ECJ upholds ‘right to reside’ test for UK child benefit and tax credits

Case C-308/14, Action under Art. 258 TGEU for failure to fulfil obligations, 14^th June 2016
 
The European Court of Justice held that the UK can lawfully impose restrictions on access to child benefit and child tax credits for EU citizens who are economically inactive.  The UK contended that economically inactive EU citizens should not become a burden on the State’s welfare system and applied a ‘right to reside’ test.
 
The European Commission sought to challenge the test relied on by the UK on grounds of direct discrimination because it only applied to foreign nationals.  EU law provides that EU citizens have the right to live in the UK for more than three months if they are in work or self-employed or have sufficient resources and health insurance so they are not a burden on the social security system.
 
The Court restricted the scope of the action to mainly child benefits and child tax credits.  It was held that in relation to these benefits, the UK legislation which governed lawful residency conditions was neither discriminatory nor prohibited by European Union law.  The Court concluded that the right to reside test was a lawful means to avoid undue burdens on the ‘social assistance system.’
 
What does this decision mean?
It means that there are now automatic exclusions from family benefits for non-national EU citizens.  This could result in excluding a number of workers who cannot provide sufficient evidence that their activities meet nationally imposed definitions of work.  This could also lead to child poverty for vulnerable children and may have implications for those who have been working but lose their jobs.
 
Read press release here and Parliament Magazine article here.