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Maria Haag – Dano: No benefits for the economically inactive Union Citizen

On 11 November 2014, the Court of Justice of the European Union decided a case regarding the limits of the right to access to social assistance granted to Union citizens in host Member States under EU law. The case concerned two Romanian nationals, mother and son, living in Germany. Ms Dano was granted a residence card of unlimited duration for EU nationals. She had never worked in Germany, nor, according to the decision of the Court, did she enter Germany to seek employment. Ms Dano and her son live with her sister who supports them materially. In addition, she receives a child benefit and an advance on maintenance payments, together amounting to just over €300 a month. In 2011, she applied for basic provision benefits for jobseekers. Jobcenter Leipzig refused this application. In 2012, the Jobcenter again rejected her new claim for the same benefits. Ms Dano’s challenge of this decision was also dismissed. She then brought an action before the Sozialgericht Leipzig which referred four questions to the CJEU for a preliminary ruling.

Decision

The key question referred to the Court was whether Article 18 TFEU, Article 20(2) TFEU, Article 24(2) of Directive 2004/38 and Article 4 of Regulation 883/2004 prohibit Member States from excluding economically inactive nationals from other Member States from being entitled to ‘special non-contributory cash benefits’, even though those benefits are granted to nationals of that Member State in the same situation.

The Court explained that every Union citizen is able to rely on the prohibition of discrimination on the grounds of nationality set out in Article 18 TFEU (para 59). This principle is specified in Article 24 of the Directive which provides that “all Union citizens residing in the territory of the host Member State are to enjoy equal treatment with the nationals of that Member State within the scope of the Treaty.” This means that “a Union citizen can claim equal treatment with nationals of the host Member State only if his residence in the territory of the host Member State complies with the conditions of Directive 2004/38” (para 69). The Court thus examined whether Ms Dano had a right of residence in Germany under the Directive and concluded that she did not. According to the Directive, the right of residence for periods longer than three months is subject to two conditions: sufficient resources and comprehensive health insurance (see Art.7(1)(b) together with Art.14(2) of the Directive). The Court held that Ms Dano did not fulfill either, therefore did not have a right to residence and could not rely on the principle of non-discrimination (para 81). The Court held that a “Member State must … have the possibility … of refusing to grant social benefits to economically inactive Union citizens who exercise their right to freedom of movement solely in order to obtain another Member State’s social assistance although they do not have sufficient resources to claim a right of residence” (para 78). Otherwise this would mean that any Union citizen from another Member State without sufficient resources would automatically get these resources through the grant of social benefits (see para 79, but also paras 105-106 of AG Wathelet’s Opinion).

Member States are therefore allowed to deny certain special non-contributory cash benefits to nationals of other Member States who do not have a right of residence under Directive 2004/38 in the host Member State, even if these benefits are granted to nationals of the host Member States in the same situation (para 84).

Finally, the Court ruled that the Charter of Fundamental Rights of the EU did not apply because Member States lay down the conditions for the grant of these benefits and therefore are not implementing EU law.

Comment

In this case, the Court addresses the politically highly sensitive issue of ‘benefit tourism’ and specifies limits for entitlements enjoyed by the Union citizen that does not and will not even look for work in the host Member State.

In paragraph 58 of its decision, the Court refers to the ‘fundamental status of Union citizenship’. In its previous case-law it has not always been clear what the Court means exactly by ‘fundamental status’. In cases like Baumbast and Ruiz Zambrano, it seems to refer to a wide and meaningful sense of European belonging. However, in Dano the fundamental status refers solely to the right to not to be discriminated against once the citizen has made use of his or her free movement rights. Here the Court clearly uses the narrower version of the expression that we also find in Grzelczyk and D’Hoop, for example. This is in line with the tone of the entire decision: more rights-limiting than rights-broadening.

It has to be kept in mind that this is an exceptional case. Ms Dano is not a worker, nor has she ever been one. She is not even a jobseeker. This case therefore addresses a very specific situation. Furthermore, her right of residence is questioned, not in the context of expulsion, but solely in the context of the right to benefits. The case therefore does not allow Germany to kick her out. Moreover, this case is not about all social benefits. In fact, Ms Dano receives child support from the German government which is not at issue in the case. Instead, Dano only concerns an unemployment benefit, more specifically a special non-contributory cash benefit.

It is not very clear how Dano is consistent with the Brey decision. In Brey, the Court held that Austrian legislation did not conform with EU law as it automatically barred the grant of social assistance benefits to an economically inactive national of another Member State if he or she did not meet the conditions of a right to residence did not conform with EU law (para 80). Advocate General Wathelet tries to discern a difference between Brey and Dano in his Opinion but admits himself that this distinction is rather tenuous (para 125). The issue that the Court had in Brey was that the Austrian legislation did not take into account the personal situation of the person concerned. There is no such automatic exclusion in the German legislation in Dano, but instead it provides that benefits are denied to people whose residence is based on the sole of objective of seeking employment or obtaining social assistance (see AG Wathelet’s Opinion, para 123). Thus, the grant of the benefit is “independent of the lawfulness of the applicant’s residence in the light of Directive 2004/38. In the words of the judgment in Grzelczyk [para 46], it is not conditional, stricto sensu, on the applicant falling within the ‘scope’ of Directive 2004/38” (para 124). Clearly, there is a very technical difference between the two cases. It is not obvious however, how the Court in Brey rejects legislation which automatically bars Union citizens who do not fulfill the requirements for a right to reside, and in Dano only considers the legality of the Union citizen’s right of residence to determine her right to benefits. Why does the Court demand the consideration of the personal situation and the application of the principle of proportionality in Brey (para 77), but in Dano does not even mention proportionality nor discusses Ms Dano’s personal circumstances? This seems to dramatically obscure the case-law.

  Maria Haag

LLM Candidate, European University Institute

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