Stipend for studies abroad

Last year, a reader, Silvan Said, asked me whether his daughter, who would be studying at a university in Scotland, could be eligible for a student maintenance grant (stipend) from Malta.

He argued that his daughter was only going to study abroad because her course was not offered here in Malta. He noted that under Maltese law she did not appear to be entitled and asked whether this law was discriminatory.

Several other students in the same situation have approached me on this issue which, I feel, should be addressed given that Maltese students are increasingly using their right of free movement to study in universities in other EU countries. Thanks to EU membership.

I had replied in this column that this situation was not covered by EU law and, therefore, no such right could be claimed. I added that even at the level of the European Court of Justice, the portability of the maintenance grants had never, as such, been upheld as a right.

Today I can report a new development which may change the situation in favour of students who study abroad as a result of new judgements of the European Court of Justice.

One case concerned Mr & Mrs Schwarz, a German couple who sent their children to a private school in Scotland.

According to German law, parents may claim a tax relief with respect to part of the school fees paid for a child attending a private school. However, this law only applies to schools established in Germany.

Messrs Schwarz claimed this relief but their request was turned down on grounds that the school in question was not in Germany. They instituted legal proceedings which were referred to the European Court of Justice (ECJ) for its opinion.

The ECJ ruled in favour of Messrs Schwarz, stating that the law on which this refusal was based was in breach of EU law on two counts. First, because it violated the principle of free movement of services because it restricted schools established in other EU countries from enrolling German children. Secondly, it restricted free movement of persons because it constrained German children from using their right to move freely within the EU for schooling.

The ECJ held that the law in question had the effect of deterring taxpayers resident in Germany from sending their children to schools established in another member state. It also hinders the offering of education by private educational establishments established in another EU country to the children of taxpayers resident in Germany.

Specifically on the issue of free movement of EU citizens, the ECJ held that: "National legislation which places at a disadvantage certain of the nationals of the member state concerned simply because they have exercised their freedom to move and to reside in another member state is a restriction on the freedoms conferred...on every citizen of the Union".

Germany argued unsuccessfully that a member state cannot be required to subsidise schools which fall under the education system of another member state. Nor was the ECJ impressed by Germany's claim that this decision would put an unreasonable financial burden on the German state.

On the argument that this case related to a tax relief and that tax was an issue of national competence - as was the education system - the ECJ held that, although it is true that direct taxation and education fall within their competence, member states must nevertheless exercise their powers consistently with EU law.

The ECJ also distinguished between private and public schools, reaching the same conclusion in both cases.

It said that schools financed by private funds may rely on the principle of free movement of services to sell their educational services abroad. On the other hand, public schools may not. However, the principle of free movement of EU citizens would apply in any case and refusing the tax relief was still in breach of this freedom.

The judgement may have important repercussions in Malta in two respects.

The first is that any tax relief granted to Maltese parents on account of school fees they pay to send their children to a private school must also be made available to parents who send their children for private schooling in another EU country. This emerges clearly from the judgement.

The second - and more profound - implication could be with respect to stipends.

Today, Maltese students who follow a university course in another EU country do not receive a stipend from Malta. But, although this case was not specifically about stipends, the legal reasoning appears to be the same and, to my mind, also applies to the payment of stipends to Maltese students who study in a university in another EU country. Provided, of course, that they or their parents are taxpayers in Malta.

Indeed, if a stipend is paid to a Maltese student following a university course at the University of Malta why should it not be paid to students who exercise their right to free movement and study in another EU country?

I have been approached by many Maltese students who are following a university course abroad. Many of them follow courses which are not available in Malta and they are therefore compelled to go abroad to pursue their studies and their chosen career. Understandably, they are often desperate for some financial support.

This judgement is probably just what they were waiting for.

Another pending case makes specific reference to grants in education. Earlier this year, the Advocate General of the European Court proposed to the Court to uphold a claim made by students to receive a grant from their home country when studying in another EU country. The final judgement is expected shortly.

Readers who would like to ask questions to be answered in this column can send an e-mail, identifying themselves, to contact@simonbusuttil.eu or through www.simonbusuttil.eu.