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

Close to 7,000 evacuated from Syrian towns after enduring nearly 3-year siege

Infrastructural and system barriers to Universal Health Coverage: get in my patient’s shoes

This plastic-free bag dissolves in water

Charles Michel advocates a strong Europe that acts where it can add real value

Can elections in Italy and Germany derail Eurozone?

Celebrating the Customs Union: the world’s largest trading bloc turns 50

The developing countries keep the world going

The EU lets the bankers go on rigging the benchmarks

Why do US presidential elections last so long? And 4 other things you need to know

From sun-powered trikes to mind-controlled TV – 10 top gadgets unveiled at CES 2020

G20 LIVE: “Our response needs to be robust…otherwise we will only find the fire we are trying to put out”, UN Secretary General Ban Ki-moon just lit up G20 in Antalya Turkey

5G mobile is nearly here – but we should share networks to make it affordable

How Mobile Technology is Changing the Healthcare System

COP21 Breaking News: Conference of Youth Focuses on Hard Skills to Drive Greater Climate Action

As the year closes out, UN political chief talks the art of diplomacy – and crises to watch in 2019.

‘Historic’ moment: Palestine takes reins of UN coalition of developing countries

Coronavirus: €117 million granted for treatments and diagnostics through the Innovative Medicines Initiative

Africa-Europe Alliance: first projects kicked off just three months after launch

He died so I could live: UN peacekeeper pays tribute to fallen colleague

3 natural mysteries that could be explained by quantum physics

ITU Telecom World 2017: exploring smart digital transformation

How to get ageing populations to invest in their health

Window for a Brexit deal: Brussels to think again May’s proposal

State aid: Commission approves €6 billion Italian schemes to support SMEs affected by coronavirus outbreak

Commission launches the Fit for Future Platform and invites experts to join

Taxation: Commission refers Poland to Court for failing to remove certain tax exemptions on the use of energy products by highly polluting businesses

European Commission welcomes the positive assessment about how it has managed the EU budget

High internet taxes are restricting access and slowing economic growth

Both sides in Libya conflict agree need for lasting ceasefire: UN negotiator

Historic first, as Tolstoy’s War and Peace lands in Geneva, to mark international centenary

France is building a village for people with Alzheimer’s

World simply ‘not on track’ to slow climate change this year: UN weather agency

This is how New York plans to end its car culture

These tech start-ups are changing what it means to farm

COP24 addresses climate change displacement ahead of crunch migration meeting

Here’s how to bring agility into the boardroom

Global migration, by the numbers: who migrates, where they go and why

Draghi tells the Parliament the ECB to use all its weaponry; euro slides to parity with the dollar

What could a no-deal Brexit mean for developing countries?

MEPs condemn criminalisation of sex education in Poland

7 ways to break the fast fashion habit – and save the planet

Horn of Africa: UN chief welcomes Djibouti agreement between Eritrea, Ethiopia and Somalia

Meet the man who drove from the Netherlands to Australia without visiting a gas station

Will AI make the gender gap in the workplace harder to close?

Mergers: Commission approves acquisition of Bayer’s animal health division by Elanco, subject to conditions

‘Democratic aspirations of the Sudanese people’ must be met urges Guterres, following military removal of al-Bashir from power

Make the internet safer: stop using passwords

18th EU Eco-Innovation Forum in Barcelona shows the way for Europe’s new Environmental policy

Crimea: The last bloodless secession of a Ukraine region?

How do we go about improving mental health in the community and reducing suicide rates in the 15-29 age group?

Coronavirus: First case confirmed in Gulf region, more than 6,000 worldwide

Philippe de Backer of ALDE at European Business Summit 2015 stresses: “Reinvent your business”

Kenya wants to run entirely on green energy by 2020

3 things to know about women in STEM

Welcome to the COVID-19 era of world sport

We need a global convention to end workplace sexual harassment

International Women’s Day: Where does she belong?

$683 million appeal to deliver reproductive health services, where they’re most needed

Does the sharing economy truly know how to share?

Parliament approves €500 million for schooling of refugee children in Turkey

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