Federal Fiscal Court, 15.03.2012, Ref.: III R 29/09
Child benefit is paid to anyone who is resident or ordinarily resident in Germany and who is bringing up a child in their household and has custody of this child.
Child benefit is therefore not linked to citizenship, but only to habitual residence or domicile, meaning that foreigners are also entitled to child benefit. This is a consequence of the welfare state principle of the German Basic Law.
Child benefit is not paid to the child, but as financial aid to the legal guardians. If the parents live separately, the child benefit is not split, but only one parent receives the benefit. This is usually the parent whose household is the centre of the child's life.
Child benefit is normally only paid up to the age of 18. However, it can continue to be paid until the age of 27 if certain conditions are met.
These requirements are set out in § 32 Para. 4 of the Income Tax Act. According to this, child benefit can also be granted for children up to the age of 27,
- if the child is not employed and is registered as a jobseeker with an employment agency in Germany,
- if the child is being trained for a profession
- if the child cannot start or continue vocational training due to a lack of a training place or
- if the child is doing a voluntary social year or a voluntary ecological year.
In accordance with § 32 Para. 4 No. 3 EStG, child benefit can also be claimed for an adult child if they are unable to support themselves through their own employment or other income and earnings due to physical, mental or psychological disabilities.
In the above-mentioned judgement of the Federal Fiscal Court, it had to deal with the question of whether child benefit must also be paid for a disabled child of full age, even though the child is gainfully employed but cannot earn a living from this employment.
Facts of the Case:
After completing her training, the deaf child worked as a cook
The plaintiff's child, who has been deaf since birth, first attended a school for the deaf and then learnt the profession of a cook at a training centre for the hearing and speech impaired. Assistant cooks work under the guidance and supervision of experienced chefs and are usually employed in canteen kitchens in hospitals, retirement homes and similar institutions.
The child was unable to earn a living with the salary he received from his education
After completing her training, the child initially worked as a cook. After a period of unemployment, she then found a job as a kitchen assistant in a butcher's shop. Despite the respective gainful employment, he was not able to cover his entire living expenses with the income generated from this.
As the payment of child benefit was refused, the legal guardian initially brought an action before the competent tax court.
Tax court ruled that the plaintiff mother was not entitled to any money, as the disability was not the cause of the salary
The tax court ruled that the plaintiff was not entitled to child benefit. Pursuant to Section 32 para. 4 sentence 1 no. 3 EStG, the tax consideration of a disabled child requires that the child is unable to support itself due to its disability.
Since her child is gainfully employed, she is able to support herself. The fact that the child's earnings are not sufficient to cover the entire cost of living is irrelevant, as this is not due to the disability, but to the low wages paid in the cook's job.
Judgement of the Federal Fiscal Court
BFH considered disability to be causal after all
The BFH did not follow the view of the tax court. The primary question to be asked is why a child who works is nevertheless unable to make a living from his or her own labour. This could be due to a wide variety of reasons. For example, the general wage level could be so low that even a non-disabled person would not be able to cover their living expenses with a full-time job (e.g. precarious employment).
In this case, the child could not be taken into account for tax purposes because it was not the disability but the poor labour market situation that was the reason why there was not enough money to live on.
Because of the disability, the child could only find work in the low-wage sector
However, it could also be the case that the child's choice of profession is so restricted from the outset as a result of his or her disability that only disability-specific training with subsequent unfavourable employment opportunities is open to him or her.
If you can only find paid work in the low-wage sector because of your disability, then your disability is the real cause of your inability to support yourself.
According to the BFH, nothing else applies if the child's ability to work is so limited due to its disability that it can only pursue part-time employment on the general labour market from the outset.
It was up to the tax court as the court of fact to determine which cause was ultimately responsible for the child's inability to support itself. The BFH therefore referred the case back to the tax court.
Source: Federal Fiscal Court
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