Court of Justice of the European Union finds in favour of the UK with regards to child benefits

IN a judgement issued on June 14, Court of Justice of the European Union has ruled that the UK can require recipients of child benefit and child tax credit to have a right to reside in the UK, and although that condition is considered to amount to indirect indiscrimination, it is justified by the need to protect the finances of the host Member State.

The regulation on the coordination of social security systems lays down a series of common principles to be observed by the legislation of the Member States in that sphere, so that the various national systems do not place at a disadvantage persons who exercise their right of freedom of movement, and of residence within the EU. 

One of the common principles that the Member States must observe is the principle of equality. In the specific field of social security, the principle of equality takes the form of prohibiting any discrimination on grounds of nationality, and the Commission received numerous complaints from non-British EU citizens resident in the UK.

They complained that the competent UK authorities had refused to grant them certain social benefits on the ground that they did not have a right to reside in the UK. Since the Commission took the view that the UK legislation does not comply with the regulation, it brought an action for failure to fulfil obligations against the UK. 

The Commission stated that under UK legislation it must be verified that persons claiming certain social benefits – including family benefits such as child benefit and child tax credit which the present case concerns – are lawfully resident in the UK.

According to the Commission, that condition is discriminatory and contrary to the spirit of the regulation since the regulation has regard only to the claimant’s habitual residence.

In response to those arguments, the UK, maintained that the host State may lawfully require that social benefits be granted only to Union citizens who fulfil the conditions for possessing a right to reside in its territory, conditions which are, essentially, laid down in an EU directive.

In today’s judgment, the Court dismisses the Commission’s action.

According to the Court, the regulation does not set up a common scheme of social security, but allows different national social security schemes to exist. It thus does not lay down the conditions creating the right to benefits, because it is in principle for the legislation of each Member State to lay down those conditions. 

In this context, the Court states that there is nothing to prevent the grant of social benefits to EU citizens who are not economically active, being made subject to the requirement that those citizens fulfil the conditions for possessing a right to reside lawfully in the host Member State.

As to the argument put forward by the Commission in the alternative, that checking of the right to reside amounts to discrimination, the Court holds that the condition requiring a right to reside in the UK gives rise to unequal treatment because UK nationals can satisfy it more easily than nationals of the other Member States.

However, the Court considers that this difference in treatment can be justified by a legitimate objective, such as the need to protect the finances of the host Member State, provided that it does not go beyond what is necessary to attain that objective.

In this regard, the Court finds that the UK authorities verify whether residence is lawful in accordance with the conditions laid down in the directive on the free movement of citizens. Thus, this verification is not carried out systematically by the UK authorities for each claim, but only in the event of doubt. It follows that the condition does not go beyond what is necessary to attain the legitimate objective pursued by the UK, namely the need to protect its finances.

This is very much a summary of a longer finding, but in essence confirms that the UK can require anyone applying for child benefit or tax credit to prove that they have a right to reside in the UK, provided that there is any doubt about their status.

This decision, coming at this time before the referendum will come as a positive statement for those campaigning to Remain within the EU, although the decision by former Australian and now American citizen Rupert Murdoch to throw the weight of the Sun newspaper behind the Brexit view will equally please the Leave campaigners.