The European Court of Justice (ECJ) has held that the UK can lawfully impose restrictions on access to child benefit and child tax credits for some EU migrants under a ‘right to reside test’.
The European Commission sought to challenge the test relied on by the UK one the grounds of direct discrimination based on nationality, in that it only applies to foreign nationals, in breach of the principle of equality. The right to residence test is based on an EU directive that states that a citizen of another EU state has the right to live in the UK for more than three months only if they are in work or self-employed, or have sufficient resources and comprehensive health insurance so that they are not a burden on the social security system.
In its decision, the Court restricted the scope of the action to include only child benefit and child tax credits, excluding social assistance in the form of non-contributory cash benefits which had formerly been the subject of a reasoned opinion. The Court was satisfied that the benefits in question constituted social benefits, bringing them within the scope of Article 4 of Regulation (EC) No 883/2004 on the coordination of social security systems.
Turning to the principal issue that the UK legislation supplemented the EU regulation law on habitual residence, the European Commission contended that a case had not been made to establish that the right to reside test was appropriate and proportionate in pursuing its aim of ensuring that a genuine link exists between the benefit claimant and the host Member State. The Commission contested the UK’s argument that economically inactive foreign-nationals should not become a burden on the State’s welfare system unless a sufficient connection to that State can be proven. They put forward that no Member State may make any changes, or enforce additional requirements to the provisions of the EU law regulation governing habitual residence criterion in the case of social security benefits.
The UK on the other hand argued that economically inactive citizens are already lawfully required to demonstrate their connection to the State in acquiring right of residence, and that the principle of equal treatment as referred to under the relevant regulation must be read in light of this. The UK openly recognised the indirect discrimination which arises on foot of the right to reside test, but argued that in the interest of protecting public finances, the measure was proportionate and objectively justified.
The Court held that the regulation in question does not exist to set out one universal scheme of social security for the entire EU, but rather to allow different schemes to exist whilst still guaranteeing the exercise of free movement for persons. Furthermore, it was found that no case law of the European Union prevented requiring persons who are not economically active from being subject to conditions pursuant to the right to reside test.
It was held that in respect of the particular benefits at issue, the UK legislation governing lawful residency conditions was neither discriminatory nor otherwise prohibited by European union law. The appeal was therefore dismissed.
Click here the full judgement is available.