basis of Article 1 (j) thereof, even though the activity was partly or wholly carried out outside the territory of the Community. It is certainly true that the regulation cannot give rise to rights not provided for in the national scheme on the basis of activities carried out in non-member countries. However, when a national scheme recognizes and establishes such rights, they form part of the legislation of the Member State in question within the meaning of Regulation No 1408/71.

The Commission concludes in regard to that point that the waiving of residence clauses provided for in the first paragraph of Article 10 (1) of Regulation No 1408/71 also applies to recipients of benefits provided for under the legislation of a Member State in respect of activities exclusively carried on in a country which, within the meaning of that legislation, may be regarded as a developing country, even though the recipient, who is a national of a Member State, resides on the territory of another Member State.

4. Sixth question

In regard to this point, the Netherlands Government states that Regulation No 1390/81 merely extends the scope of Regulation No 1408/71 to self-employed persons without conferring upon them further rights in addition to those provided for employed persons. Article 2 of Regulation No 1390/81 may not therefore be interpreted differently from Article 94 of Regulation No 1408/71, which deals with the same subject as the former.

With regard to Article 94 (4), the Netherlands Government considers that it merely made it possible for a person who had not been awarded any benefit or who had had his benefits suspended by reason of his nationality or place of residence to be awarded such a benefit or to have the benefit resumed. The benefits in question can only be awarded or resumed if the applicable nationality or residence requirements may be waived on the basis of the provisions of the preceding titles of the regulation. With regard to residence requirements, the regulation merely provides that periods of residence are to be assimilated in respect of benefits already acquired.

The purpose of Article 94 (4) of the regulation is not the general abolition of conditions of nationality or residence.

According to the Netherlands Government, the consequence is that neither Article 94 (4) of Regulation No 1408/71 nor Article 2 of Regulation No 1390/81 is applicable to a residence requirement such as that at issue since that requirement was a necessary condition for the acquisition of the right to benefits. Consequently, the benefit in this case is not one which has not been awarded by reason of the place of residence of the person concerned within the meaning of Article 2 (4) of Regulation No 1390/81.

Finally, the Netherlands Government observes that that question is not at all important in this case because the aforementioned provisions are applicable only to benefits which had been awarded or suspended before 1 July 1982 whereas the decision in question modifying the benefit was notified to the plaintiff on 8 December 1982.

According to the Commission, the waiving of residence clauses referred to in Article 2 (4) of Regulation No 1390/81 and Article 10 (1) of Regulation No 1408/71 not merely ensures that the person concerned retains the right to receive social benefits acquired under the legislation of one or more Member States even after taking up residence in another Member State, but also that he may not be prevented from acquiring such a right merely because he does not reside in the territory of the State in which the institution responsible for payment is situated.

That interpretation is confirmed both by the very terms of Article 2 (4) of Regulation No 1390/81 and by the Court's case-law, particularly the judgment of 10 June 1982 (Case 92/81 Caracciolo v INAMI [1982] ECR 2213). Since the Court considered that Article 10 of Regulation No 1408/71 provided inter alia for the waiving of residence clauses which were a condition for the award of benefits, then, a fortiori, the same must be true of clauses requiring the insured person to stay for a specified period on the territory of a Member State, since the obligation to reside in a certain Member State in order to be eligible for certain benefits is in fact more severe than the obligation merely to stay there.

III — Oral procedure

At the sitting on 27 February 1986 the Commission, represented by F. Herbert, assisted by R. Cornelissen, in the capacity of expert, presented oral argument and replied to questions put by the Court.

The Advocate General delivered his Opinion at the sitting on 23 April 1986.

1 Language of the Case: Dutch.

2 Translator's Note: Self-employed person is in fact the term used in the English version of Regulation No 1408/71.