Géraldine Renaudière, Trainee at the CJEU, within the cabinet of the Court Vice-President, Koen Lenaerts. (This post reflects the author’s view only).

The CJEU’s recent ruling in Elisabeta Dano and Florin Dano v Jobcenter Leipzig revisits the sensitive issue of national laws that prevent economically inactive EU citizens from receiving special non-contributory benefits, even though those benefits are available to nationals in similar situations. Issued a year after the controversial Brey decision, this judgment aims to clarify the connection between Directive 2004/38, which concerns the free movement of EU citizens, and Regulation 883/2004, which deals with coordinating social security systems. While the broader political implications of the judgment have been discussed elsewhere by Steve Peers, this post will examine the judgment within the historical context of EU case law regarding citizens’ access to benefits.

Background

Although the Maastricht Treaty expanded the right to move and reside freely within the EU to all citizens, breaking from the previous limitation to economically active individuals, the historical focus on economic activity persists within EU law. Articles 20(2) and 21 TFEU outline limitations and conditions to the right of free movement. The CJEU has clarified these conditions, now found in Directive 2004/38, while simultaneously addressing the related issue of equal access to social assistance and minimum subsistence benefits for EU citizens in their host countries.

The Court has struggled to find a balance between the rights of economically inactive migrants and the desire of Member States to safeguard their welfare systems from potential abuse. This difficulty has created ambiguity regarding the existence of a right to social benefits for European students, retirees, or those in need. The Dano judgment raises questions about its potential departure from past approaches and its ability to establish greater legal certainty and a more equitable balance between these competing interests.

Judgment

The German Sozialgericht Leipzig requested a preliminary ruling in the case of Mrs. Dano and her son, Romanian nationals and non-economically active, who were denied subsistence benefits, social allowances, and contributions to accommodation and heating costs by German authorities. The CJEU clarified that such “special non-contributory cash benefits” fall under Article 4 of Regulation 883/2004, which upholds non-discrimination as stated in Article 18 TFEU, applicable to EU citizens seeking such benefits. However, this must be interpreted in conjunction with Article 24 of Directive 2004/38, which establishes equal treatment for EU citizens exercising their right to free movement and residence.

Aligning with the Advocate General’s perspective, the CJEU recognized for the first time that an applicant who doesn’t meet the requirements outlined in Article 7(1) of Directive 2004/38 (specifically, lacking sufficient resources for themselves and their family) is not covered by Article 24(1) and (2) of the same Directive. Consequently, EU citizens cannot claim equal treatment regarding social benefits if their right of residence doesn’t comply with Directive 2004/38.

Comments

Before Directive 2004/38, the CJEU connected the right to equal treatment and non-discrimination with EU citizenship, both enshrined in the TFEU (as per the Martinez Sala judgment). This allowed individuals in similar situations to receive equal treatment, including social assistance benefits, irrespective of nationality. This approach, seen in the Grzelczyk and Trojani judgments, considered these rights independent of the right to reside and move freely within the EU. Deemed fundamental to Union citizenship, only limited and proportionate differences in treatment were acceptable, overlooking the requirement in Article 18 TFEU for the situation to be “within the scope of application of the Treaties.”

Facing criticism for this approach, the Court granted Member States greater flexibility. Depending on the situation, access to social benefits for economically inactive EU migrants could be contingent on demonstrating a genuine link to the job market (Collins and Vatsouras), a certain level of integration (Bidar and Forster), or facing temporary financial hardship that wouldn’t burden the host state’s finances (Grzelczyk).

While this individual-focused approach was welcomed, the use of broad concepts and the wide margin of appreciation given to national authorities introduced uncertainty. The Brey case, involving the denial of a compensatory supplement to a German retiree due to insufficient resources to establish legal residence in Austria as per Article 7(1)(b) of Directive 2004/38, presented a more complex issue. The benefit sought was categorized as a “special non-contributory benefit” under Regulation 883/2004.

The Court in Brey affirmed the right of Member States to set conditions for inactive EU migrants to receive benefits, including legal residence exceeding three months. Paradoxically, when evaluating these conditions, national authorities had to consider additional factors, such as the specific benefit requested (in this case, intended to secure minimum subsistence, see Skalka) and whether granting it would jeopardize the migrant’s right of residence or unduly burden the national social assistance system.

This made it challenging to define beneficiaries of those specific benefits. In contrast, Dano, while also addressing the relationship between the Directive and Regulation, provides greater clarity: Member States can deny inactive EU citizens access to non-contributory benefits if they lack proper residence rights under Article 7(1) of Directive 2004/38. Significantly, the condition of having sufficient resources to avoid becoming an “unreasonable” burden is evaluated based on individual circumstances, excluding the requested social benefits.

This approach distinguishes those with established legal residence exceeding three months who are temporarily unable to meet requirements from those arriving without meeting these requirements and therefore ineligible to claim equal treatment for unconditional access to benefits. The Court argues that any other interpretation undermines Directive 2004/38’s objective of preventing economically inactive citizens from relying on the host state’s welfare system for subsistence.

Whether this case, beyond providing legal clarity, will address practical challenges remains to be seen. The interpretation of “sufficient resources” and “unreasonable burden” (especially when legal residence is contested, or an individual’s financial issues become long-term) could still pose difficulties. Additionally, it remains to be seen if a truly fair and balanced approach between inactive EU migrants’ rights and the legitimate interests of Member States has been achieved.

Barnard & Peers: chapter 13, chapter 16