Terhoeve case

Social security--Community law and national law--freedom of movement-- worker being sent to another Member State by his employer for part of one tax year--periods spent at home and in another Member State for employment purposes assessed separately--statutory maximum for contributions could be applied against each assessment--combined assessment could exceed statutory minimum-- national law was an obstacle to freedom of movement for workers.
From 1 January 1990 to 6 November 1990 Mr Terhoeve, a Dutch national, lived and worked in the United Kingdom having been sent there by his employer. He was regarded as non-resident for tax purposes during that period, but continued to be liable for national insurance contributions. Under national law, a taxpayer's liability to social security contributions was calculated by reference to taxable income for the period in question up to a specified maximum amount. Moreover, where a person had spent a period abroad in any one tax year, he was assessed separately by the tax authorities for tax and national insurance in respect of both periods and issued with two separate demands. However, in the case of such persons, the statutory maximum for social security contributions applied to each assessment which could result in a combined liability in excess of the usual maximum for any one year. In Mr Terhoeve's case, the demand forsocial security contributions for the months during which he had been resident in the United Kingdom had been arrived at by taking account *310 of, inter alia , income from real property. Since he was also assessed for social security contributions in respect of the period during that tax year when he was resident in the Netherlands he became liable for an amount of social security contributions above the statutory maximum. Mr Terhoeve brought proceedings before the Court of Appeal on the grounds that since that situation arose only where two separate assessments were made, the heavier contributions burden which resulted affected mainly nationals of other Member States and constituted discrimination on grounds of nationality contrary to Article 48 of the E.C. Treaty. The national court referred various questions to the Court of Justice including whether the main proceedings on their facts fell within the scope of Community law on the freedom of movement for workers and, in particular, of Article 7 and 48 of the E.C. Treaty and Article 7(2) of Regulation 1612/68, and whether that legislation prevented a Member State from levying greater social security contributions on a worker who had transferred his residence in the course of a year from one Member State to another in order to take up employment there than those payable by a worker who had continued to reside throughout the year in that Member State.
Free movement provisions could be relied on by a national employed in another Member State
H4 Although the rules on freedom of movement could not be applied to activities which were confined to one Member State, a Community national who had exercised the right to freedom of movement and had been employed in another Member State fell within the scope of those rules. Article 48 of the E.C. Treaty and Article 7(2) of Regulation 1612/68 could therefore be relied on by a worker against the Member State of which he was a national where he had resided and been employed in another Member State. [25]-[28]
Scholz v. Opera Universitaria di Cagliari and Another (C-419/92): [1994] E.C.R. I- 505; [1994] 1 C.M.L.R. 873, followed.
Provisions of national law constituted obstacle to the freedom of movement for workers
H5 Even though, in the absence of harmonisation at Community level, it was for each Member State to determine the conditions governing the right or duty to be insured by a social security scheme, national legislation governing the financing of social security must nonetheless comply with Community law, in particular the rules relating to freedom of movement for workers. Since a person could be deterred from pursuing employment in another Member State if he were required to pay greater social security contributions than if he continued to reside in the same Member State throughout the year, national legislation of the kind at issue in the main proceedings *311 constituted an obstacle to freedom of movement of workers, prohibited by Article 48 of the E.C. Treaty.
Decker v. Caisse de Maladie des Employes Prives and Kohll v. Union des Caisses de Maladie
All income relevant under national law for determining liability to socialsecurity contributions to be taken into account
H6 Article 48 of the E.C. Treaty applied only to employees and to persons who moved to seek employment. Nonetheless a person covered by Article 48 of the E.C. Treaty could rely on that provision to challenge national legislation entailing an obstacle to his freedom of movement, whatever mechanism gave rise to that obstacle. Accordingly, when assessing whether the burden of social security contributions borne by a worker who had transferred his residence from one Member State to another to take up employment there was heavier than if he had continued to reside in the same Member State, all income relevant under national law for determining the amount of contributions, including income arising from property must be taken into account.