OPINION OF ADVOCATE GENERAL ALBER delivered on 14 December

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1 JAUCH OPINION OF ADVOCATE GENERAL ALBER delivered on 14 December I Introduction 1. This question for a preliminary ruling was submitted to the Court of Justice by the Landesgericht (Regional Court) Feldkirch (Austria) which has jurisdiction in respect of employment and social security disputes. The national court is referring a question concerning the compatibility of a national residence requirement for the grant of a care allowance under the Austrian Bundespflegegeldgesetz (Federal Law on care allowance hereinafter: 'BPGG') with Article 19(1) of Council Regulation (EEC) 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. 2 II Facts and procedure 2. The claimant in the main proceedings, Friedrich Jauch, is a German national, born on 3 April 1927, who has always resided in Lindau, a town in the Federal Republic of Germany close to the Austrian border. From May 1941 to June 1958 during which period he was compulsorily insured and then from July 1958 to November 1981 during which period he was voluntarily insured he worked in Austria. He completed a total of 480 insurance months in Austria and, since 1 May 1995, has been in receipt of a retirement pension paid by the Pensionsversicherungsanstalt der Arbeiter (Workers' Pension Insurance Institution), the defendant in the main proceedings. 3. Mr Jauch completed only negligible periods of insurance in the Federal Republic of Germany, and does not receive any /German pension. However, by virtue of a decision of 28 November 1996, from 1 September 1996 to 31 August 1998, he received care insurance benefits from the Allgemeine Ortskrankenkasse (AOK) Bayern, Pflegekasse Lindau (General Local Health Insurance Fund for Bavaria, Lindau Care Fund). That institution ceased paying those benefits, however, in reliance on the judgment of the Court of Justice of 5 March 1998 in Case C-160/ Original language: German. 2 As amended and updated by Council Regulation (EEC) No 1247/92 of 30 April 1992 amending Regulation (EEC) 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 ((OJ 1992 L 136, p. 1); for the consolidated version of the Regulation, see OJ 1992 C 325, p Case C-160/96 Molenaar [1998] ECR By decision of 7 September 1998, the defendant in the main proceedings rejected I

2 OPINION OF MR ALBER CASE C-215/99 Mr Jauch's claim for care allowance under the BPGG. Since the competent authorities in Austria and Germany had both refused him a care allowance, Mr Jauch brought proceedings against those refusals in both Member States. thereby releasing resources for care allowance in the pension insurance funds. 5. In the Austrian proceedings before the Landesgericht Feldkirch competent to hear employment and social security disputes the defendant in the main proceedings submitted that the application should be dismissed on the ground that care allowance under the BPGG is expressly listed in Annex Ha to Regulation No 1408/71 as a special non-contributory benefit within the meaning of Article 10a of that regulation, available only to persons who reside in the territory of the Member State concerned. 6. In view of the particular circumstances in which the arrangements for financing the care allowance entered into force, the national court is, however, uncertain whether the care allowance is in fact a special non-contributory benefit within the meaning of the abovementioned Article 10a. 8. The Landesgericht Feldkirch accordingly decided to stay proceedings and to refer the following question to the Court for a preliminary ruling: 'Is it contrary to Article 19(1) of Council Regulation (EEC) No 1408/71 of 14 June 1971 on the application of social security schemes to employed persons, to selfemployed persons and to members of their families moving within the Community, in its current version, to make entitlement to care allowance under the Bundespflegegeldgesetz (BPGG) (Austrian Federal Law on care allowance, BGBl. 110/1993), in its current version, dependent on the person reliant on care being habitually resident in Austria?' 7. When the BPGG was adopted, the rates of sickness insurance contributions were increased by 0.8%. At the same time, the transfer of funds from pension insurance to the sickness insurance institution was cut, 9. The order for reference was received at the Registry of the Court of Justice on 7 June The Austrian and German Governments and the Commission submitted written observations. The French, Netherlands and United Kingdom Governments also took part in the hearing. I

3 JAUCH III The relevant legislation (e) benefits in respect of accidents at work and occupational diseases; (a) Provisions of Community law (f) death grants; 10. Article 4 of Council Regulation (EEC) 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, as amended by Council Regulation (EEC) No 1247/92 of 30 April 1992 (OJ 1992 L 136, p. 1) reads as follows: (g) unemployment benefits; (h) family benefits. '1. This Regulation shall apply to all legislation concerning the following branches of social security: 2. This Regulation shall apply to all general and special social security schemes, whether contributory or non-contributory, and to schemes concerning the liability of an employer or shipowner in respect of the benefits referred to in paragraph 1. (a) sickness and maternity benefits; (b) invalidity benefits, including those intended for the maintenance or improvement of earning capacity; 2a. This Regulation shall also apply to special non-contributory benefits which are provided under legislation or schemes other than those referred to in paragraph 1 or excluded by virtue of paragraph 4, where such benefits are intended: (c) old-age benefits; (d) survivors' benefits; (a) either to provide supplementary, substitute or ancillary cover against the risks covered by the branches of social security referred to in paragraph 1(a) to (h); I

4 OPINION OF MR ALBER CASE C-215/99 or The first subparagraph shall also apply to lump-sum benefits granted in cases of remarriage of a surviving spouse who was entitled to a survivor's pension.' (b) solely as specific protection for the disabled. 2b. This Regulation shall not apply to the provisions in the legislation of a Member State concerning special non-contributory benefits, referred to in Annex II, Section III, the validity of which is confined to part of its territory ' 12. Article 10a(l) of the regulation provides: 'Notwithstanding the provisions of Article 10 and Title III, persons to whom this Regulation applies shall be granted the special non-contributory cash benefits referred to in Article 4(2a) exclusively in the territory of the Member State in which they reside, in accordance with the legislation of that State, provided that such benefits are listed in Annex IIa. Such benefits shall be granted by and at the expense of the institution of the place of residence.' 11. According to Article 10(1) of the regulation: 'Save as otherwise provided in this Regulation, invalidity, old-age or survivors' cash benefits, pension for accidents at work or occupational diseases and death grants acquired under the legislation of one or more Member States shall not be subject to any reduction, modification, suspension, withdrawal or confiscation by reason of the fact that the recipient resides in the territory of a Member State other than that in which the institution responsible for payment is situated. 13. Annex Ha ('Special non-contributory benefits' (Article 10a of the Regulation)) states: 'K. AUSTRIA (a)... I

5 JAUCH (b) Care allowance (Pflegegeld) under the Austrian Federal Care Allowance Act (Bundespflegegeldgesetz) with the exception of care allowance granted by accident insurance institutions where the handicap is caused by an accident at work or occupational disease.' 'The following persons are entitled to care allowance in accordance with the provisions of this Federal Law, provided they are habitually resident in the national territory: 1. Persons in receipt of a full pension who are in need of care as a result of an accident at work or occupational disease, or who are in receipt of a pension (other than a miner's pension) in accordance with the (b) National legislation (a) Allgemeinen Sozialversicherungsgesetz (General Law on Social Insurance) (ASVG), BGBl. No 189/1955; 14. In Austria, since 1993, care allowance under the BPGG is, as stated in Paragraph 1 of that law, intended to provide care and assistance, in the form of a flat-rate payment, to persons reliant on care in order to improve their opportunity of leading a life which is autonomous and meets their needs. 15. According to Paragraph 3(1) of the BPGG: (b)...' 16. Under Paragraph 22 of the BPGG, the care allowance is payable by the compulsory pension and accident insurance institutions. However, Paragraph 23 of the BPGG provides that the State is to 'reimburse to the institutions responsible for statutory pension insurance the expenditure established pursuant to the present Federal Law in the separate income account, to be drawn up in accordance with the provisions on social insurance institutions, which has been incurred on care allowance, benefits in kind, travel costs, the services of the medical officer and other care, postal delivery fees, the corresponding proportion of administrative expenses, and other expenditure.' I

6 OPINION OF MR ALBER CASE C-215/99 IV Positions taken by the partcipants in the proceedings 19. Should the Court none the less consider it necessary to analyse the conditions governing the inclusion of the benefit at issue in Annex IIa, the Austrian Government points out that there is no Community definition of special non-contributory benefits and both relevant criteria must therefore be scrutinised. (a) The Austrian Government 17. The Austrian Government contends that the residence requirement linked to the grant of the care allowance listed in Annex IIa to the regulation is not incompatible with the regulation. 18. It is clear from the Court's case-law that the Court itself has not called into question the entries in Annex IIa. In paragraph 30 of its judgment of 4 November 1997 in Case C-20/96, 4 the Court held as follows: 'The fact that the Community legislature refers to legislation, such as that relating to DLA, in Annex IIa to Regulation No 1408/71 must be accepted as establishing that benefits granted pursuant to the legislation are special non-contributory benefits falling within the scope of Article 10a of Regulation No 1408/71'. The Court fully endorsed that interpretation of the law in its judgments of 11 June 1998 in Case C-297/96 5 and of 25 February 1999 in Case C-90/ Case C-20/96 Snares [1997] ECR I Case C-297/96 Partridge [1998] ECR I Case C-90/97 Swaddling [1999] ECR I The Austrian Government contends that the term non-contributory means that the benefit is financed without any contribution from the insured person (or his employer). In other words, it is necessary to establish conclusively that the funding derives solely from the general tax revenue. That is clearly the case where care allowance is paid as a supplement to an Austrian pension on the basis of the abovementioned Paragraph 23 of the BPGG. 21. It is true that when the BPGG was introduced the rates of contribution and financing flows between the insurance institutions were altered. However, this was done specifically to ease the financial burden on the federal budget, in order to release the resources needed to finance care allowance from general tax revenue. Moreover, the accompanying financial policy measures, and particularly the increase in sickness insurance contributions, point rather to care allowance being a noncontributory benefit, since the payment of an increased contribution in no way entitles I

7 JAUCH persons in active employment to receive care allowance. 22. The Austrian Government further points out that, on another view, the noncontributory nature of a benefit may be seen as reflecting the absence of a specific qualifying period, as in the case of the European Convention on Social Security, concluded within the framework of the Council of Europe. Care allowance attaches as a supplement to any pension, regardless of the period of insurance on the basis of which the pension is awarded. Member States have become automatically exportable cash sickness benefits. Unlike what is provided under the relevant provisions of Austrian law, in Germany carerelated insurance is financed from contributions which are essentially linked to 'normal' sickness insurance contributions. Although these differences could give rise to problems in the relations between Austria and Germany, they do not represent a breach of the regulation. The latter merely establishes a system of coordination, and does not affect the differing national social security schemes. 23. As regards the question whether this is a special benefit, the Austrian Government considers this to be established simply on the basis that care allowance essentially shares the same social-policy objectives as the benefits the Court examined in Snares and Partridge. In any event, the fact that, in Austria, care-related benefits, to which all inhabitants of Austria are entitled, have a social objective makes them closely related to social assistance, particularly since the risk of being in need of care is akin to other risks, like poverty, in regard to which the State intervenes in its role as social welfare provider. 24. The Austrian Government argues, finally, that the decision in Molenaar is not relevant for the resolution of the main proceedings. In particular, it cannot be inferred from that judgment that all carerelated benefits under the legislation of the (b) The German Government 25. The German Government also contends that the question referred must be answered in the negative. 26. In its submission, the Austrian care allowance constitutes a special non-contributory benefit within the meaning of Article 10a of the regulation, since, unlike care allowance under the German care insurance scheme, it is financed exclusively from tax revenue. The fact that these resources were previously released as a result of restructuring within the Austrian federal budget (by increasing sickness insurance contributions), is not significant in this connection and does not alter the noncontributory nature of the Austrian care allowance. I- 1909

8 OPINION OF MR ALBER CASE C-215/ It is true that the claimant in the main proceedings is not entitled to care allowance in Germany either, as he does not belong to the German care insurance scheme. However, his exclusion from that benefit is permissible since care allowance financed through contributions constitutes a cash benefit of sickness insurance as referred to in Article 19(1)(b) of the regulation. It has also to be pointed out that the effect is not to deprive the claimant in the main proceedings of all rights. In place of care allowance, he is entitled to a range of benefits in kind from the extensive list available under the German care insurance scheme (home care, home care where the carer is unable to attend, care equipment and technical assistance, measures to improve the home environment, day or night care, short-term care and, if necessary, in-patient care). 29. The French Government contends that this case involves determining the substantive scope of Regulation No 1247/92 and, consequently, the articles which the latter regulation inserted into Regulation No 1408/71 (namely Article 4(2a) and Article 10a). The French Government therefore refers to the history of Regulation No 1247/92. It is necessary to start from the original distinction between social security benefits and social assistance benefits. The Court of Justice has included a number of social benefits of a dual nature within the scope of Regulation No 1408/71, provided they fulfil certain conditions. In connection with such benefits, Article 4(2a) inserted a special provision concerning special non-contributory benefits in Regulation No 1408/71. To cater for the particular nature of these benefits, Article 10a was drawn up, providing for a specific derogation from the original system of coordination. 28. In accordance with Article 19(1)(a) of the regulation, these benefits are provided by the German care insurance institution in the form of benefits in kind on behalf of the competent (in this case, Austrian) institution. (c) The French Government 30. The question now arises as to whether the listing of a benefit in Annex IIa to the regulation means that the special rules automatically take effect. According to the French Government, Article 10a is a derogation and has therefore to be narrowly construed. For it to apply, two conditions must be met, and both have to be fulfilled. The benefit at issue must both fall within the scope of Article 4(2a) and be listed in Annex IIa to the regulation. I- 1910

9 JAUCH 31. A court wishing to apply the derogation must establish unequivocally that it is dealing with a special benefit which is not tied to contributions. It has therefore to be a benefit linked to the social sphere and financed from the general tax revenue. The mere fact that the benefit is listed in Annex IIa to the regulation is not sufficient to bring the special rules into play, since the characteristics and purpose of the provision have also to be evaluated. 32. The French Government therefore proposes that the question referred be answered as follows: hearing, namely: the significance of the inclusion of a benefit in Annex IIa to the regulation; the significance of the method of financing a benefit for classification purposes; and the concept of 'special benefit'. 34. The Netherlands Government contends that the mere fact that a benefit has been included in Annex IIa to the regulation is sufficient to characterise it as a benefit within the meaning of Article 10a of the regulation. The Annex was drawn up by the Community legislature in such a way that there is no scope for further assessment. That approach is confirmed by the judgment in Snares. Making entitlement to a benefit such as care allowance dependent on a residence requirement is not contrary to Regulation No 1408/71 if that benefit is listed in Annex IIa to the regulation and it is clear from an assessment of the characteristics and purpose of the benefit that it is a special non-contributory benefit within the meaning of Article 4(2a) of the regulation. 35. As regards the method by which a benefit is financed for classification purposes, the Netherlands Government submits that only the actual method of funding matters. The history of a benefit is irrelevant. It is therefore immaterial that the sickness insurance contributions were increased when the benefit was introduced, provided that benefit is objectively financed from the public purse. (d) The Netherlands Government 33. The Netherlands Government expressed its views on three points at the 36. As regards the concept of 'special benefit', it is necessary to take into account a close relationship with economic and social aspects of the immediate environ- I -1911

10 OPINION OF MR ALBER CASE C-215/99 ment in which the benefit itself is accorded. Furthermore, proper account must be taken of the authority of the Member States to organise their own systems of social security. A national legislature is, for example, free to determine the level of protection and does not have to be influenced by legislative decisions of other Member States. Partridge and Swaddling judgments, 7 the Court of Justice ruled that the clear implication of the inclusion of a benefit in Annex IIa was that it was a special noncontributory benefit falling within Article 10a of the regulation to the exclusion of Article 19. It also considered whether a benefit of that nature, which is subject to a residence requirement, could represent indirect discrimination on grounds of nationality and therefore be in breach of Article 48 of the EC Treaty (now, after amendment, Article 39 EC). 37. The Netherlands Government rejects the Commission's submission in the alternative, namely that the residence requirement could constitute discrimination under Community law. Were that line of argument adopted, both Article 10a and Annex Ha would be without practical significance. Moreover, those issues have already been resolved by the judgment in Snares. In conclusion, the Netherlands Government contends that the inclusion of the care allowance at issue in Annex Ha to the regulation implies that it is a special non-contributory benefit covered by Article 10a of Regulation (EEC) No 1408/ The United Kingdom Government submits that only one condition has to be fulfilled for Article 10a of the regulation to apply and that is the inclusion of the benefit in question in Annex Ha to the regulation. The reference to the benefit in Annex Ha simply means that the derogation whereby the residence clause is waived should apply. The individual features of the benefit were assessed before it was included in Annex - Ha. (e) The United Kingdom Government 38. The United Kingdom Government essentially raised two issues at the hearing. First, it takes the view that in the Snares, 40. As regards the possibility that a residence requirement might give rise to discrimination within the meaning of Articles 48 and 6 of the EC Treaty (now, after amendment, Article 12 EC), the United 7 See footnotes 4 to 6 above. I

11 JAUCH Kingdom Government considers that the question was answered implicitly by the judgments in Snares, 8 Partridge 9 and Swaddling. 10 Were it necessary to consider a residence requirement of that kind to be discriminatory under Community law, the Court of Justice could have held Regulation No 1247/92 to be invalid. In that connection, the United Kingdom Government cites the Council's extensive discretionary power to adopt coordinating measures within the meaning of Article 51 of the EC Treaty (now, after amendment, Article 42 EC). 41. In conclusion, the United Kingdom Government considers that a benefit listed in Annex IIa to the regulation falls within the scope of Article 10a and is therefore excluded from the scope of Article 19(1) of the regulation. Court of Justice is, however, able to provide the national court with the information required to interpret the concept under Community law. 43. In the Commission's view, the decisive factor enabling a benefit to be classified as non-contributory is that it should be financed from the general tax revenue and not from contributions. That condition is generally held to be met if the system under which the benefit is provided is either financed solely from the general tax revenue or, in the case of a system which is financed both from contributions and from State subsidies derived from the general tax revenue, provided it is possible clearly to distinguish between the different sources of funding and to be sure that the benefit in question is financed from the general tax revenue only ('special budget'). (f) The Commission 42. The Commission begins by stating that the question referred is seeking to ascertain whether the benefit at issue has actually to be considered to be a special non-contributory benefit within the meaning of Articles 4(2a) and 10a of the regulation. That is a question which requires an interpretation of national law and can therefore be answered only by the national court itself. In accordance with settled case-law, the 8 Case C (cited in footnote 4 above). 9 Case C-297/96 (cited in footnote 5 above). 10 Case C-90/97 (cited in footnote 6 above). 44. It is true that Paragraph 23 of the BPGG, according to which the Austrian Federation has to reimburse the competent institutions the care allowance they accord, suggests that this is a non-contributory benefit. However, as the national court has demonstrated, there are significant grounds for taking the opposite view. These include, in particular, the increase in sickness insurance contributions and the simultaneous reduction in the level of contributions to be paid by the pension funds to the sickness insurance funds in the amount of the anticipated increase in expenditure on care allowance at the time the BPGG was introduced. I -1913

12 OPINION OF MR ALBER CASE C-215/ In the Commission's view, this benefit cannot, moreover, be regarded as a noncontributory benefit within the meaning of Article 10a of the regulation. That is clear if a comparison is made with the German care allowance at issue in Molenaar, since both benefits are intended to offset the additional costs resulting from reliance on care. In Molenaar, the Court held that care allowance was a social security benefit, in the form of a cash benefit in the event of sickness, intended to cover specific costs arising out of reliance on care and intended to improve the state of health and quality of life of the persons concerned. case. It is clear, in particular, from Molenaar that the claimant can apply for care allowance regardless of his place of residence. 48. The Commission therefore proposes that the question referred should be answered to the effect that it is contrary to Articles 19(1), 25(1) and 28(1) of the regulation to make entitlement to a benefit such as care allowance dependent on the person insured being habitually resident in the State in which he is affiliated to the insurance scheme, where care allowance is also financed in part at least from contributions from insured persons. 46. The Commission concludes from this that the Austrian care allowance probably fails to meet the conditions for a noncontributory benefit and ought not therefore to have been included in Annex IIa. In that connection, the judgment in Snares is not to be construed as meaning that the mere fact that a benefit is included in Annex IIa creates a right, regardless of the circumstances of the individual case. 49. Should the Court decide that care allowance is a special non-contributory benefit, the Commission argues that the abovementioned provisions of the regulation cannot apply to a benefit of that nature. A national rule which makes entitlement to care allowance subject to a person being habitually resident in the Member State concerned is incompatible with the prohibition on discrimination on grounds of nationality (Article 6 of the EC Treaty now, after amendment, Article 12 EC and Article 48 of the EC Treaty now, after amendment, Article 39 EC). 47. If care allowance is not a special noncontributory benefit, the Commission considers that reference should be made to the judgment in Molenaar in order to answer the question referred, since Molenaar concerned a national rule largely comparable to the national provision at issue in this 50. It is settled case-law that these provisions prohibit not only direct discrimination on grounds of nationality but also all forms of discrimination which have the same effect as a result of the application of other distinguishing criteria. While Aus- I -1914

13 JAUCH trian nationals usually remain in Austria and would therefore be entitled to care allowance, for example, migrant workers normally leave their State of employment when their activity is at an end, and migrant workers who are frontier workers are practically never habitually resident there. Therefore, the BPGG unjustifiably treats Austrian nationals, who have not made use of their right to free movement, and migrant workers differently to the detriment of the latter. 51. The 'care allowance' issue was considered by the Court of Justice for the first time in Molenaar. It has now again been brought to the Court's attention in the form of an Austrian State social benefit. As Advocate General Cosmas graphically demonstrated in his Opinion in Molenaar, 11 [the risk of] 'reliance on care' is a phenomenon that still exists. However, it has only recently become a risk of social insurance. That is probably why the risk of reliance on care does not appear in the list contained in Article 4(1) of Regulation No 1408/71 concerning the kinds of benefit covered by the regulation. That alone is why the question crucial to the resolution of this dispute was raised, namely whether the benefit in question falls within the scope of Article 4(2a) of the regulation. Had the risk of reliance on care been expressly listed in Article 4(1), then, when that risk materialised, the benefit would automatically have to be considered a traditional social security benefit, to which the general rules on coordination apply, that is to say, for example, that Article 10 on waiving the residence clause would apply. V Assessment (a) Preliminary observation 11 Opinion of Advocate General Cosmas of 9 December 1997 in Case C-160/96 ([19981 ECR I-843, I-846, point 3). 52. In Molenaar, which concerned care insurance and care allowance under German law, the preliminary issue of the applicability of Regulation No 1408/71 was therefore raised. In that case, the Court was able to conclude on the basis of the submissions of the various participants in the proceedings before it 12 that: 'All the interveners in the proceedings agree that a scheme such as that at issue in the main proceedings falls within the scope of Regulation No 1408/71.' The claimant and defendant in the main proceedings, the Austrian, German and Swedish Governments and the Commission were the participants in the proceedings before the Court inmolenaar. 13 Molenaar, cited in footnote 3 above, paragraph 16. I- 1915

14 OPINION OF MR ALBER CASE C-215/ However, there was no consensus on the category of risk to which the benefits should be attached. Some of the participants considered that they were 'sickness benefits'. 14 The claimants in the main proceedings in that case contended that the benefits could also be 'old-age benefits'. 15 The Commission, finally, took the view that the benefits could not be linked exclusively to any one of the branches of social security referred to in Article 4(1) of the regulation. '... those benefits display characteristics in common with the sickness, invalidity and old-age branches referred to in Article 4(1)(a), (b) and (c), but cannot be strictly identified with any one of them.' 16 a legally defined position and provided that it concerns one of the risks expressly listed in Article 4(1) of Regulation No 1408/71... That list is exhaustive, so that a branch of social security not mentioned therein does not fall within that category even if it confers upon recipients a legally defined position entitling them to benefits...' The Advocate General in Molenaar proposed that the care allowance at issue in the main proceedings was to be deemed equivalent to a cash benefit in respect of sickness The Court drew attention to the criterion already established in earlier case-law, namely that the distinction between benefits excluded from the scope of Regulation No 1408/71 and those which fall within it is based essentially on the constituent elements of each particular benefit, in particular its purpose and the conditions on which it is granted, and not on whether a benefit is classified as a social security benefit by national legislation. 17 'The Court has consistently stated that a benefit may be regarded as a social security benefit in so far as it is granted, without any individual and discretionary assessment of personal needs, to recipients on the basis of 56. For its part, the Court analysed the essential features of the benefit, and, as part of that analysis, also considered the purpose of care insurance benefits, which is to develop the independence of persons reliant on care, particularly from the financial point of view. 'The system introduced is aimed at encouraging prevention and rehabilitation in preference to care and at promoting home care in preference to care provided in hospital.' 20 As regards the purpose of care allowance, the Court held that the payment allows the insured to choose the method of assistance they prefer 14 Molenaar, cited in footnote 3 above, paragraph Molenaar, cited in footnote 3 above, paragraph Molenaar, cited in footnote 3 above, paragraph Molenaar, cited in footnote 3 above, paragraph Molenaar, cited in footnote 3 above, paragraph See the proposal by Advocate General Cosmas at Section IX of his Opinion. 20 Molenaar, cited in footnote 3 above, paragraph 22. I-1916

15 JAUCH and, for example, to remunerate in one form or another the third party assisting them The question therefore arises whether the judgment in Molenaar is liable to affect the way in which care allowance is classified for the purposes of Regulation No 1408/ At the end of its analysis, the Court held: 'Accordingly, benefits of that type are essentially intended to supplement sickness insurance benefits to which they are, moreover, linked at the organisational level, in order to improve the state of health and the quality of life of persons reliant on care. In those circumstance, even if they have their own characteristics, such benefits must be regarded as "sickness benefits" within the meaning of Article 4(1 )(a) of Regulation No 1408/71.' In any event, it has to be borne in mind that, unlike the care allowance at issue in Molenaar, the care allowance in question in this case is linked, at an organisational level, not to sickness insurance but to oldage insurance. In addition, the Austrian benefit is specifically listed in Annex IIa to the regulation, so that the effects of its inclusion are relevant to the answer to the question referred. It is therefore necessary to begin by considering whether inclusion in Annex IIa to the regulation is in itself conclusive, so that there is no further scope for a material assessment of the characteristics of a special non-contributory benefit, and the benefit then more or less automatically falls within the special coordinating rules of Article 10a of the regulation. 58. As regards the purpose of Austrian care allowance, it may be affirmed that it is in all essential respects comparable to the German care allowance. The Austrian legislature defined the purpose of care allowance in Paragraph 1 of the BPGG. According to that definition, the benefit is designed 'to compensate, in the form of a lump-sum contribution, for the extra expenditure needed to provide persons reliant on care so far as possible with the care and assistance they need, and improve their opportunity of living an independent life in accordance with their needs'. 21 Molenaar, cited in footnote 3 above, paragraph Molenaar, cited in footnote 3 above, ParaGraphs 24 and 25. (b) The legal effects of inclusion in Annex - IIa to the regulation 61. The various annexes to Regulation No 1408/71 eight in all differ in content and significance. Annex I, for example, refers to the persons covered by the regulation, that is to say, it lists groups of persons, in the categories defined in the laws of the Member States, which have to be included under the concepts of I- 1917

16 OPINION OF MR ALBER CASE C-215/99 'employed person' and 'self-employed person' in the regulation. If, then, Annex I contains the positive provisions defining the scope of the regulation, Annex II provides a negative definition of the substantive scope of the regulation, by setting out special schemes for self-employed persons excluded from the scope of the regulation. 62. Thus, the Court of Justice has held in relation to Annex V that its content cannot supplement the definition of worker in the regulation in a specific way 23 and that the Annex may not be construed broadly or applied by analogy. 24 There is a wealth of case-law involving the annexes to Regulation No 1408/71 and to the implementing Regulation No 574/ Annex IIa was added to the regulation only in conjunction with the insertion of Articles 4(2a) and 10(a). The annex is entitled: 'Special non-contributory benefits (Article 10a of the Regulation)'. That makes it perfectly clear that it is intended to produce its effects in relation to Article 10a. Article 10a contains 'a special system of coordination' 26 for special noncontributory benefits in the form of a derogation from the waiving of residence clauses in accordance with Article 10. Given that this is a derogation to the rule contained in Article 10, particular care has to be taken in interpreting Article 10a. It is settled case-law of the Court that derogations have in principle to be strictly interpreted. 65. The first sentence of Article 10a(1) provides: 63. In so far as it is sought to draw any conclusion for the purposes of this case, I consider it permissible to be guided only by the content and purposes of the individual annex and above all its function in regard to the substantive provisions of the regulation which the annex in question is intended to clarify. 23 See Cases 17/76 Brack [1976] ECR 1429 and 143/79 Walsh [1980] ECR See Case 150/79 Commission v Belgium [1980] ECR Regulation (EEC) No 574/72 of the Council of 21 March 1972 fixing the procedure for implementing Regulation (EEC) No 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community (OJ, English Special Edition 1972 (I), p. 159) (for the consolidated version see OJ 1992 C 325, p. 96). 'Notwithstanding the provisions of Article 10 and Title III, persons to whom this Regulation applies shall be granted the special non-contributory cash benefits referred to in Article 4(2a) exclusively in the territory of the Member State in which they reside, in accordance with the legislation of that State, provided that such benefits are listed in Annex Ha' See the sixth recital in the preamble to Regulation No 1247/92, which refers to: 'a system of coordination which differs from that currently provided for in Regulation (EEC) No 1408/71.' 27 My emphasis. I- 1918

17 JAUCH 66. That form of wording suggests that for the derogation to take effect the benefit has to be listed in Annex IIa. It does not, however, give any indication as to whether this has to be a special non-contributory benefit within the meaning of Article 4(2a). However, it must be a special non-contributory benefit if Article 10a is to apply. Furthermore, the wording of Article 10a implies that the benefits to which it refers also come within Article 4(2a) of Regulation No 1408/71, as amended by Regulation No 1247/ The Court has already, in its judgments in Snares, 2 8Partridge 29 and Swaddling, 30 had to express its view on the scope of Article 10a in conjunction with Annex IIa of the regulation. The relevant passage in Snares reads as follows: In those circumstances, a benefit such as the DLA must, by reason of the fact that it is listed in Annex IIa, be regarded as being exclusively governed by the coordination rules of Article 10a and, consequently, as being a special non-contributory benefit within the meaning of Article 4(2a).' 31 'The fact that the Community legislature refers to legislation, such as that relating to the DLA, in Annex IIa to Regulation No 1408/71 must be accepted as establishing that benefits granted pursuant to that legislation are special non-contributory benefits falling within the scope of Article 10a of Regulation No 1408/71 (see, in particular, to that effect, Case 24/64 Dingemans v Bestuur der Sociale Verzekeringsbank [1964] ECR 647, at p. 654). 28 Case C-20/96, cited in footnote 4 above. 29 Case C-297/96, cited in footnote 5 above. 30 Case C-90/97, cited in footnote 6 above. 68. The participants in these proceedings do not agree on the interpretation of this passage: that is to say on whether the very fact that it is listed means that the benefit has to be classified as a non-contributory benefit within the meaning of Article 4(2a) or whether this has first to be assessed. The latter view is advanced in particular with reference to the fact that in Snares the question whether the benefit was a special non-contributory benefit did not arise; at issue was simply the legal consequence, that is to say the applicability of Article 10a. 31 See the judgment in Snares, cited in footnote 4 above, paragraphs 30 to 32. I- 1919

18 OPINION OF MR ALBER CASE C-215/ It is necessary to establish the extent to which the Partridge and Swaddling judgments, which confirm the judgment in Snares, argue for one or other of these approaches. In the German translation at least, the implication of both judgments and they both refer to the abovementioned paragraphs 30 and 31 of the judgment in Snares and indeed reproduce them more or less verbatim is far more clearly that inclusion in Annex IIa to the regulation makes the benefit a special non-contributory benefit within the meaning of Article 4(2a) of the regulation. The relevant passages read as follows: unter die Koordinierungsvorschriften des Artikels 10a und stellt damit eine beitragsunabhängige Sonderleistung im Sinne des Artikels 4 Absatz 2a dar...' 33 ['A benefit such as income support is, by reason of the fact that it is listed in Annex IIa, governed by the coordination rules of Articles 10a and, consequently, constitutes a special non-contributory benefit within the meaning of Article 4(2a)...'] 'Daher unterliegt eine Leistung wie die AA wegen ihrer Erwähnung in Anhang IIa den Koordinierungsregeln des Artikels 10a und stellt somit eine beitragsunabhängige Sonderleistung im Sinne von Artikel 4 Absatz 2a dar...' In the French version, the language in which the Court conducted its deliberations, the implication is less conclusive. It reads: ['In those circumstances, a benefit such as AA is, by reason of the fact that it is listed in Annex Ha, governed by the coordination rules of Articles 10a and is consequently a special non-contributory benefit within the meaning of Article 4(2a)...'] 'Dans ces conditions, une prestation telle que la DLA, du fait qu'elle figure à l'annexe II bis, doit être considérée comme étant exclusivement régie par les règles de coordination de l'article 10 bis et, partant, comme relevant des prestations spéciales à caractère non contributif au sens de l'article 4, paragraphe 2 bis.' 'Eine Leistung, die wie die Einkommensbeihilfe in Anhang IIa aufgeführt ist, fällt 71. Turning now to the Dingemans 34 judgment to which the Court made specific 32 See paragraph 33 of the judgment in Partridge (cited in footnote 5 above). 33 See paragraph 24 of the judgment in Swaddling (cited in footnote 6 above). 34 Case 24/64 [1964] ECR 647. I

19 JAUCH reference in Snares, 35 and which concerned the classification of an invalidity benefit as a 'benefit of type B', 36 it is striking that, on the basis of an amendment to Annex F to Regulation No 3, which categorised the (contested) Netherlands legislation as such as type B, the Court recognised the benefit to be a type B benefit. However, the Court expressly noted: be considered to be contrary to Article 48 of the EC Treaty (now, after amendment, Article 39 EC). 73. Moreover, in both Snares and Partridge, the Court held, in almost identical terms, as follows: 'The legality of the amendment has never been contested. The Court can therefore only take note of 37 this situation.' 'Furthermore, the wording of Article 10a implies that the benefits to which it refers also come within Article 4(2a) of Regulation No 1408/71, as amended by Regulation No 1247/92.' In the judgments in Snares, 38 Partridge 39 and Sivaddling, 4 0 the nature of the benefits at issue as special non-contributory benefits was also not in itself in question. Snares concerned the temporal scope of Regulation No 1247/92, whereas Partridge concerned the effect of a declaration under Article 5 of the regulation. Sivaddlitig, finally, concerned the question whether the residence clause had per se to 35 See paragraph'30 of the judgment. 36 See Article 24(1 ) of Regulation No 3 of the Council of the EEC concerning social security for migrant workers (journal Officieľoí 16 December 1958, p. 561). According to that article, these are provisions 'under which invalidity benefits are as a rule calculated in relation to the duration of completed periods.' 37 See Dingemans, cited in footnote 34 above, at section II. 38 Cited in footnote 4 above. 39 Cited in footnote 5 above. 40 Cited in footnote 6 above. 74. In my view, that form of wording allows for the possibility of a substantive assessment of a benefit in cases in which it is doubtful or contested whether that benefit is in fact a special non-contributory benefit. Article 10a can take effect only if the benefits in question are special noncontributory benefits listed in Annex Ha to the regulation. Inclusion in Annex Ha may be indicative of the character of a benefit. But, where there are doubts concerning the nature of a benefit, it cannot replace the assessment in accordance with Article 4(2a). 41 Sec paragraph 31 of the judgment in Snares (cited in footnote 4 above; my emphasis). The French version of the judgment reads as follows: 'Il ressort en outre du libellé de l'article 10 bis que cette disposition implique que les prestations qu'elle vise relèvent par ailleurs de l'article 4, paragraphes bis, du règlement no 1408/71, tel que modifié par le règlement no 1247/92.' I- 1921

20 OPINION OF MR ALBER CASE C-215/ Moreover, the eighth recital in the preamble to Regulation No 1247/92, which first specifically placed special noncontributory benefits within the scope of Regulation No 1408/71, states: '... it is necessary nevertheless to ensure that the existing system of coordination in Regulation (EEC) No 1408/71 continues to apply to benefits which either do not fall within the special category of benefits referred to or are not expressly included in the Annex to that Regulation...' At the hearing, it was submitted that the annexes like the regulation as a whole could be amended only unanimously. Without unanimity, a potentially incorrect listing could therefore continue to be included in Annex IIa. In that respect, the United Kingdom Government's reference to the possibility of bringing Treatyinfringement proceedings is misconceived in that such proceedings are not capable of determining the attitude of a Member State within the Community's legislative process. Finally, there is also no apparent reason why inclusion in an annex should not in principle be open to judicial review. 76. That wording also makes it clear that inclusion in the list in Annex IIa is merely one prerequisite for the application of Article 10a. 79. As an interim conclusion, I therefore consider that it must be possible to undertake a substantive assessment of the benefit at issue in the light of Article 4(2a) of the regulation. It is therefore necessary to consider the question referred by the national court as to whether the benefit at issue is a special non-contributory benefit within the meaning of Article 4(2a). 77. Nor is it apparent why an annex to Regulation No 1408/71, adopted by the Community legislature, should be more authoritative than the other provisions of secondary Community legislation, since it is always open to analysis in terms of its compatibility with higher-ranking law. For that reason, it should also be possible to assess the content of benefits listed in the annex. 42 My emphasis. (c) The constituent elements of a special non-contributory benefit within the meaning of Article 4(2a) 80. For Article 10a to take effect in law, it is necessary to ascertain whether the benefit in question is a special non-contributory I

21 JAUCH benefit within the meaning of Article 4(2a). In order to determine the characteristics of a benefit of that nature, it is first necessary to refer back to Regulation No 1247/92, which inserted both Article 4(2a), Article 10(a) and Annex IIa in the regulation. The third and fourth recitals indicate the background to and the reasons for its adoption. They state: 'Whereas it is also necessary to take account of the case-law of the Court of Justice stating that certain benefits provided under national laws may fall simultaneously within the categories of both social security and social assistance because of the class of persons to whom such laws apply, their objectives and their manner of application; Whereas the Court of Justice has stated that, in some of its features, legislation under which such benefits are granted is akin to social assistance in that need is an essential criterion in its implementation and the conditions of entitlement are not based upon the aggregation of periods of employment or contributions, whilst in other features it is close to social security to the extent that there is an absence of discretion in the manner in which such benefits as are provided thereunder are awarded and in that it confers a legally defined position upon beneficiaries.' 81. The regulation was therefore intended to make clear that subject to certain conditions and in accordance with the Court's case-law certain social benefits of a dual nature fall within the scope of Regulation No 1408/71. To the extent that these are not traditional social security benefits, the special system of coordination is also justified, given that the inclusion of the benefits within the scope of the regulation marked an improvement on the previous situation, which was based on a twofold system of 'social security' on the one hand and 'social assistance' 4 3 specifically excluded from the regulation on the other. Only the Court's case-law made it possible to categorise individual benefits of a combined nature. 82. However, Regulation No 1247/92 was also designed to ensure that: 'the existing system of coordination in Regulation (EEC) No 1408/71 continues to apply to benefits which... do not fall within the special category of benefits referred to...'. 44 It is therefore necessary to identify the features of this 'special category of benefits' in order to use it for the purposes of classifying a benefit. 83. On the one hand, the benefit must be 'non-contributory'. But that criterion alone cannot be decisive, since Article 4(2) of the 43 Sec Article 4(4) of Regulation No 1408/ See the eighth recital in the preamble to the regulation. I