C.P.M. Meeusen v. Hoofddirectie Van de Informatie Beheer Groep

(Case C-337/97)

Before the Court of Justice of the European Communities (Fifth Chamber)

ECJ (5th Chamber)

(Presiding, Puissochet P.C.; Jann ( Rapporteur),

Moitinho de Almeida, Gulmann and Edward JJ.) Mr Antonio La Pergola, Advocate

General.

8 June 1999

Reference from the Netherlands by the Commissie van Beroep Studiefinanciering

(Study Finance Tribunal) for a preliminary ruling under Article 177 of the E.C. Treaty (now Article 234 E.C.).

Free movement of persons--workers--Regulation 1612/68--equality of treatment of workers from another Member State--workers from other Member States to receive same tax and social advantages as national workers--study finance--residence requirement--definition of "worker" within the meaning of Article 7 of Regulation 1612/68 and Article 43 E.C.--could include national of a Member State, employed in one Member State but resident in Member State of which he was a national--whether child of such worker could rely on Regulation 1612/68 to obtain study finance. Under the Dutch law on the financing of studies ("the WSF"), only studies pursued in the Netherlands gave rise to an entitlement to study finance, except in the case of certain foreign institutions which were treated as Dutch institutions for the purposes of the WSF, one of which was the Technical Institute for Chemistry in Antwerp. Under Article 7 of the WSF, study finance was available to students who were Dutch nationals or those who were resident in the Netherlands. M was of Belgian nationality and was residing in Belgium when she began her studies at the Institute. Her parents were both Belgian and resident in Belgium, but her father was the director and sole shareholder of a company established in the Netherlands, at which her mother was employed for two days per week. When her application for study finance under the WSF was rejected, she brought

proceedings before the Study Finance Tribunal on the ground that the right to study finance could not be made subject to the requirement that the student be resident in the Member State where the parents were employed. M's case turned on Article 7 of Regulation 1612/68 which provided *660 that a worker who was a national of a Member State could not be treated differently from national workers by reason of nationality in respect of any conditions of employment. In Bernini, the Court had ruled that study finance awarded by a Member State to children of workers constituted a social advantage to a migrant worker, as provided by Article 7(2) of Regulation 1612/68, where the worker continued to support the child. It has also been held that the child could rely on Article 7(2) in order to obtain study finance under the same conditions as were applicable to national workers and in particular without any further requirements as to place of residence. The question therefore arose whether M's mother was regarded as a migrant worker within the meaning of Article 48 of the E.C. Treaty (now, after amendment, Article 39 E.C.) and Regulation 1612/68. The Tribunal stayed proceedings and referred several questions to the Court of Justice for a preliminary ruling, in particular: (1) whether the fact that a person was related by marriage to the director and sole shareholder of the company for which he pursued his activity precluded that person from being classified as a "worker" within the meaning of Article 39 E.C. and of Regulation 1612/68 and (2) whether the dependent child of a national of another Member State who pursued an activity as an employed person in another Member State while maintaining his residence in the State of which he was a national, could rely on Article 7(2) of Regulation 1612/68 in order to obtain study finance under the same conditions as were applicable to children of nationals of the State of employment, in particular without any further requirement as to the child's place of residence, and whether he could obtain study finance under those same conditions. Held: "Worker" within the meaning of Article 39 E.C. and Regulation 1612/68 It was settled case law that any person who pursued activities which were effective and genuine to the exclusion of activities on such a small scale as to be regarded as purely marginal and ancillary, had to be regarded as a "worker". Moreover, according to that case law, the essential feature of an employment relationship was that for a period of time a person performed services for and under the direction of another person in return for which he received remuneration. In that regard, the personal and property relations between spouses was not such as to preclude, in the context of the organisation of an undertaking, the existence of the subordination characteristic of an employment relationship. Accordingly, the fact that a person was related by marriage to the director and sole owner of the company for which he pursued an effective and genuine activity did not preclude that person from being classified as a "worker" within the meaning of Article 39 E.C. and of Regulation 1612/68, so long as he pursued his activity in the context of a relationship of subordination. [12]-;[17] *661 Lawrie-Blum v. Land Baden-Württemberg (66/85): [1986] E.C.R. 2121;

[1987] 3 C.M.L.R. 389 and Martinez Sala v. Freistaat Bayern (C-85/96): [1998] E.C.R. I-2691, applied; Asscher v. Staatssecretaris Van Financien (C-107/94): [1996] E.C.R. I-3089; [1996] 3 C.M.L.R. 61, not applied. The dependent child's right to rely on Article 7 of Regulation 1612/68 It was expressly stated in the fourth recital of the preamble to Regulation 1612/68 that the right to free movement must be enjoyed "without discrimination by permanent, seasonal and frontier workers ...". Moreover, the Court had consistently held that the principle of equal treatment laid down in Article 7 of that Regulation was also intended to prevent discrimination to the detriment of descendants dependent on the worker. It followed that the dependent child of a national of a Member State, who was employed in one Member State but maintained his residence in the State of which be was a national, could rely on Article 7(2) of Regulation 1612/68 to obtain study finance under the same conditions as were applicable to children of nationals of the State of employment, and in particular without any further requirement as to the child's place of residence. [18]-;[25] Bernini v. Minister Van Onderwijs en Wetenschappen (C-3/90): [1992] E.C.R. I-1071 and Office National de l'Emploi (Onem) v. Deak (94/84): [1985] E.C.R. 1873, followed. The dependent child's right to obtain study finance under the same conditions as children of nationals Article 52 of the E.C. Treaty (now, after amendment, Article 43 E.C.) conferred on nationals of one Member State who wished to pursue activities as self-employed persons in another Member State the benefit of the same treatment as the host State's own nationals and prohibited any discrimination based on nationality. That prohibition also applied to the imposition of a residence requirement in respect of a social advantage where it had been established that the requirement was discriminatory in nature. It followed that the dependent child of a national of a Member State, who was employed in one Member State but maintained his residence in the State of which he was a national could obtain study finance under the same conditions as were applicable to children of nationals of the State of establishment, and in particular without any further requirement as to the child's place of residence. [26]-;[30] E.C. Commission v. Luxembourg (C-111/91): [1993] E.C.R. I-817; [1994] 2 C.M.L.R. 781, applied. Representation P. J. M. Meeusen, for C. P. M. Meeusen. A. H. M. Nierman, Ambassador of the Netherlands to Luxembourg, acting as Agent, for the Dutch Government. *662 E. Röder, Ministerialrat in the Federal Ministry of Economic Affairs, acting as

Agent, for the German Government. P. J. Kuijper, Legal Adviser, and B. J. Drijber, of its Legal Service, acting as Agents, for the E.C. Commission. Cases referred to in the judgment: 1. Bernini v. Minister Van Onderwijs en Wetenschappen (C-3/90), 26 February 1992: [1992] E.C.R. I-1071. 2. Lawrie-Blum v. Land Baden-Württemberg (66/85), 3 July 1986: [1986] E.C.R. 2121; [1987] 3 C.M.L.R. 389. 3. Martinez Sala v. Freistaat Bayern (C-85/96), 12 May 1998: [1998] E.C.R. I-2691. 4. Asscher v. Staatssecretaris Van Financiën (C-107/94), 27 June 1996: [1996] E.C.R. I-3089; [1996] 3 C.M.L.R. 61. 5. Meints v. Minister Van Landbouw, Natuurbeheer en Visserij (C-57/96), 27 November 1997: [1997] E.C.R. I-6689; [1998] 1 C.M.L.R. 1159. 6. Office National de l'Emploi (Onem) v. Deak (94/84), 20 June 1985: [1985] E.C.R. 1873. 7. E.C. Commission v. Luxembourg (C-111/91), 10 March 1993: [1993] E.C.R. I-817; [1994] 2 C.M.L.R. 781. Further cases referred to by the Advocate General: 8. Brown v. Secretary of State for Scotland (197/86), 21 June 1988: [1988] E.C.R. 3205; [1988] 3 C.M.L.R. 403. 9. R. v. Ministry of Agriculture, Fisheries and Food, Ex parte Agegate Ltd (C-3/87), 14 December 1989: [1989] E.C.R. 4459; [1990] 1 C.M.L.R. 366. 10. Levin v. Staatssecretaris Van Justitie (53/81), 23 March 1982: [1982] E.C.R. 1035; [1982] 2 C.M.L.R. 454. 11. Echternach and Another v. Minister Van Onderwijs en Wetenschappen (389 & 390/87), 15 March 1989: [1989] E.C.R. 723; [1990] 2 C.M.L.R. 305. 12. O'Flynn v. Adjudication Officer (C-237/94), 23 May 1996: [1996] E.C.R. I-2617; [1996] 3 C.M.L.R. 103. 13. Union de Recouvrement des Cotisations de Securite Sociale et d'Allocations Familiales de la Savoie (Urssaf) v. Hostellerie Le Manoir Sarl (C-27/91), 21 November 1991: [1991] E.C.R. I-5531. 14. Sotgiu v. Deutsche Bundespost (152/73), 12 February 1974: [1974] E.C.R. 153. 15. Di Leo v. Land Berlin (C-308/89), 13 November 1990: [1990] E.C.R. I-4185. 16. Matteucci v. Communaute Francaise de Belgique and Another (235/87), 27 September 1988: [1988] E.C.R. 5589; [1989] 1 C.M.L.R. 357. 17. Criminal Proceedings against Even and Office National des Pensions pour Travailleurs Salaries (ONPTS) (207/78), 31 May 1979: [1979] E.C.R. 2019; [1980] 2 C.M.L.R. 71 *663 . 18. Centre Public d'Aide Sociale de Courcelles v. Lebon (316/85), 18 June 1987: [1987] E.C.R. 2811; [1989] 1 C.M.L.R. 337.

Opinion of Mr Advocate General La Pergola

Introduction 1. In these proceedings the College van Beroep Studiefinanciering, Netherlands (hereinafter the "College") is seeking a ruling from the Court on the relevance of the place of residence of a worker and members of his family in determining the scope of the rule of equal treatment with regard to social advantages contained in Article 7(2) of Council Regulation 1612/68 on freedom of movement for workers within the Community. [FN1] First, the court making the reference asks whether work in a subordinate position in a family firm can be regarded as employment for the purposes of Article 48 of the E.C. Treaty (now, after amendment, Article 39 E.C.) and Regulation 1612/68. A second question concerns whether, under Article 52 of the E.C. Treaty (now, after amendment, Article 43 E.C.), the right of non-discrimination with regard to social advantages can exist even where these are granted to self-employed persons. FN1 [1968] O.J. Spec. Ed. (II) 475.

The facts of the case and the questions referred by the national court 2. The case pending before the national court concerns a challenge to the decision adopted by the Dutch authority which manages study finance, the Hoofddirectie van de Informatie Beheer Groep (hereinafter "IBG"), to refuse to grant Chantal Meeusen, a Belgian national residing in Belgium, entitlement to receive benefits under the Dutch law on study finance despite the fact that her parents, also Belgians residing in Belgium, had always worked in the Netherlands. 3. Although they had worked in the Netherlands since 1976, Mr and Mrs Meeusen, Chantal's parents, decided in 1980 to reside in Essen, in Belgium, not far from the Dutch border. The father, Petrus Meeusen, is the director-general of Inpechem Inspectors BV, a limited company which he set up and of which he is the sole shareholder. The company, whose registered office is in Rotterdam, specialises in transporting liquids and employs some 20 people. The plaintiff's mother is an employee of the company. Mr and Mrs Meeusen have always received an income in the Netherlands and pay taxes to the Dutch revenue authority. They come under the Dutch general social security scheme, in accordance with the law in that country, which refers to the place of work of the person concerned. *664 4. On 14 October 1993 Chantal Meeusen applied to the IBG for a grant to study chemistry at the Provinciaal Hoger Technisch Instituut voor Scheikunde, Antwerp. From November 1993 to March 1994 she received a basic grant, which, under the Dutch study finance law, the Wet op de Studiefinanciering (hereinafter the "WSF"), is given direct to students who are over 18 years of age irrespective of their income. By decision of 2 October 1994 the IBG reversed its decision and at the same time required Chantal Meeusen to repay the money she had already received. The grant was withdrawn on the grounds that, since Chantal did not

have Dutch nationality and was not resident in the Netherlands, she was not covered by the WSF. That law applied to Dutch nationals and to some categories of foreigners, including nationals of Member States of the Community, provided they resided in that country. The decision of 2 October 1994, upheld by the IBG following a complaint by Chantal Meeusen, was challenged by her before the court making the reference. According to the College, entitlement to the grant, although not available to non-resident foreigners under the national legislation, might, by virtue of the Community provisions on freedom of movement for workers, be open to a foreigner who was a national of another Member State. In the proceedings which gave rise to the present reference, the IBG submitted that the Community legislation does not protect frontier workers who do not reside in the Netherlands. Since according to the Court a study grant awarded by a Member State to the children of workers is a social advantage within the meaning of Article 7(2) of Regulation 1612/68, the College for its part wonders whether that provision applies also where both the worker and his family reside in a State other than the State of employment and to which the persons concerned pay their taxes and contributions. However, it starts by disclosing its doubts as to whether the mother is an employee. If the provisions relating to the protection of employees do not apply, the College asks the Court to rule on the applicability of the provisions on freedom of establishment. 5. The College therefore referred the following questions for a preliminary ruling: 1(a) Does a situation such as that in the present case, in which the plaintiff's mother is employed by the limited company of which her husband is the director and sole shareholder, preclude her from being regarded as a migrant worker within the meaning of Article 48 of the E.C. Treaty and of Regulation 1612/68? If Question 1(a) is answered in the negative: 1(b) In the Bernini judgment [FN2] the Court held that study finance awarded by a Member State to children of workers constitutes a social advantage to a migrant worker, as provided for in Article 7(2) of Regulation 1612/68, where the worker continues to support the child. In such a case the child may rely on Article 7(2) in order to obtain *665 study finance under the same conditions as are applicable to children of national workers, and in particular without any further requirement as to place of residence. Does this rule equally apply if the migrant worker must be regarded as a frontier worker? FN2 Case C-3/90, Bernini v. Minister Van Onderwijs en Wetenschappen: [1992] E.C.R. I-1071. 1(c) Does the rule of law in Bernini, as stated in Question 1(b) above, also apply if the child of a migrant worker, as in the present case, has never lived in the Netherlands? 2. Must Article 52 of the E.C. Treaty be interpreted in such a way that the safeguard provided for under the rule laid down in Bernini, as mentioned above in Question 1(b), also applies to the child of a national of a Member State who pursued activities in another Member State as a self-employed person?

To what extent is it also decisive in that connection that the child has never been resident in the Netherlands, and that the parent is not resident in the country in which the activity as a self-employed person is pursued?

Relevant Community provisions 6. So far as employees are concerned, the principle of non-discrimination is set out in general terms in Article 39(2) E.C., according to which freedom of movement for workers "entail[s] the abolition of any discrimination based on nationality between workers of the Member States as regards employment, remuneration and other conditions of work and employment". Under Article 7(2) of Regulation 1612/68 "[a worker who is a national of a Member State] shall enjoy the same social and tax advantages as national workers". 7. So far as self-employed persons are concerned, Article 43 E.C. states: Within the framework of the provisions set out below, restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State shall be abolished by progressive stages in the course of the transitional period.

Study finance under the legal system of the Netherlands 8. In the Netherlands, the provisions relating to study finance are contained in the WSF, which has been in force since 1 October 1986. First, provision is made for a basic grant, awarded irrespective of parental income. [FN3] A supplementary grant may also be awarded, which is dependent on parental income. [FN4] The amount of the basic grant and the supplementary grant vary depending on whether or not the student is living with his or her parents. Under the present regime grants are paid direct to students. Under the previous system the parents of a student aged 18 to 27 could receive family allowances. More needy students could also obtain a study grant calculated on the basis of the family income. FN3 Article 16. FN4 Articles 18 & 20. 9. According to Article 7 of the WSF, that law applies only to: *666 a. students who possess Dutch nationality; b. students who do not possess Dutch nationality but are resident in the Netherlands and are treated as Dutch nationals as regards study finance under provisions contained in conventions concluded with other States or in a decision adopted by an organisation governed by public international law which is binding on the Netherlands; c. students who do not possess Dutch nationality but are resident in the Netherlands and belong to a category of persons specified by or under a

regulation issued by the public authorities who are treated as Dutch nationals as regards study finance.

Question 1(a) 10. The national court seeks initially to ascertain whether Chantal Meeusen's mother may be regarded as an employee for the purposes of the application of the Community provisions which guarantee workers equal treatment as regards social advantages. The Court's case law regards as a social advantage, at least in some cases, the payment of study grants to the children of workers. The first question is intended, more specifically, to ascertain whether the activity engaged in by the wife of the sole owner of a company, where the company concerned is family-owned, can be regarded as employment for the purposes of the application of the provisions on freedom of movement for workers, in particular Article 39 E.C. and the relative implementing provisions contained in Regulation 1612/68. 11. We are thus faced in this case with the difficult problem of distinguishing between the personal and professional aspects of an occupational activity pursued in a family context. Family collaboration can take a different form from work under contract, or may fall outside the contractual context altogether. For this reason the national legal systems seek to protect the rights of family members working in a family firm. This also explains how it is that work performed in a family firm may be characterised in a number of different ways within the same legal system. As is stated in the order for reference: in Dutch law the question whether there is a relationship of employment has received various replies according to the sector of national law concerned (social security law, fiscal law, civil law). 12. There is no reason, however, so far as an activity pursued in a "family" firm is concerned, to depart from the criteria laid down by the Court for the application of the provisions protecting Community workers. Community case law has in fact defined the concept of "Community worker" in a way which is different from the way in which it is defined within the national legal systems. [FN5] A person is regarded as an employee if "for a certain period of time [he] performs services for *667 and under the direction of another person in return for which he receives remuneration". [FN6] It must, however, be an "effective and genuine activity", as opposed to a marginal one. [FN7] It is therefore necessary, on the basis of the above-mentioned case law, to examine how the activity pursued fits into the organisation of the firm and ascertain whether that activity is performed under the authority of another person who is entrusted with overall responsibility for the management of the firm. The question is therefore one which is to be resolved on the basis of the facts, and the various formal categorisations laid down for particular purposes under Dutch law are irrelevant. The College states that it has found that the work performed by Mrs Meeusen is effective work. The national court must also ascertain whether that work is performed under the direction of other persons. FN5 See the judgments in Case 66/85, Lawrie-Blum v. Land Baden-

Württemberg: [1986] E.C.R. 2121; [1987] 3 C.M.L.R. 389, para. [16]; Case 197/86, Brown v. Secretary of State for Scotland: [1988] E.C.R. 3205; [1988] 3 C.M.L.R. 403, para. [21], and Case C-3/87, R. v. Ministry of Agriculture, Fisheries and Food, Ex parte Agegate Ltd: [1989] E.C.R. 4459; [1990] 1 C.M.L.R. 366, para. [35]. FN6 Judgment in Lawrie-Blum, cited above, para. [17] and Case C-107/94, Asscher v. Staatssecretaris Van Financien: [1996] E.C.R. I-3089; [1996] 3 C.M.L.R. 61, para. [25]. FN7 See the judgment in Case 53/81, Levin v. Staatssecretaris Van Justitie: [1982] E.C.R. 1035; [1982] 2 C.M.L.R. 454, para. [21]. I shall merely observe that the amount of time devoted to her husband's firm and the type of activities in which she engages there lead one to believe that these activities do indeed fit into a more general co-ordinated framework. According to the information provided by the plaintiff and by the court making the reference, the activity performed by Mrs Meeusen appears to constitute employment according to the Community definition of that term. [FN8] FN8 See the judgments in Lawrie-Blum, paras [16] & [17] and Asscher, cited above, para. [25]. 13. However no significance can be attached to other criteria even if some store is set by them in certain of the national legal systems. In particular, it does not appear to be relevant that the economic risk falls more or less directly also on the wife of the head of the firm. I think therefore that the Commission's suggestion that account should be taken of the matrimonial regime chosen by Mr and Mrs Meeusen (about which, moreover, no details are given) should not be followed. In the Commission's view the question of definition with which we are concerned should, in the case of separation of property, be dealt with and resolved in the same way as for all employment relationships. If Mr and Mrs Meeusen were subject to the Community-property regime, however, and were therefore co-owners of the firm, the rule established in the Asscher case, in which the Court did not accept that the salaried director of a company of which he was also the sole shareholder was pursuing his activity in a relationship of subordination, should apply by analogy. [FN9] In that case the Court rightly denied that the subordinate status formally linked to being an "employee" was effective in view of the type of activity actually being performed. The observation that neither Mr nor Mrs Meeusen could be in a relationship of subordination with respect to their joint *668 ownership of all the shares is therefore of no relevance. To reason in this way would be to confuse the property aspect with the actual nature of the occupational relationships within the organisation of the firm. The view put forward by the Dutch Government (at the hearing also) that there could never be a subordinate relationship between a husband and wife is also irrelevant because it confuses the personal aspect with that of the organisation of the firm.

The fact that either the husband or the wife is responsible for organisation and co-ordination does not mean there is any hierarchy within their personal relationships. FN9 Asscher, para. [26].

Question 1(b) and 1(c) 14. If, as I think, Question 1(a) should be answered in the affirmative, it is necessary also to examine parts (b) and (c). Community case law has recognised in Joined Cases, 389 & 390/87, Echternach and Another v. Minister Van Onderwijs en Wetenschappen [FN10] and Bernini [FN11] that assistance to cover tuition and maintenance costs for secondary and higher education should be regarded as social advantages for the purposes of Article 7(2) of Regulation 1612/68, provided, as is made clear in the Bernini judgment, that the worker continues to support his child. [FN12] First, in Question 1(b) the national court asks whether the worker is entitled to the same social advantages as those enjoyed by national workers even if he resides in a place other than that in which he pursues his occupation. If Question 1(c) is answered in the affirmative, it also asks whether such a social advantage must be granted even where the child who would receive it has never resided in the State which is required to pay the social benefit sought. The two questions therefore relate to the relevance of the place of residence in determining the applicability of the rules guaranteeing Community workers equality in the enjoyment of social advantages. FN10 [1989] E.C.R. 723; [1990] 2 C.M.L.R. 305. FN11 Cited above. FN12 See Echternach, para. [34] and Bernini, para. [24]. 15. I would say at once that in my view frontier workers, who are moreover expressly mentioned in the preamble to Regulation 1612/68, are entitled not to be discriminated against as regards the enjoyment of the social advantages granted by the Member State to which they pay their taxes and social security contributions. In the view of the Court the provisions of Article 39 E.C. and of Article 7 of Regulation 1612/68 prohibit not only overt discrimination on grounds of nationality but also all disguised forms of discrimination which, through the application of other criteria, ultimately achieve the unlawful result of unequal treatment. [FN13] The judgments to which I refer take account of *669 the fact that specification of certain requirements on which entitlement to enjoy certain rights may depend in reality has the object or effect of favouring the citizens of one State over another. The Court has also made it clear that the compatibility with the Treaty of national provisions which make the enjoyment of social advantages subject to residence requirements must be determined by applying appropriate tests of reasonableness. The situation of frontier workers is specifically considered in Case C-57/96, Meints v. Minister Van Landbouw,

Natuurbeheer en Visserij, [FN14] again as regards enjoyment of social advantages. [FN15] In that case the Court held that [FN16]: unless it is objectively justified and proportionate to its aim, a provision of national law must be regarded as indirectly discriminatory if it is intrinsically liable to affect migrant workers more than national workers and if there is a consequent risk that it will place the former at a particular disadvantage. FN13 See the judgment in Case C-237/94, O'Flynn v. Adjudication Officer: [1996] E.C.R. I-2617; [1996] 3 C.M.L.R. 103, para. [17]. It was on that basis that it was held that indirect discrimination resulted from making any reimbursement of expenses paid by a migrant worker subject to the condition that burial or cremation take place in the country, para. [23]. In the judgment in Case C-27/91, Union de Recouvrement des Cotisations de Securite Sociale et d'Allocations Familiales de la Savoie (Urssaf) v. Hostellerie Le Manoir Sarl: [1991] E.C.R. I-5531, para. [10], it was held to be incompatible with the Treaty to make entitlement to reductions in an employer's social contributions dependent on the employer taking on trainee workers who came within the State education system, on the basis of the ground that the vast majority of the trainees still came under the national educational system of their respective States of origin. FN14 [1997] E.C.R. I-6689; [1998] 1 C.M.L.R. 1159. FN15 In that case what was concerned was an allowance granted on a one-off basis to agricultural workers when their contracts of employment were terminated in particular circumstances. FN16 Meints, cited above, para. [45]. Recently too, in Case C-111/91, E.C. Commission v. Luxembourg, the Court held that a Luxembourg provision which made the grant of maternity benefits dependent on the mother having resided in the country for a year prior to the birth of the child was incompatible with the Treaty. [FN17] In some cases there may be objective reasons for taking residence into account. In Case 152/73, Sotgiu v. Deutsche Bundespost the Court held that in order to assess the separation allowance it was necessary to see whether at the time when the workers concerned took up their employment they were residing in the territory of the State in question or abroad. [FN18] FN17 [1993] E.C.R. I-817; [1994] 2 C.M.L.R. 781, para. [7]. FN18 [1974] E.C.R. 153, para. [11]. 16. The Dutch and German Governments have argued that the provisions on freedom of movement are designed essentially to promote the integration of Community workers. In their view therefore, if the worker and his family have chosen not to reside and so not to become integrated into their State of

employment they cannot claim from that State the social advantage concerned in this case. In this connection the Dutch Government cites the fifth recital in the preamble to the Regulation, which sets out the objective of eliminating *670 obstacles to the freedom of movement for workers: one of the ways of achieving this is to grant the worker the right "to be joined by his family and the conditions for the integration of that family into the host country". Even the Echternach judgment pointed [FN19] to the frankly ancillary value of the principle of equality of treatment as compared with the objective of integrating the worker into the host country. The German Government cites other case law to this effect. [FN20] The case law, which appears at first glance to seek a wide application of the prohibition of discriminatory treatment in the field of social advantages, ultimately supports, it is claimed, the opinion put forward by the two Governments in question. In particular, in the view of the Dutch Government, the facts in this case differ from those in Echternach in that the advantage provided by the award of a study grant to be paid abroad "has nothing to do with a worker exercising his right to be joined by his family and the conditions for the integration of that family into the host country". It is further argued that study finance constitutes in the Dutch legal system a right enjoyed by the student himself, falling outside the relationship that links him to the family. By reasoning in this way the Dutch Government ends up by forgetting the existence of the Bernini case, which specifically concerns Dutch study grants, and the fact that the statements made by the Court in that judgment contradict the views now held by Germany and the Netherlands. It is necessary, however, to examine more closely the arguments put forward by each of those Governments. The German Government observes that, as compared with the protagonists in the present case, the persons who were claiming Community social advantages in the Bernini case had closer links with the Dutch State. Mrs Bernini's parents, it says, were migrant workers; Mrs Bernini herself, although she was residing in Italy at the time of the case, had previously worked and resided in the Netherlands, whereas in the case of the Meeusens there is no question of integration and there is therefore no reason to ensure equality of treatment. The Dutch Government adopts the same position; in its view the decisive factor is that Mrs Meeusen chose to maintain her residence in Belgium. The present case, it claims, is one in which the worker concerned has no intention of becoming integrated into the State of employment. FN19 In para. [20]. FN20 Judgments in Case C-308/89, Di Leo v. Land Berlin: [1990] E.C.R. I-4185, para. [9] and in Case 235/87, Matteucci v. Communaute Francaise de Belgique and Another: [1988] E.C.R. 5589; [1989] 1 C.M.L.R. 357, para. [16]. 17. What can be said of these arguments? In the case before us, it is true, the requirements of integration do not seem to be relevant. The Meeusens move easily between the State in which they work and the State where they live together with their daughter. Their situation, one might say, provides a striking example of the mobility of workers in practice. It is of no consequence, from this

point of view, that, as has already been stated during the proceedings, the plaintiff resided in the *671 Netherlands until the age of five or, as Mr Meeusen stated at the hearing, that since the summer of 1997 Chantal Meeusen has been residing in the Netherlands (without however changing her plans to study in Belgium). 18. The fact is, however, that the problem before the Court must be posed and resolved in the context of a mobile frontier worker and not that of a worker who must be encouraged to put down roots in the country in which he works. The relevant requirement, as the Commission rightly pointed out, is therefore that of co-ordination between the various systems of social advantages provided for by the Member States: all the more so, I should say, when, as in this case, those advantages are at least in part compensatory to the extent that they are funded by contributions paid by the workers themselves. The Community legislation in the field which concerns us is, in fact, based on the criterion of co-ordination. Council Regulation 1408/71 on the application of social security schemes to employed persons and their families moving within the Community [FN21] lays down, in implementation of Article 51 of the E.C. Treaty (now, after amendment, Article 42 E.C.), the provisions needed in order to co-ordinate the detailed rules for the payment of social security benefits in the categories referred to in that instrument of secondary legislation. The same criterion was adopted by the Community legislature also in respect of the category of social advantages provided for in Article 7(2) of Regulation 1612/68, a category which is more general than that covering the benefits specifically determined by Regulation 1408/71. [FN22] In my view there is justification for applying the principle of non-discrimination, as laid down in general terms in Article 39 E.C. and in Article 7(2) of Regulation 1612/68, in a case such as the one before us. The social security benefit in question has, as I have observed earlier, unquestionably the character of a compensatory advantage, although there is a residence condition except for Dutch nationals. In this way, as the Commission observes, inequality of treatment between frontier workers is introduced, depending on their nationality. Eliminating such discrimination means ensuring that a worker who is exercising his freedom of movement is not deprived of the advantages accorded to a worker who stays put. This in my view is a solution which complies with both the principles of the Treaty and the Community legislation which fall to be interpreted here. FN21 [1971] O.J. Spec. Ed. (II) 416. FN22 As regards the relationship between Article 7(2) and Regulation 1408/71, see the article by Lyon-Caen, A.: "La sécurité sociale et le principe de l'égalité de traitement dans le traité et le règlement No. 1408/71", in La sécurité sociale en Europe. Egalité entre nationaux et non nationaux, Lisbon, 1995, p. 45, and Gouloussis, D.: Instruments internationaux sur l'égalité de traitement en matiére de sécurité sociale, idem pp. 91 et seq. 19. In the Bernini case, the Court acknowledged that certain study grants came

within the category, broadly defined in its case law, of *672 social advantages within the meaning and for the purposes of Regulation 1612/68. [FN23] The question had been put with specific reference to the provisions of the WSF which provide for benefits granted directly to the students and thus not directly linked to an employment relationship. The Court held that the benefits in question may be granted to a worker only when he continues to support the child. [FN24] Having regard to the objectively compensatory nature of the grants and to the condition that the children be genuinely dependent on the parent, the case law has thus placed study grants made directly to students on the same footing as that other instrument of social security, family allowances. Study grants and family allowances have the common characteristic of constituting financial action in support of the upbringing, maintenance and education of children. FN23 The term "social advantages" as defined by the settled case law of the Court includes "all those which, whether or not linked to a contract of employment, are generally granted to national workers primarily because of their objective status as workers or by virtue of the mere fact of their residence on the national territory" (judgment in Case 207/78, Criminal Proceedings against Even and Office National des Pensions pour Travailleurs Salaries (ONPTS): [1979] E.C.R. 2019; [1980] 2 C.M.L.R. 71). FN24 See Bernini, para. [25], which also quotes in this connection para. [13] of the judgment in Case 316/85, Centre Public d'Aide Sociale de Courcelles v. Lebon: [1987] E.C.R. 2811; [1989] 1 C.M.L.R. 337. Such a condition must be viewed in the context of the compensatory nature of the social advantages concerned. It is not relevant therefore to state, as the Dutch Government does, that in the Netherlands entitlement to study finance is regarded as a legal situation which concerns only the student and has therefore nothing to do with the parents. The compensatory nature of the benefit is recognised in the Bernini judgment in the statement that study finance may be regarded as a social advantage only if the worker continues to support the child. Referring to this criterion, the Dutch Government points out that in the case now before it it is necessary to establish whether the plaintiff is indeed being supported by her mother, on whose status as an employee the applicability of the Regulation depends, and not the father, who is not an employee and whose situation would not be taken into account under the domestic provisions concerned. The factors which are in any event of importance are two in number: the compensatory nature of the advantages in question and the fact that the prohibition on discrimination derives its justification in this context from requirements relating rather to co-ordination of systems than to integration. In determining whether there is an entitlement to equal treatment in a case such as the one before us, it will be necessary, I should make clear, to examine the financing system established in the State of employment as compared with the other systems to which it is theoretically possible to have recourse and then to evaluate the consequences that failure to award the grant might entail. [FN25]

On the basis of the considerations set out above, a comparison should be made between the two systems, as suggested by the Commission, taking into account all the different types of finance provided for. It is necessary to take into account both the family allowances granted to workers and the grants paid directly to students. This comparison should moreover *673 be undertaken in concrete terms, bearing in mind the options actually available to workers and members of their families. [FN26] FN25 The Member States have, moreover, different systems for awarding grants. A survey of the situation in the various Member States can be found in Rossi, F. P.: I diritti della famiglia europea nell'ordinamento comunitario di sicurezza sociale, Milan, 1996, pp. 90 et seq. FN26 Contrary to what is proposed in the written observations submitted by the Dutch Government which, in examining the Belgian legislation applicable in theory, fails to take into account the fact that, in this case, that legislation did not in fact apply, see below. 20. In the case before us, therefore, the Dutch system of financing has necessarily to be compared with that of Belgium, since the Meeusen family are Belgian nationals and Belgium is where they reside. It is clear from the documents before the Court that Chantal Meeusen is not entitled, under the legal system of either country, to receive a study grant awarded on the basis of the family income. As regards, on the other hand, financing which is not means-tested, accorded in the form of study grants or family allowances, Chantal Meeusen cannot qualify for this precisely because of her particular family circumstances. Belgian law does not apply in this case since non-means-tested benefits, granted in the form of family allowances to workers covered by the social security scheme, cannot be paid to Mr and Mrs Meeusen, who do not pay taxes to the Belgian revenue authority [FN27]; nor is Chantal Meeusen entitled to the basic Dutch study grant since the WSF imposes a residence requirement on foreigners. FN27 Under the Belgian legal system the award of allowances and benefits for studies is governed by the Law of 19 July 1979. Under Article 2 of the Law of 19 July 1971 allowances are paid to students who are pursuing studies at institutions run, subsidised or recognised by the State. The award of study grants depends on the level of income of the student or of the persons on whom he or she may be dependent. There are also family allowances which are received by workers who have dependent children under 25 years of age. How can the negative conflict thus be resolved? The most clear and convincing answer seems to me to attribute decisive importance to the fact that the worker contributes to the financing of the social security system to which he is affiliated.

Question 2

21. I do not consider it necessary to consider the second question, to which in any event the answers given above to Question 1(b) and 1(c) would apply.

Conclusion 22. In the light of the foregoing I propose that the Court should reply to the national court as follows: 1(a) In determining whether a worker who is employed by a limited liability company of which her husband is the director-general and sole shareholder may be regarded as a migrant worker within the meaning of *674 Article 39 E.C., general criteria should be applied in order to establish whether the work performed is subordinate or autonomous, and how the occupation concerned fits into the organisation of the firm. 1(b) & 1(c) Children of workers who do not reside in their State of employment, even where such children do not live in their parent's State of employment, may have recourse to the study grants awarded by a Member State which, having regard inter alia to their compensatory nature, constitute social advantages within the meaning of Article 7(2) of Regulation 1612/68. JUDGMENT [1] By order of 26 September 1997, received at the Court on 29 September 1997, the Commissie van Beroep Studiefinanciering (Study Finance Tribunal) referred to the Court for a preliminary ruling under Article 177 of the E.C. Treaty (now Article 234 E.C.) several questions on the interpretation of Articles 48 and 52 of the E.C. Treaty (now, after amendment, Articles 39 E.C. and 43 E.C.) and of Article 7 of Regulation 1612/68 on freedom of movement for workers within the Community. [FN28] FN28 [1968] O.J. Spec. Ed. (II) 475. [2] Those questions were raised in proceedings between Miss Meeusen, the plaintiff in the main proceedings, and the Hoofddirectie van de Informatie Beheer Groep (governing board of the information management group, the "IBG"), the defendant in the main proceedings, relating to an application for a study grant made by Miss Meeusen under the Wet op de Studiefinanciering (Law on the financing of studies, "the WSF") when she registered at the Provincial Higher Technical Institute for Chemistry, Antwerp, an institution of higher education. [3] Article 7 of Regulation 1612/68 provides: 1. A worker who is a national of a Member State may not, in the territory of another Member State, be treated differently from national workers by reason of his nationality in respect of any conditions of employment and work ... 2. He shall enjoy the same social and tax advantages as national workers. [4] Under Article 7 of the WSF, that Law applies to:

(a) students who possess Dutch nationality; (b) students who do not possess Dutch nationality but are resident in the Netherlands and are treated as Dutch nationals in respect of the financing of studies under provisions in agreements with other States or in a decision of an organisation in public international law which is binding on the Netherlands; *675 (c) ... [5] The finance provided for in the WSF is granted directly to students aged 18 and over. It consists of a basic grant, the level of which is independent of the parents' income, and a supplementary grant, the level of which varies according to parental income. [6] Under Article 9(1) of the WSF, only studies pursued in a Dutch institution give rise to an entitlement to study finance. Article 9(3) provides, however, for an exception to that rule in the case of certain foreign institutions which are treated as Dutch institutions for the purpose of applying the WSF. It is common ground that the Provincial Higher Technical Institute for Chemistry, Antwerp, is covered by that exception. [7] It is clear from the order for reference that Miss Meeusen, of Belgian nationality and residing at the material time in Belgium, began her studies in August 1993 at the Provincial Higher Technical Institute for Chemistry, Antwerp. Her father and mother are both of Belgian nationality and resident in Belgium. Her father is the director and sole shareholder of a company established in the Netherlands. Her mother is employed by that company for two days a week. The national court takes the view that her activity is effective and genuine. [8] On 14 October 1993, Miss Meeusen applied to the IBG for study finance under the WSF. [9] Finance was initially granted to Miss Meeusen, who obtained a basic grant for the period from November 1993 to March 1994, but her application was later rejected by a decision of 2 October 1994, by which she was also required to refund the sums already received. A complaint against that refusal of finance was also dismissed by decision of the IBG of 12 January 1995. [10] After her complaint was dismissed, Miss Meeusen brought proceedings before the Commissie van Beroep Studiefinanciering. Before that tribunal, she claimed that the right to study finance could not be made subject to the requirement that the child live or be resident in the territory of the Member State where his parents are employed, any more than it could be related to nationality. In its defence, the IBG contended that the applicant's parents could not be regarded as migrant workers within the meaning of Article 39 E.C., since they do not live in the Netherlands. For a person to be classified as a migrant worker he would have to have the status of an employee and have established his residence in the host country. As for frontier workers, to which the preamble to Regulation 1612/68 refers, these are persons working in the immediate proximity of a border. [11] In those circumstances the national court decided to stay proceedings and refer the following questions to the Court for a preliminary ruling:

1. (a)Does a situation such as that in the present case, in which the plaintiff's mother is employed by the limited company of which her *676 husband is the director and sole shareholder, preclude her from being regarded as a migrant worker within the meaning of Article 48 of the E.C. Treaty and of Regulation 1612/68? If question 1(a) is answered in the negative: (b) In the Bernini judgment [FN29] the Court ruled that study finance awarded by a Member State to children of workers constitutes a social advantage to a migrant worker, as provided for in Article 7(2) of Regulation 1612/68, where the worker continues to support the child. In such a case the child may rely on Article 7(2) in order to obtain study finance under the same conditions as are applicable to children of national workers, and in particular without any further requirement as to place of residence. FN29 Case C-3/90, Bernini v. Minister Van Onderwijs en Wetenschappen: [1992] E.C.R. I-1071. Does this rule equally apply if the migrant worker must be regarded as a frontier worker? (c) Does the rule of law in Bernini, as stated in question 1(b) above, also apply if the child of a migrant worker, as in the present case, has never lived in the Netherlands? 2. Must Article 52 of the E.C. Treaty be interpreted in such a way that the safeguard provided for under the rule laid down in Bernini, as mentioned above in question 1(b), also applies to the child of a national of a Member State who pursues activities in another Member State as a self-employed person? To what extent is it also decisive in that connection that the child has never been resident in the Netherlands, and that the parent is not resident in the country in which the activity as a self-employed person is pursued? Question 1(a) [12] By this question the national court seeks to ascertain, in substance, whether the fact that a person is related by marriage to the director and sole shareholder of the company for which he pursues his activity precludes that person from being classified as a "worker" within the meaning of Article 39 E.C. and of Regulation 1612/68. [13] The Court has consistently held that the concept of "worker", within the meaning of the abovementioned provisions, has a specific Community meaning and must not be interpreted narrowly. Any person who pursues activities which are effective and genuine, to the exclusion of activities on such a small scale as to be regarded as purely marginal and ancillary, must be regarded as a "worker". The essential feature of an employment relationship is, according to that case law, that for a certain period of time a person performs services for and under the direction of another person in return for which he receives remuneration. [FN30]

FN30 See, in particular, Case 66/85, Lawrie-Blum v. Land Baden-Württemberg: [1986] E.C.R. 2121; [1987] 3 C.M.L.R. 389, paras [16] & [17]; and Case C-85/96, MartÍnez Sala v. Freistaat Bayern: [1998] E.C.R. I-2691, para. [32]. [14] The fact that that person is related by marriage to the director and sole owner of the undertaking is not, of itself, such as to affect that classification. *677 [15] The Court did indeed hold, in Case C-107/94 Asscher v. Staatssecretaris Van Financien, [FN31] that the director of a company of which he is the sole shareholder is not carrying out his activity in the context of a relationship of subordination, and so he is not to be regarded as a "worker" within the meaning of Article 39 E.C. However, that result cannot be automatically transposed to his spouse. The personal and property relations between spouses which result from marriage do not rule out the existence, in the context of the organisation of an undertaking, of a relationship of subordination characteristic of an employment relationship. FN31 [1996] E.C.R. I-3089; [1996] 3 C.M.L.R. 61, para. [26]. [16] The existence of a relationship of subordination is a matter which it is for the national court to verify. [17] The answer to question 1(a) must therefore be that the fact that a person is related by marriage to the director and sole shareholder of the company for which he pursues an effective and genuine activity does not preclude that person from being classified as a "worker" within the meaning of Article 39 E.C. and of Regulation 1612/68, so long as he pursues his activity in the context of a relationship of subordination. Question 1(b) and (c) [18] By these questions, which it is appropriate to examine together, the national court seeks to ascertain, in substance, whether the dependent child of a national of one Member State who pursues an activity as an employed person in another Member State while maintaining his residence in the State of which he is a national can rely on Article 7(2) of Regulation 1612/68 in order to obtain study finance under the same conditions as are applicable to children of nationals of the State of employment, and in particular without any further requirement as to the child's place of residence. [19] As is clear from Bernini, paragraph [25], study finance awarded by a Member State to children of workers constitutes for a migrant worker a social advantage within the meaning of Article 7(2) of Regulation 1612/68 where the worker continues to support the child. [20] The Dutch and German Governments submit that that rule cannot be extended to cover the case of a frontier worker. The equality of treatment provided for in Article 7(2) of Regulation 1612/68 aims, as is evident from the fifth recital in its preamble, only to facilitate the mobility of workers and the integration of the migrant worker and his family in the host State. The granting by the host

State, for the child of a worker resident with his family in another Member State, of finance for the pursuit of studies abroad does not come within that context. A residence requirement, as imposed by the national legislation at issue in the main proceedings, is thus objectively justified and proportionate to the objective pursued by Regulation 1612/68. *678 [21] As the Court held in Case C-57/96, Meints v. Minister Van Landbouw, Natuurbeheer en Visserij, [FN32] that argument disregards the wording of Regulation 1612/68. It is expressly stated in the fourth recital in the preamble to that Regulation that the right of free movement must be enjoyed "without discrimination by permanent, seasonal and frontier workers and by those who pursue their activities for the purpose of providing services" and Article 7 of the Regulation refers, without reservation, to a "worker who is a national of a Member State". The Court deduced from that and ruled, in Meints, that a Member State may not make the grant of a social advantage within the meaning of Article 7 of the Regulation dependent on the condition that the beneficiaries be resident within its territory. FN32 [1997] E.C.R. I-6689; [1998] 1 C.M.L.R. 1159, para. [50]. [22] It should also be added that the Court has consistently held that the principle of equal treatment laid down in Article 7 of Regulation 1612/68 is also intended to prevent discrimination to the detriment of descendants dependent on the worker. [FN33] Those descendants can thus rely on Article 7(2) in order to obtain study finance under the same conditions as are applicable to children of national workers. [FN34] FN33 See Case 94/84, Office National de l'Emploi (Onem) v. Deak: [1985] E.C.R. 1873, para. [22]. FN34 Bernini, para. [28]. [23] It follows that, in a situation where national legislation, such as that in point in the main proceedings, does not impose any residence requirement on the children of national workers for the financing of their studies, such a requirement must be regarded as discriminatory if it is imposed on the children of workers who are nationals of other Member States. [24] Such a requirement would operate to the detriment of, in particular, migrant workers who, by definition, are resident in a Member State where, as a general rule, the members of their family are also resident. [25] In the light of the foregoing, the answer to the questions referred must be that the dependent child of a national of one Member State who pursues an activity as an employed person in another Member State while maintaining his residence in the State of which he is a national can rely on Article 7(2) of Regulation 1612/68 in order to obtain study finance under the same conditions as are applicable to children of nationals of the State of employment, and in particular without any further requirement as to the child's place of residence.

The second question [26] By this question, the national court seeks to ascertain, in substance, whether the dependent child of a national of one Member State who pursues an activity as a self-employed person in another Member State while maintaining his residence in the State of which he is a national can obtain study finance under the same conditions as are *679 applicable to children of nationals of the State of establishment, and in particular without any further requirement as to the child's place of residence. [27] In that regard, it should be observed that Article 43 E.C. 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 State's own nationals and prohibits any discrimination based on nationality which hinders the taking up or pursuit of such activities. As the Court held in Case C-111/91, E.C. Commission v. Luxembourg, [FN35] that prohibition covers not only specific rules on the pursuit of occupational activities, but also, as emerges from the General Programme for the abolition of restrictions on the freedom of establishment, [FN36] 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. FN35 [1993] E.C.R. I-817; [1994] 2 C.M.L.R. 781, para. [17]. FN36 O.J. Spec. Ed., Second Series (IX), 7. [28] That prohibition thus applies to the imposition of a residence requirement in respect of the grant of a social advantage where it has been established that that requirement is discriminatory in nature. [FN37] FN37 E.C. Commission v. Luxembourg, cited above, para. [18]. [29] 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. It precludes, therefore, the imposition of a residence requirement such as that provided for in the national legislation concerned which, as stated in paragraph [23] of this judgment, must be regarded as discriminatory. [30] In the light of the foregoing, the answer to the second question must be that the dependent child of a national of one Member State who pursues an activity as a self-employed person in another Member State while maintaining his residence in the State of which he is a national can obtain study finance under the same conditions as are applicable to children of nationals of the State of establishment, and in particular without further requirement as to the child's place

of residence. Costs [31] The costs incurred by the Dutch and German Governments and by the Commission, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the proceedings pending before the national court, the decision on costs is a matter for that court. Order *680 On those grounds, THE COURT (Fifth CHAMBER), in answer to the questions referred to it by the Commissie van Beroep Studiefinanciering by order of 26 September 1997, HEREBY RULES: 1. The fact that a person is related by marriage to the director and sole sharcholder of the company for which he pursues an effective and genuine activity does not preclude that person from being classified as a "worker" within the meaning of Article 48 of the E.C. Treaty (now, after amendment, Article 39 E.C.) and of Council Regulation 1612/68 on freedom of movement for workers within the Community, so long as he pursues his activity in the context of a relationship of subordination; 2. The dependent child of a national of one Member State who pursues an activity as an employed person in another Member State while maintaining his residence in the State of which he is a national can rely on Article 7(2) of Regulation 1612/68 in order to obtain study finance under the same conditions as are applicable to children of nationals of the State of employment, and in particular without any further requirement as to the child's place of residence; 3. The dependent child of a national of one Member State who pursues an activity as a self-employed person in another Member State while maintaining his residence in the State of which he is a national can obtain study finance under the same conditions as are applicable to children of nationals of the State of establishment, and in particular without any further requirement as to the child's place of residence.

(c) Sweet & Maxwell Limited [2000] 2 C.M.L.R. 659 END OF DOCUMENT