Indexation of family benefits, child tax credit and family tax credits: Commission takes Austria to Court for discrimination

taxes 2020

(Olga DeLawrence, Unsplash)

This article is brought to you in association with the European Commission.

Today, the European Commission decided to refer Austria to the Court of Justice of the EU. The Commission considers that Austrian law on the indexation of family benefits, child tax credit and family tax credits is not allowed under EU rules and is discriminatory.

On 1 January 2019, Austria introduced a mechanism indexing the amount of family benefits, child tax credits and family tax credits for EU nationals who work in Austria and have children living abroad. The Commission considers that such an indexation mechanism is against the EU rules on freedom of movement for workers and on the coordination of social security systems.

The mechanism is against current rules on social security coordination and discriminatory as it means that some mobile EU workers in Austria who fully contribute to the Austrian economy, workforce and social security system receive lower benefits compared to those workers whose children are living in Austria. Yet, the Austrian indexation mechanism does not apply to Austrian nationals who work abroad for an Austrian public authority and have children living with them abroad, even though they are in a similar situation.

Today’s referral to Court is the last step in the infringement procedure that started in January 2019, when the Commission sent a letter of formal notice to Austria. As the response given by Austria in March 2019 was considered unsatisfactory, the Commission followed up with a reasoned opinion in July 2019. Having analysed the Austrian reply received in October 2019, the Commission considers that its concerns have not been addressed. Hence, the decision was taken to refer Austria to the Court of Justice of the EU.


Which EU rules are being violated?

The Commission finds that the indexation of the amount of family benefits, child tax credit and family tax credits applied to EU mobile workers whose children reside in another Member State, raises concerns as regards its compatibility with EU law. In particular, the Austrian legislation is incompatible with the following EU regulations and principles:

  • Regulation (EC) No 883/2004 on the coordination of social security systems and its principles of equal treatment and the prohibition of residence clauses.

Member States may not reduce the amount of any cash benefit granted to persons insured under their legislation for the sole reason that these persons or their family members are residing outside their territory. The Austrian indexation mechanism reduces the amount of family benefits and child tax credit granted for children residing in an EU Member State where the cost of living is considered to be lower.

The fact that another Member State is considered to have lower cost of living than Austria is of no relevance for a benefit, which is paid out as a lump sum and is not linked to the actual cost of maintaining a child. In addition, Austria does not apply the indexation mechanism to persons working abroad for an Austrian public authority, whose children also reside in another EU Member State.

Further, the principle of equal treatment in social security coordination matters means that persons must be treated equally without distinction of nationality, by abolishing discriminatory measures in national legislation.

  • Regulation (EU) No 492/2011 on the freedom of movement for workers within the EU and the principle of equal treatment of workers who are nationals of another Member State as regards social and fiscal advantages.

Under Regulation (EU) No 492/2011, a worker who is a national of a Member State shall enjoy, in the territory of another Member State, the same social and tax advantages as workers living in that Member State. The purpose of the family tax credit, the single earner tax credit, the single parent tax credit and the tax credit for child maintenance payments is to reward, also in the context of an aging society, those parents who are professionally active besides raising children. The tax credits at stake are not related to the actual costs of child-rearing.

For More Information

Subscribe to the European Commission’s free e-mail newsletter on employment, social affairs and inclusion.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Guterres appeals for ‘maximum restraint’ over Jammu and Kashmir, as tensions rise

Palestine refugees’ relief chief warns Security Council money to fund Gaza operations will run out in mid-June

FROM THE FIELD: Faces and Voices of Conflict

EU presses India for a free trade agreement

How tiny countries top social and economic league tables (and win at football, too)

The world condemned by neo-liberals to feed trillions to banks: the New Deal exorcised

Human rights are ‘key’ for economic policymaking says UN expert

Safer products: EP and Council close deal to beef up checks and inspections

EU summit: Are the London Tories planning an exit from the EU?

DR Congo President and UN chief meet at a ‘historic moment’ for democracy in the country

EU migration crisis again accentuates lack of unity and solidarity among member states

Fashion has a huge waste problem. Here’s how it can change

THE COMMITTEES: ‘All roads lead to the Fifth’

Guterres hails historic Convention banning violence and harassment at work

These 5 industries can drive digital financial inclusion

MEPs to debate priorities for 28-29 June EU summit

EU opens a third antitrust file against Google

Key takeaways on digital currency from The Davos Agenda

Egypt urged to free prominent couple jailed arbitrarily since last June: UN rights office

A dangerously hot climate, simmering political tensions: ‘This is not the summer of our youth,’ UN chief warns

What can smallpox teach us about how we’ve managed COVID-19?

MEPs react to breaches of human rights in Moldova, Burundi and Somalia

Japanese banks to move their European HQ from London to Frankfurt after Brexit

DR Congo: efforts to control Ebola epidemic continue, UN food relief agency doubles assistance to affected people

Nordic companies prove doing good is good for the bottom line

Difficulties of vaccination against COVID-19

Look Mom, even the House of Lords says the #righttobeforgotten is not right

Protect women’s rights ‘before, during and after conflict’ UN chief tells high-level Security Council debate

The widely advertised hazards of the EU not that ominous; the sting is financial woes

UN Human Rights Council resolution on youth and human rights: a step forward for youth rights

FROM THE FIELD: Argentina Preserving Pristine Forests

The West and Russia impose a new order on the world

Better outreach to citizens needed to improve effectiveness of European Commission’s public consultations, say Auditors

A European young student shares his thoughts on Quality Education

Millions in Idlib ‘counting on your support to make the violence stop’, UN relief chief tells Security Council

Code of Practice on Disinformation one year on: online platforms submit self-assessment reports

Empowering people living with HIV ‘will end the epidemic’, says AIDS agency chief

Facility for Refugees in Turkey: €127 million to boost EU’s largest ever humanitarian programme

As children in Ebola-affected areas of DR Congo head back to school, UNICEF ramps up support

DR Congo: days ahead ‘critical’ to ‘historic election process’ Security Council hears

‘Whole spectrum of Afghan society’ must get behind peace talks, UN envoy tells Security Council

The EU Parliament unanimously rejects Commission’s ideas about ‘seeds’

What just happened? 5 themes from the COP24 climate talks in Poland

Two States ‘side-by-side’ is the ‘peaceful and just solution’ for Israel-Palestine conflict: Guterres

Only one in five countries has a healthcare strategy to deal with climate change

World’s 1.8 billion youth must ‘have a say in the future of the planet’

Better sanitation for India is in the pipeline

Italian voters put again the European Peoples in the Brussels picture

Coronavirus: Commission proposes to provide €81.4 billion in financial support for 15 Member States under SURE

Eurozone’s central bank leadership prepares for shoddier prospects

Improving coverage of mental health services

How robotics can help humanitarians bridge the digital divide

South Sudan’s women caught up in ‘futile man’s war’ UN gender equality chief

‘A global measles crisis’ is well underway, UN agency chiefs warn

Sassoli: Migration agreement respects fundamental principles of Parliament’s proposal

These are the biggest risks facing our world in 2019

Over 80 per cent of schools in anglophone Cameroon shut down, as conflict worsens

Commission proposes fishing opportunities in the Atlantic and North Sea for 2019

Mental health of health professionals: the alter ego

Paris is building the world’s greenest business district. What can other cities learn from it?

More Stings?


Speak your Mind Here

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s