In the latest landmark judgment of 25 April 2024 (ref. C-36/23), Court of Justice of the European Union (CJEU) has once again spoken out on the key issue of coordination of social security schemes in the context of family benefits paid across borders. The case concerned a dispute between a Polish citizen working in Germany and the German family benefits office (Familienkasse Sachsen), which claimed from him a partial reimbursement of the paid family benefits (Kindergeld) due to the presumed precedence of Polish law.
This CJEU judgment is not only an important voice in the interpretation of Article 68 of Regulation 883/2004, but also clearly draws the boundaries between the institutions' responsibilities and information obligations recipients. The CJEU reaffirms the principle that in the absence of payment of benefits by the State having priority, recourse to the citizen is not possible. This ruling could have momentous practical consequences for hundreds, if not thousands, of Polish families migrating for work within the EU, providing greater protection of the beneficiary.
Facts of the case and cross-border context: A typical scenario for families in the EU
The facts of the case were typical of many cross-border families benefiting from coordination of family benefits. A Pole with a business in Germany received family allowances (Kindergeld) for a child living in Poland with his mother. His wife, according to the German Familienkasse, had the possibility to receive the "500+" benefit in Poland, which - according to the priority rules arising from Article 68(1)(b) of Regulation 883/2004 - was to make Poland the country 'originally competent' to pay the benefits. In practice, however, the wife did not apply for benefits and no money from the Polish system was paid out. Despite this, the German institution decided to reduce the payments of the Kindergeld retrospectively and to demand the reimbursement of more than EUR 1 600 from the beneficiary.
For more on German family benefits, see the article: Who is entitled to the German family benefit Kindergeld?.
EU Court of Justice ruling: Unambiguous protection for the beneficiary
Court of Justice of the EU was in no doubt that Article 68 of Regulation 883/2004 does not entitle the institution of the subordinate State to demand reimbursement of benefits from a citizen in a situation where the "originally competent" State (here: Poland) has not paid any benefits. Thus, if the beneficiary has received funds from a state whose legislation does not have priority and no payment has been made family benefits from the first-choice state, he or she cannot be obliged to repay the funds. This is a key principle for protection of the beneficiary in the system coordination of social security.
CJEU stressed that the system coordination of family benefits in the EU aims not only to prevent the over-accumulation of benefits (so-called anti-accumulation), but also to protect the rights of migrants, simplify procedures and avoid the citizen being penalised for errors or delays on the part of the administration. Even if a 'secondary' institution (such as the Familienkasse) considers that the benefits should have been paid by another institution, it cannot simply demand reimbursement of the payments from the beneficiary - it can instead seek reimbursement between the institutions if there has indeed been an overpayment.
Find out more about coordination of benefits: Attendance allowance and Kindergeld and EU coordination.
Procedural fiction and the institutions' duty of loyal cooperation
Court emphasised very strongly that, pursuant to Articles 68(3) and 81 of Regulation 883/2004, an application lodged in one Member State shall also be deemed to have been lodged in the competent State. This means that Familienkasse should have forwarded the application to a Polish institution, and Poland - as the state with priority - was obliged to consider the application, even if it was not formally submitted directly by the person concerned.
This approach eliminates procedural pitfalls that could lead to the loss of rights for labour migrant citizens. CJEU Recalls that national administrations are obliged to cooperate loyally within a system of coordination of benefits. The lack of a response from the primary institution (e.g. Poland) does not relieve the other institution of its obligation to pay the benefits - much less justify a claim for reimbursement from the citizen. It is worth mentioning the system of EESSI: Electronic Exchange of Information Systemto improve this cooperation.
Information obligation of the beneficiary: Limits of liability
Court also referred to the argument raised by the German court that the beneficiary had failed to properly communicate his wife's employment situation. Even if such an oversight had indeed occurred, the sanctions - as he pointed out CJEU - must be applied under national law, in accordance with the principles of equivalence and effectiveness. Conversely, they cannot result in the automatic recovery of family benefits on the basis of Union Article 68.
In practice, this means that any liability of the beneficiary for lack of information should be resolved through separate national proceedings, e.g. for recovery of undue benefit - but with full procedural guarantees, and not automatically.
The significance of the CJEU judgment (C-36/23): Establishing the protection of vulnerable groups
Judgment in Case C-36/23 is another milestone in the social protection of migrant families EU staff. CJEU confirmed that:
- Union law must not lead to a reduction in social protection, especially in situations where only one country pays benefits.
- Beneficiaries must not be adversely affected by the lack of coordination between state institutions.
- Procedural obligations are primarily the responsibility of the administration, not the citizen.
For the practice of law firms dealing with EU social law and for the migrants themselves - an important signal that it is worth asserting one's rights and that the institutions of the Member States must act in a coordinated, proportionate and loyal manner.
Court of Justice of the EU w judgment of 25 april 2024. set clear limits on the responsibility of institutions and reaffirmed the primacy of protecting the interest of the beneficiary. At a time when labour migration in the EU does not falter, the ruling is an important contribution to ensuring an effective and fair social security system - regardless of which side of the border the family members live on.
If your case involves similar circumstances or you need advice on German or EU social benefits, such as Kindergeldor other cross-border benefits, e.g. German widow's pension in Poland - Please do not hesitate to contact us. We will be happy to answer your questions.
Do you want to know more about Kindergeld?
Read our article: Kindergeld: What do you need to know if you work in Germany and your child lives in Poland?
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