## Facts

- A Dutch national acquired a private limited company incorporated in the United Kingdom and became its director.
- The director placed his Netherlands one-person business under the UK company as a subsidiary; all commercial activity occurred in the Netherlands through that subsidiary.
- The UK company maintained a registered office in the United Kingdom but carried on no business there.
- The director reported sick and sought benefits under the Netherlands general sickness insurance scheme.
- The competent Dutch social insurance body refused benefits, reasoning that the director lacked an employment relationship involving subordination to an employer.
- Dutch case law treated directors holding at least 50% of shares as employees for compulsory insurance when the company was incorporated under Netherlands law; the agency argued that this approach should not apply to foreign-incorporated companies to prevent abuse.
- The Netherlands court of last instance in social security matters referred questions on compatibility with freedom of establishment (Treaty provisions on establishment of persons and companies) and the equal-treatment rule in EU social security coordination law.

## Issues

1. Whether freedom of establishment precludes a host Member State from excluding a company director from national sickness insurance benefits solely because the company was incorporated in another Member State, even if it conducts no business in its incorporation state.
2. Whether a general exclusion based on foreign incorporation can be justified as an anti-abuse measure where the company operates in the host Member State.
3. Whether the exclusion is permissible under the equal-treatment requirement in EU social security coordination law.

## Decision

- The court ruled that freedom of establishment for companies prohibits excluding the director from the host State’s sickness insurance benefits solely because the company was formed under the law of another Member State and has its registered office there, even if it conducts no business there.
- The host State could not justify the categorical distinction by invoking abuse-prevention concerns tied only to place of incorporation.
- Because the freedom-of-establishment ruling resolved the dispute, the court did not provide a separate dispositive analysis under the equal-treatment provision of EU social security coordination law.

## Legal Principles

- Companies formed under the law of a Member State and having a qualifying link to the EU enjoy freedom of establishment in other Member States on the same terms as domestic companies.
- A host Member State may not apply social security rules that treat directors less favorably solely due to the employer’s place of incorporation in another Member State.
- The fact that a company performs no business in its incorporation state does not, by itself, remove Treaty protection for establishment in the host State.
- Anti-abuse objectives cannot support a blanket exclusion based solely on foreign incorporation; any response to abuse must avoid generalized discrimination and rely on case-specific, proportionate means.

## Conclusion

The decision held that freedom of establishment forbids denying national sickness insurance benefits to a director solely because the employing company was incorporated in another Member State, confirming that social security eligibility rules may not penalize cross-border corporate formation choices within the EU.


Segers v. Bestuur van de Bedrijfsvereniging voor Bank- en Verzekeringswezen, Groothandel en Vrije Beroepen (Case 79/85), 1986 E.C.R. 2375 (E.C.J. 1986)