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Child benefit abroad
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Social benefits in cross-border cases: EU and Switzerland

Table of Contents

Tax residency

How is child benefit regulated abroad? In Germany, child benefit is regulated within the framework of the income tax law. In order to be entitled to child benefit at all, you must be subject to unlimited tax liability in Germany. This requirement is met if you have an apartment in Germany under conditions that indicate that you will keep and use the apartment. This becomes a problem if, for example, the parents move abroad for a limited period of time due to an assignment and keep their old apartment. Even if this apartment is fully furnished and you use it while on vacation and keep it after your return, the tax courts do not see it as an apartment within the meaning of Section 8 AO and deny the entitlement to child benefit.

On the other hand, you can be entitled to child benefit in Germany even without an apartment. Anyone who has a habitual residence in Germany or works here is generally entitled to a claim. Anyone who does not work in Germany but submits an application to be treated as having unlimited tax liability is also entitled to child benefit. This applies to cases where the person entitled lives in the EEA area or Switzerland and receives at least 90% of their total income in this country, for example from participation in a company.

Spouse's own children and children

Child benefit abroad: In cross-border child benefit cases, the EU Regulation 883/2004 on the coordination of social security systems must be applied within the EEA (EU, Norway, Iceland, Liechtenstein and Switzerland) with priority over national regulations. This regulation does not regulate child benefit uniformly for all states. It's all about determining:

  • For which children do you get child benefit?
  • Which child benefit fund is responsible?
  • Who receives child benefit?

 

On the first question, the European Court of Justice (ECJ) decided in a ruling of April 2, 2020 that child benefit is not only payable for one's own children and for the children of the spouse living in the household from a previous relationship. Anyone who supports their spouse's child from a previous relationship is also entitled to receive child benefit.

The decision was made on the claim of a cross-border commuter who was responsible for supporting a child of his spouse living in another European country. After a change in the law in 2016, such children were no longer considered family members. Consequently, under German law, these children were no longer entitled to child benefit. This legal regulation conflicts with the fundamental right to freely determine the place of residence of all EU citizens and is therefore not applicable if the case as a whole is located within the EU and Switzerland.

Child benefit abroad: the responsible country

When it comes to the topic of “child benefit abroad”, claims for child benefit usually come into consideration in several countries at the same time. In order to prevent people from receiving child benefit multiple times, at least within the EU and Switzerland, rules were agreed according to which a claim to child benefit can generally only be assigned to the law of one country. If the parents are employed or self-employed, the child is assigned to the country in which the parents earn their income. If several countries are considered because the parents work in different countries, the country in which the child lives is responsible.

If, according to this allocation, less child benefit is to be paid than would be paid if the parents worked in the child's country of residence, then a child benefit supplement can be considered. The country where the child lives is responsible for this.

Who is the child benefit paid to?

Problems arise when the parents do not agree and several people claim payment of child benefit. According to the EU regulation, the responsible country is first determined in these cases. The nationally different regulations then apply as to who the child benefit or the supplement is to be paid to. Normally, child benefit is paid to the parent with whom the child lives. If there is no clear answer or agreement, under German law child benefit is paid to the parent who pays the higher amount of cash support. 

Jürgen Bächle
Jurgen Bachle

has been working as an independent tax consultant and expert in international tax law since 1989 and has been a member of the board of the German Association of Tax Consultants Baden-Württemberg, DSTVBW, for over 20 years.

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