The Response of Residence-Based Schemes in the Netherlands to Cross-Border Movement

Publication Date01 June 2016
Date01 June 2016
AuthorFrans Pennings
Frans Pennings*
e Netherlands already had a residence-based scheme for old-age pensions when the
fi rst Coordination Regulation came into force. Th
is national scheme incorporated a pro-
rata system from the start and fi ts rather well, despite diff erences in character, with
the coordination rules. Health care became organised in a residence-based scheme in
2004, and is based on a contributory system that also fi ts well with the coordination
rules. Special non-contributory benefi ts and social assistance are more vulnerable to
the growth of mobility. Although there are certainly defi ciencies and challenges in the
system, there are various techniques in residence-based schemes that can be used to
control access by mobile persons and at the same time to ensure a minimum income
or provision. Th

is makes it interesting to carry out a comparison with other residence-
based schemes.
Keywords: coordination rules; free movement; minimum income; residence permit;
residence-based schemes
e Dutch social security system is a combination of residence-based insurance
schemes and employees’ insurance schemes, supplemented by subsistence schemes
(public assistance, special non-contributory benefi ts and provisions).
Residence-based insurance schemes were introduced for risks for which coverage
was deemed desirable for everyone living in the country (old-age benefi ts, survivors’
benefi ts, family benefi ts, benefi ts for persons who were disabled before the age of 18,
and health care provisions) – see further, Section 3.1 below. Employees’ insurance
schemes protect only those working for an employer (and a limited group of
Professor of Labour Law and Social Security Law at Utrecht University, the Netherlands, Guest
Professor at Gothenburg University, Sweden and joint editor of EJSS. Address: Achter St. Pieter 200,
NL 3512 HT Utrecht, the Netherlands; phone: +31 30 253 7258; email:

e Response of Residence-based Schemes in the Netherlands to Cross-border Movement
assimilated categories, such as, under some conditions, homeworkers) and cover the
risks of unemployment, disability and sickness.
e residence-based schemes for old-age benefi ts, long-term care benefi ts and
survivors’ benefi ts are fi nanced by contributions. Only persons with a very low income
do not pay contributions and for them being a resident is suffi
cient to be insured.
Family benefi ts and benefi ts for persons who were already disabled before the age of
18 are paid from taxes. Here there is no connection with contributions. For the former
schemes, this way of fi nancing was the result of a decision in the past (employers were
to be compensated for the cancellation of another subsidy scheme). For the young
disabled the fi nancing method follows from the nature of the risk: those covered have
not worked and thus cannot have paid contributions. Health care benefi ts are based
on private schemes, though regulated by legislation. For these schemes contributions
have to be paid to private insurance companies.
Public assistance is provided on the basis of the Participatiewet (Participation Act).
Article 11 provides that any person of Dutch nationality living in the Netherlands
who is in such circumstances or threatens to become in such circumstances that
s/he does not have the means for paying the necessary costs of living is entitled to
public assistance. Aliens who are legally staying in the Netherlands are assimilated
according to specifi ed sections of Article 8 of the Aliens Act, with the exception of the
cases mentioned in Article 24(2) of Directive 2004/38. Th
us, living in the Netherlands
is a necessary but not a suffi
cient requirement. One must also satisfy the condition on
nationality or have a statutorily specifi ed residency status.
In this contribution, I discuss the position of persons who enter or leave the country,
since for them a residence requirement can be problematic. Since, in particular,
the EU coordination law is meant to address the position of mobile persons, it is of
particular relevance to study the impact this has had, and still has, on residence-
based schemes. Do mobile persons have adequate protection under residence-based
schemes? Did the schemes have to be changed as a result of the application of the
coordination rules? And are the schemes adequately protected although mobile
persons have access to them?
e article contains accounts of the following residence-based schemes: the old-
age pension scheme, the scheme for special non-contributory benefi ts and the health
care system. Th
e term ‘residence’ is defi ned at the outset since it is a major instrument
for controlling access to the schemes.
e term ‘residence’ is an important criterion for access to, and for insurance in,
residence-based schemes. Fortunately, by cross referencing in the Acts, the criteria
for residence are applied in the same way across insurance and other residence-based
schemes. For example, Article 2 of the Health Care Act (Zorgverzekeringswet, ZVW)
European Journal of Social Security, Volume 18 (2016), No. 2

Frans Pennings
refers to the term ‘residence’ as defi ned in the Act on Long-term Care (Wet op de
langdurige zorg
). Th
is ensures that the term is interpreted the same way. Other Acts,
such as the Act for the Young Disabled (Wet Wajong), do not use cross referencing but
simply provide that a resident is a person who lives in the Netherlands.
In order to ensure that there is no tension between the provisions on who is
covered by the national residence Act concerned and international or European
law, each Act has a provision giving priority to international and European law (for
example, Article 6a of the Act on Old-Age Pensions states that: ‘persons shall not be
considered to be insured persons if, by virtue of a treaty or convention or a decision
of an organisation of public international law, the legislation of another State applies
to them’).
e term ‘residence’ has been interpreted in case law and the results are set out
in published policy rules of the benefi t administration (Sociale Verzekeringsbank,
), which can be found on its website ( Th
ese policy rules provide
that a person is a resident of the Netherlands when s/he lives in the Netherlands.
Whether or not this is the case depends on the circumstances of the case. Th
is means,
in general, that there has to be a durable link of a personal nature between this person
and the Netherlands. Whether there is such link has to be considered on the basis of
all relevant facts and circumstances of the case.1 Factors such as where the person
lives and works, where her/his family lives, and registration in the civil registry are all
taken into account. In particular, the duration of the residence is relevant. Th
is means
that short stays do not lead to residency. For accepting a durable link also the way the
person earns her/his income is taken into account. Working as an employee or self-
employed person oft en shows a durable link with the country.
e criteria for residency have remained more or less the same over time. An
important change of the laws was, however, the exclusion in the 1990s of persons who
do not have a permanent residence permit for the Netherlands.2 Th
ese persons are
not considered as residents. Non-residents are insured for a residence-based scheme if
they are subject to the Dutch Law on Tax on Wages (Wet op de loonbelasting) on the
ground that they are employed in the Netherlands. For example, a person who works
in the Netherlands but lives in Belgium or Germany is covered by the Dutch Old-Age
pension Act.
e inclusion of persons working as employees in the Netherlands has been part of
the residence Acts from the very beginning (since 1957, for the Old-Age Pension Act).
As a result, there is a natural link with the coordination rules, since these determine
the legislation of the country where one works as being applicable on the basis of the
‘country of employment principle’ (currently Article 11(2) of Regulation 883/2004).
As a result, both on the basis of national law and on the basis of the Coordination
Hoge Raad (Supreme Court) 21 January 2011 (ECLI:NL:HR:2011:BP1466) and Hoge Raad 4 March
2011 (ECLI:NL:HR:2011:BP6285).
e so-called Koppelingswet (Linking Act), which links entitlement to benefi t or insurance to legal

e Response of Residence-based Schemes in the Netherlands to Cross-border Movement
Regulation, a person working as an employee in the Netherlands is covered by a
residence-based scheme, even if s/he does not live in the country. Coordination rules
also address situations not foreseen in the national scheme (for instance, in the case of
a person working in two countries),3 but basically the eff ect of the coordination rules
is not an alien concept for the Dutch residence-based schemes.
e extension and restriction of the group of persons insured in residence-based
schemes are regulated in a general decree based on the Acts (Besluit uitbreiding en
beperking kring verzekerden volksverzekering, BUB
), Decree on the extension and
restriction of the personal scope of residence-based insurance schemes). Th
e coverage

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