The Court of Justice of the European Union (CJEU) has ruled that a self-employed person in an EU Member State (EEA state), with economic activity in an EFTA-EEA state (EEA state), and a third state (non-EEA state), may remain affiliated to the social security system of the EU Member State.
The referral, Case C-329/23, Sozialversicherungsanstalt der Selbständigen v W M, was sent to the CJEU by the Supreme Administrative Court of Austria (Verwaltungsgerichtshof), and involved a person residing in Austria, with economic activity in Austria, but also Liechtenstein and Switzerland.
Background and facts
W M, who is of Austrian and Liechtenstein nationality, pursued self-employed activities in Austria (an EU Member State), Liechtenstein (an EFTA-EEA state), and Switzerland (a third state). He resides in Austria. He derives income from all three states.
Sozialversicherungsanstalt der Selbständigen (SVS), the social insurance institution for self-employed persons in Austria, initially refused to issue a certificate stating that W M was subject to Austrian social security for a period of time in question. SVS were of the view that his activities should be separately subject to the legislation of each state, which W M objected to.
Legal provisions
The core of the dispute revolves around the interpretation of Regulation 1408/71 and Regulation (EC) No 883/2004, particularly Articles 13 and 14a of Regulation 1408/71 and Articles 11 and 13(2) of Regulation 883/2004, in conjunction with Regulation (EC) No 987/2009.
But beyond just EU secondary law, the legal context of the case is also framed by the EEA Agreement and the EU-Switzerland Free Movement of Persons Agreement (EUSFMPA).
The EEA Agreement aims to promote a homogeneous European Economic Area by ensuring the free movement of persons, and includes social security coordination by way of EEA secondary law.
Similarly, the EUSFMPA facilitates the free movement of persons between the EU and Switzerland, and includes provisions for social security coordination.
First instance proceedings
W M appealed the SVS decision to refusal to issue the certificate.
The Federal Administrative Court of Austria (Bundesverwaltungsgericht) upheld W M’s appeal, stating that he should be subject to Austrian social security legislation.
Second instance proceedings
SVS appealed the first instance ruling to the Supreme Administrative Court that was initially favourable to W M. It is this national court who has referred the case to the CJEU.
Doubts were expressed about whether the Austrian social security legislation was compatible with the EEA Agreement (re: Liechtenstein aspects) and the EU-Switzerland Free Movement of Persons Agreement (EUSFMPA) (re: Switzerland aspects) given the overall principle of the EU/EEA secondary law on social security coordination that the legislation of a single Member State should apply.
Judgment of the CJEU
The judgment was delivered by the Court of Justice of the European Union (CJEU) on 26 September 2024, addresses the issue of determining the applicable social security legislation for a self-employed worker who simultaneously pursues self-employed activities in multiple states, including an EU Member State (Austria), an EFTA-EEA state (Liechtenstein), and a third state (Switzerland).
First, the CJEU analysis highlighted that, under the EEA Agreement, W M’s activities in Austria and Liechtenstein should be examined based on Regulation 883/2004. Since W M pursued a substantial part of his activities in Liechtenstein, the centre of interest of his activities was in Liechtenstein, and he should, in principle, be subject to Liechtenstein social security legislation.
However, and importantly, Article 87(8) of Regulation 883/2004 provides that the social security legislation applicable under Regulation 1408/71 continues to apply if the relevant situation remains unchanged. In this case therefore, the CJEU found that W M’s situation remained unchanged, and thus, Austrian social security legislation should continue to apply.
Second, under the EUSFMPA, the CJEU determined that since W M pursued the majority of his activities in Austria, where he resided, the centre of interest of his activities was in Austria, and he should be subject to Austrian social security legislation.
The CJEU noted that the pursuit of an additional occupational activity in Switzerland, accounting for only a small percentage of W M’s total income, did not constitute a change in the relevant situation under Article 87(8) of Regulation 883/2004.
There was no Opinion of an Advocate General.
Operative part
Therefore, the CJEU ruled that,
‘Council Regulation (EC) No 1408/71 of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community, in the version amended and updated by Council Regulation (EC) No 118/97 of 2 December 1996, as amended by Regulation (EC) No 631/2004 of the European Parliament and of the Council of 31 March 2004 and Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems, as amended by Regulation (EU) No 465/2012 of the European Parliament and of the Council of 22 May 2012 in conjunction with Regulation (EC) No 987/2009 of the European Parliament and of the Council of 16 September 2009 laying down the procedure for implementing Regulation No 883/2004, as amended by Regulation (EU) No 465/2012 of the European Parliament and of the Council of 22 May 2012,
must be interpreted as being applicable, under the Agreement on the European Economic Area of 2 May 1992, as amended by the Agreement on the participation of the Republic of Bulgaria and Romania in the European Economic Area and the Agreement between the European Community and its Member States, of the one part, and the Swiss Confederation, of the other, on the free movement of persons, signed in Luxembourg on 21 June 1999, to a situation in which an EU citizen – who simultaneously pursues occupational activities as a self-employed person in an EU Member State and a State of the European Free Trade Association, which is a party to the Agreement on the European Economic Area – takes up an additional occupational activity as a self-employed person in Switzerland. It is necessary, in accordance with the relevant provisions of those regulations, to determine the applicable social security legislation separately: on the one hand, within the context of the Agreement on the European Economic Area and, on the other, within the context of the Agreement between the European Community and its Member States, of the one part, and the Swiss Confederation, of the other, on the free movement of persons.’
Analysis
This was a clear victory for W M. given that the individual could continue to be subject to Austrian social security legislation, despite his additional self-employed activities in Liechtenstein and Switzerland.
The CJEU’s judgment clarified that Regulations 1408/71 and Regulation 883/2004, along with Regulation 987/2009, are applicable to situations involving multiple states, including EU Member States, EFTA-EEA states (Iceland, Liechtenstein, and Norway), and Switzerland.
The CJEU emphasised that this EU/EEA secondary law aim to ensure that individuals are subject to the social security legislation of a single Member State to avoid complications arising from the simultaneous application of multiple national legal orders.
In all, the judgment highlights the need for a coherent application of EU/EEA secondary law in conjunction with EU international agreements like the EEA Agreement and the EUSFMPA.
But did the CJEU ‘go first’ here? Kind of, but not quite.
Last year, in 2023, the EFTA Court ruled in the Christian Maitz v AHV-IV-FAK case (Case E-5/22). There (read the judgment here), the EFTA Court had a case concerning the same Regulation 883/2004, with the facts being an Austrian national, working in Liechtenstein and residing in Switzerland, in which the EFTA Court had to consider the applicability of the EEA secondary law to a person residing outside the EEA, but working within it.
In Maitz, the EFTA Court rightly found that Union citizens and nationals of EFTA-EEA states do not need to reside in the EEA to be covered by EEA secondary law on social security coordination.
But did the CJEU take it upon itself to recognise this Maitz judgment of the EFTA Court in its own ruling in Sozialversicherungsanstalt der Selbständigen v W M. It, regrettably, did not.
This is particularly puzzling given that both cases concerned individuals living and working across inside and outside the EEA, and the determination of applicable social security coordination given the principle that individuals should be subject to the legislation of a single state to avoid complications from overlapping social security systems.
Judicial dialogue between the CJEU and the EFTA Court must work both ways. It must go beyond here conference speeches, and rather, be expressed concretely in judgments. Where suitable, and I argue this is one such situation, the CJEU should recognise related cases of the other EEA court.
Read the judgment
The judgment of the Court of Justice of the European Union (Seventh Chamber) in Case C-329/23, Sozialversicherungsanstalt der Selbständigen v W M, delivered on 26 September 2024, can be read here.
Postscript (13 November 2024)
This blog post did not address the issue of ‘assessments’ under the EEA Agreement and the EUSFMPA, which the Court stated must be done separately.