Facts

Belgian  Royal  Degree  38  provides  that  self-employed  persons  are covered by a compulsory social insurance scheme that is administered by  ‘Partena’.  A  self-employed  person  within  the  meaning  of  Royal Degree 38 is someone who pursues an occupational activity in Belgium. Paragraph 4 of Article 3(1) of the Royal Degree (‘Paragraph 4’) provides, “Persons designated as agents of a company or association which is liable to  pay  Belgian  corporation  tax  […]  shall  be  irrebuttably    presumed  to pursue in  Belgium a professional activity as self-employed persons”. This irrebuttable presumption was the subject matter of a dispute involving Mr Rombouts and a company of which he was a 50% shareholder and a director. According to Royal Degree 38, this company, called Les Tartes de Chaumont-Gistoux SA (‘Tartes de Chaumont’), was jointly liable for the payment of the social insurance contributions in question.In  1999,  Mr  Rombouts  emigrated  to  Portugal.  In  2001,  he  found  a job  there  but  in  1999  and  2000  he  was  not  employed.  In  May  2008, Partena served an order on Mr Rombouts and Tartes de Chaumont. Initially, Partena demanded payment of over  €  125,000 by way of social insurance contributions covering the period 1999-2007, but later this was reduced to about  €  68,000.

National proceedings

Tartes  de  Chaumont  disputed  the  payment  order  and  brought  legal proceedings.  The  court  where  he  brought  the  proceedings  referred questions  to  the  ECJ.  Essentially,  the  questions  were  whether Paragraph  4  complies  with  Article  18  EC  [Editor:  this  is  now,  Article 21 TFEU] on free movement, as detailed in Regulation 1408/71 (now, Regulation  883/2004,  Editor).  Article  13(1)  of  Regulation  1408/71 provides that persons to whom the Regulation apply shall be subject to the social insurance legislation of a single Member State only. Article 13(2)(b)  states  that  “a  person  who  is  self-employed  in  the  territory  of one Member State shall be subject to the legislation of that State even if he resides in the territory of another Member State”. Under this main rule, Mr Rombouts would be subject to Portuguese social insurance law only, and would therefore not need to pay Partena contributions. However, there are exceptions to the main rule. One such exception is “where a person is self-employed in Belgium and gainfully employed in another Member State”. Partena claimed that this was the case, as Mr Rombouts was irrebuttably presumed to be self-employed in Belgium and was gainfully employed in Portugal.

ECJ’s findings

1.   The ECJ begins by rejecting the Belgian government’s inadmissibility defence (§ 28-41).
2.   The  question  at  issue  is  how  far  a  Member  State  may,  for  the purpose of cover by its social security scheme for self-employed persons, determine the location where the activity of the workers in question is deemed to take place. In this instance, can a director of a Belgian company, who manages that company from his home in Portugal, be said to be self-employed in Belgium? (§ 43-44). 
3.   The  provisions  of  Regulation  1408/71  must  be  interpreted  in  the light of the purpose of Article 48 TFEU, which is to contribute to the establishment of the greatest possible freedom of movement for migrant workers (§ 46).
4.   The first step is to determine the location of a person’s professional activity. It is not until this location has been determined that that activity  can  be  qualified  as  ‘employed’  or  ‘self-employed’.  It  is not for the Member State to determine said location; this is to be determined exclusively on the basis of EU law. If a Member State could  determine  where  a  person  carries  out  his  professional activity, that could lead to the cumulative application of different legislation to the same activity, which is precisely what Regulation 1408/71 aims to prevent (§ 52-54).
5.   The  meaning  and  scope  of  terms  for  which  EU  law  provides  no definition must be determined by considering their usual meaning in everyday language, while also taking into account the context in which they occur and the purposes of those rules of which they are part. Thus, the concept of the ‘location’ of an activity is the place where the person concerned carries out the actions connected with that activity (§ 56-57).
6.   By making the irrebuttable presumption that persons designated as  agents  of  a  company  liable  to  pay  Belgium  corporation  tax pursue a professional activity in Belgium, Paragraph 4 is liable to lead to a definition of ‘location’ that is contrary to EU law (§ 58).
7.   It is true that the presumption at issue may prevent social security fraud  by  artificially  relocating  the  activity  of  agents  of  Belgian companies.  However,  by  making  that  presumption  irrebuttably, Paragraph 4 goes further than is strictly necessary for attaining the legitimate objective of combatting fraud, since it acts as a general impediment to those persons’ ability to prove that the location of their activity is actually in another Member State (§ 60).

Ruling

EU law, in particular Articles 13(2)(b) and 14c(b) of Council Regulation (EEC)  No  1408/71  […]  precludes  national  legislation  such  as  that  at issue in the main proceedings insofar as it allows a Member State to presume irrebuttably that management from another Member State of a company subject to tax in the first Member State has taken place in that first Member State.