Anyone applying for child benefit in Germany, even though their children live in another EU country, is often faced with the question of whether there are priority family benefits available abroad. The Hessian Finance Court has now clarified that, in such cases, the family benefits office may not simply withdraw child benefit if it delays or even neglects the necessary coordination procedure with the other Member State.
The facts of the case
A Polish national lived alternately in Germany and Poland and received unemployment benefit in Germany. His four children lived with their mother in Poland; neither parent was in employment. For the months of March to September 2016, he initially received child benefit, which the family benefits office later withdrew. The reason given was that there were priority entitlements to family benefits in Poland which would wholly or partly supersede the German entitlement.
The problem was that the family benefits office had never properly verified this assumption. It is true that Article 68(3) of EU Regulation No 883/2004 provides for a so-called coordination procedure, under which the authorities of the Member States concerned clarify amongst themselves which benefits take precedence. However, the Family Benefits Office did not initiate this procedure until eight years after the application for child benefit had been submitted, and then only because legal proceedings were already underway. The Polish authority did not respond at all to enquiries.
The decision of the Tax Court
The Hessian Finance Court ruled in favour of the claimant (court decision of 19 November 2024, ref. 3 K 2306/16). The court made it clear that any authority withdrawing a benefit that had already been granted to a citizen must be able to prove that the conditions for doing so are met. The Family Benefits Office was unable to prove that a priority claim had in fact existed in Poland. It was also unable to provide this evidence because it had failed to initiate the prescribed coordination procedure for years.
As the investigation into the facts had failed due to the inaction of the family benefits office, the resulting doubts were not to the detriment of the claimant but to that of the authority. The entitlement to German child benefit therefore remained in force.
Appeal allowed by the Federal Fiscal Court
The Finance Court has expressly authorised an appeal to the Federal Finance Court because the case is of fundamental importance. The proceedings are pending there under case number III R 42/24. The Federal Finance Court must now make a final ruling on the extent of the Family Benefits Office’s duty to investigate in such circumstances and which party must bear the consequences of a failure to establish the facts.
What does this mean for those affected?
Anyone who has received a similar letter from the Family Benefits Office in which child benefit has been withdrawn or refused on the grounds of possible priority claims from abroad should not simply accept this decision. Whilst the Federal Fiscal Court (BFH) proceedings are ongoing, an appeal may be lodged against such decisions and reference may subsequently be made to the statutory suspension of proceedings under Section 363(2) of the German Fiscal Code. This ensures that one’s own case remains open until the matter has been clarified by the highest court.
In individual cases, it is advisable to seek tax or legal advice, particularly where cross-border issues within the EU are involved.
Source: Haufe: Tax
This article was created with the help of AI and has been editorially reviewed.
