(March 20, 2015)
On March 19, 2015 the European Court of Justice (CJEU) ruled in Case C-266/13 L. Kik versus Staatssecretaris van Finaciën (ECLI:EU:C:2015:188).
·
o Must the rules regarding the scope ratione personae of Regulation No 1408/71 and the rules which determine the territorial scope of the designation rules in Title II of that regulation be interpreted as meaning that those designation rules apply in a case such as the present, which concerns (i) a worker residing in the Netherlands who (ii) is a national of the Netherlands, (iii) in any event, was previously compulsorily insured in the Netherlands, (iv) is employed as a seafarer by an employer established in Switzerland, (v) carries out his work on board a pipe-laying vessel which flies the Panamanian flag, and (vi) carries out those activities first outside the territory of the European Union (approximately 3 weeks above the continental shelf of the United States and approximately 2 weeks in international waters) and then above the continental shelf of the Netherlands (periods of one month and approximately one week) and of the United Kingdom (a period of slightly more than one week), while (vii) the income earned thereby is subject to income tax levied by the Netherlands?
o If so, is Regulation No 1408/71 then applicable only on the days when the person concerned works above the continental shelf of a Member State of the European Union, or also during the preceding period in which he worked elsewhere outside the territory of the Union?
· If Regulation No 1408/71 applies to a worker as referred to in question 1(a), what legislation or sets of legislation does the regulation then designate as applicable?’
The dispute in the main proceedings and the questions referred for a preliminary ruling
· In the course of 2004, Mr Kik, a Netherlands national residing in the Netherlands, worked on board a pipe-laying vessel that flew the Panamanian flag. He was employed until 31 May 2004 by a company established in the Netherlands and was subject to the Netherlands social security scheme. In the period from 1 June 2004, a company established in Switzerland employed Mr Kik to carry out the same activity. His salary continued to be subject to Netherlands income tax. Under the Netherlands legislation, insurance under the social security scheme ceases where a person works outside the Netherlands for a continuous period of at least three months for an employer who is not established in the Netherlands.
· The question which is central to the dispute in the main proceedings is whether, in the light of Regulation No 1408/71, Mr Kik is liable to pay Netherlands social security contributions for the period from 1 June 2004 to 24 August 2004. During that period, the vessel on which he was working was positioned, in succession, above the continental shelf adjacent to a third State, in international waters and above the part of the continental shelf adjacent to certain Member States (the Netherlands and the United Kingdom).
· Mr Kik submits that it follows from Regulation No 1408/71 that he was not subject to the Netherlands social security scheme during the period concerned.
· Hearing the appeal in cassation brought by Mr Kik against the decision of the lower court finding him liable to pay contributions to the Netherlands social security scheme for the period under consideration, the Hoge Raad der Nederlanden (Supreme Court of the Netherlands) is uncertain whether Regulation No 1408/71 is applicable.
· The Hoge Raad enquires first of all whether the regulation applies exclusively to migrant workers and, if that is the case, whether Mr Kik, in view of the succession of places in which he worked during the period at issue, may be regarded as such a worker, account being taken of the particular nature of the vessel on which he was working and its classification under the Convention on the Law of the Sea and, if relevant, of the intended use of the pipes laid.
· In particular, the referring court is uncertain whether, during the periods when the vessel concerned was above the part of the continental shelf adjacent either to the Netherlands or to the United Kingdom, Mr Kik was to be regarded as carrying out his activity in the territory of those Member States. Depending on the answer to that question, it might have to be found that, during either the whole of the period at issue or a large part of it, Mr Kik worked outside the territory of the European Union and cannot be regarded as a migrant worker falling, on that account, within the scope ratione personae of Regulation No 1408/71.
· However, the national court, referring to the judgment in Aldewereld (C‑60/93, EU:C:1994:271), considers that, even where a professional activity is carried on outside the territory of the European Union, a sufficiently close connection with that territory will result in Title II of Regulation No 1408/71 being applied to a worker who is a national of a Member State.
· In that regard, the referring court considers the possibility that relevant connecting factors might be established both with the Swiss Confederation — a State which must be treated as a Member State so far as the application of Regulation No 1408/71 is concerned — (the place where the employer is established) and with the territory of the European Union (levying of income tax in the Netherlands and, possibly, work on the territory of the Kingdom of the Netherlands and of the United Kingdom, if the work on board the pipe-laying vessel, at issue in the main proceedings, may — when the vessel was operating above the part of the continental shelf adjacent to those Member States — be regarded as work on the territory of those States). However, the referring court observes that, assuming the last-mentioned factor to be relevant, the question arises whether it must be taken into account solely for the periods when the vessel was operating above the part of the continental shelf adjacent to those Member States, or for the entire period at issue: the answer may ultimately depend on what had originally been planned.
· On the assumption that Mr Kik comes within the scope ratione personae of Regulation No 1408/71 and that the rules in Title II thereof must thus be applied in order to determine the social security legislation applicable, the referring court raises the question of what might be the relevant rule.
· It considers that the place of work is an important factor and that it is therefore necessary, also in this regard, to ascertain whether employment on board a pipe-laying vessel operating above the part of the continental shelf adjacent to a Member State is to be regarded as employment on the territory of that Member State.
· If that is not the case, the referring court considers that no rule in Title II of Regulation No 1408/71 applies as such. Accordingly, since it is unacceptable for a worker to whom the regulation applies not to be subject to any social security scheme, the referring court considers it necessary to identify the most relevant connecting factor. In the case before it, the employee’s residence must, in its view, be discounted, since there is no indication of any link whatsoever between his residence and the employment relationship. The same is true of the place in which his employment income is taxed, since Regulation No 1408/71 attaches no significance to that factor. By a process of elimination, the place where the employer is established assumes particular significance, the national court referring in that regard to the judgment in Aldewereld (EU:C:1994:271).
· If employment on board a pipe-laying vessel operating above the part of the continental shelf adjacent to a Member State is to be treated as employment on the territory of that Member State, the Hoge Raad der Nederlanden contemplates two possible approaches.
· The first is to refer to the main rule in Article 13(2)(a) of Regulation No 1408/71, which designates the legislation of the place of work, and, consequently, to apply the legislation of the Netherlands and that of the United Kingdom in respect of the periods during which the work is to be regarded as having been carried out in the territory of each of those Member States, with Swiss legislation being applicable as to the remainder, for the same reasons as those set out in paragraph 30 of this judgment.
· Following the second approach contemplated by the referring court, the person would be regarded as having been normally employed in the territory of two or more Member States, as referred to in Article 14(2) of Regulation No 1408/71, and, consequently, the rule set out in the first situation mentioned in Article 14(2)(b)(i) of the regulation would apply: that approach would result in the legislation of the Member State of residence being applicable, since the activity was partly pursued there.
· The referring court considers that the fact that Article 14 of Regulation No 1408/71, according to the wording of its title, contains special rules applicable to persons, other than mariners, engaged in paid employment might not be decisive, since Article 14b of the regulation, which sets out the special rules applicable to mariners, contains no provision that is applicable in the case before it.
· The referring court is, however, uncertain about the distinction that should be made between the case referred to in Article 14(2) of Regulation No 1408/71 and the case in which a person is employed first in one Member State and then in another Member State, a situation governed by Article 13(2)(a) of the regulation, since, strictly speaking, two activities can never be carried out simultaneously by the same person in two different places. As a consequence, the expression ‘a person normally employed in the territory of two or more Member States’, which is used in Article 14(2) of the regulation, also encompasses an activity which is carried out in two or more Member States in succession. An over-strict interpretation of that expression would be unfavourable for the free movement of workers, since it would mean that workers not covered by the special rule set out in Article 14(2) would be subject to Article 13(2)(a) of Regulation No 1408/71 and, as a result, would be subject to frequent changes in the legislation applicable to them.
· In those circumstances, the Hoge Raad der Nederlanden decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:
1)
a. Must the rules regarding the scope ratione personae of Regulation No 1408/71 and the rules which determine the territorial scope of the designation rules in Title II of that regulation be interpreted as meaning that those designation rules apply in a case such as the present, which concerns (i) a worker residing in the Netherlands who (ii) is a national of the Netherlands, (iii) in any event, was previously compulsorily insured in the Netherlands, (iv) is employed as a seafarer by an employer established in Switzerland, (v) carries out his work on board a pipe-laying vessel which flies the Panamanian flag, and (vi) carries out those activities first outside the territory of the European Union (approximately 3 weeks above the continental shelf of the United States and approximately 2 weeks in international waters) and then above the continental shelf of the Netherlands (periods of one month and approximately one week) and of the United Kingdom (a period of slightly more than one week), while (vii) the income earned thereby is subject to income tax levied by the Netherlands?
b. If so, is Regulation No 1408/71 then applicable only on the days when the person concerned works above the continental shelf of a Member State of the European Union, or also during the preceding period in which he worked elsewhere outside the territory of the Union?
2) If Regulation No 1408/71 applies to a worker as referred to in question 1(a), what legislation or sets of legislation does the regulation then designate as applicable?
The CJEU ruled as follows:
1. Regulation (EEC) No 1408/71 of the Council 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 Council Regulation (EC) No 307/1999 of 8 February 1999, must be interpreted to the effect that the persons covered by it include an employed person who, like Mr Kik, is a national of a Member State, in which he resides and in which his income is subject to tax, is employed on a pipe-laying vessel flying the flag of a third State and operating in various parts of the world, in particular above the part of the continental shelf adjacent to certain Member States, was previously employed by an undertaking established in his Member State of residence, changes employer and thereafter is employed by an undertaking established in Switzerland, whilst continuing to reside in the same Member State and to sail on the same vessel
2. The provisions determining the national legislation applicable, which are contained in Title II of Regulation No 1408/71, must be interpreted as meaning that a national of a Member State, or of the Swiss Confederation (a State treated as a Member State for the purposes of applying the regulation), who is employed on board a vessel flying the flag of a third State and carries out his activities outside the territory of the European Union — including above the continental shelf of a Member State — but who is employed by an undertaking established in the Swiss Confederation, is subject to the legislation of the State in which his employer is established. However, in circumstances such as those of the main proceedings, if, pursuant to Regulation No 1408/71, that legislation entails him being insured under a voluntary insurance scheme or not being insured under any social security scheme, that national will be subject to the legislation of his Member State of residence.
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