Child benefit for persons entitled to freedom of movement within the EU: Derived entitlement possible despite lack of gainful employment (Düsseldorf Finance Court 9 K 1192/23)

In its judgement of 15 January 2025, the Münster Finance Court dismissed the claim by a mother living in Germany, who has three minor children, all of Romanian nationality, for further payment of child benefit. The appeal was allowed on grounds of fundamental importance, as there is no case law from the Federal Finance Court (BFH) on specific scenarios relating to the receipt of social assistance benefits and the resulting implications for entitlement to child benefit.

The mother arrived in Germany with her husband, who, unlike the other family members, holds Turkish nationality. The mother submitted the applications for child benefit. She herself was never in employment subject to social security contributions in Germany, nor was she registered as seeking work. It was only after several years that she took up marginal employment.

The husband initially held paid employment. The family lived on this income, together with child benefit, which the claimant received for the three children from the fourth month of their stay in Germany. The husband later ceased this employment, although it was not proven that he had lost this job through no fault of his own. This was followed by the receipt of Unemployment Benefit I, and later social security benefits. After a considerable period of time, the husband then began to earn an income from self-employment. The family also received supplementary social assistance benefits.

For legal reasons, the husband’s employment history was not relevant, as the child’s mother was the applicant for child benefit. Child benefit payments were suspended because the family could not sustain themselves in the long term without social security benefits.

The children’s mother took the view that the suspension of child benefit payments infringed her rights to freedom of movement as an EU citizen and was unconstitutional.

As the husband and father of the children was not an EU citizen, his employment history was irrelevant and was only of significance insofar as he temporarily or partially contributed to the family’s livelihood alongside the child benefit received.

Under German law, the children’s mother should not have been permitted to remain in Germany with the children for as long as she did. According to the Fiscal Court’s judgement, the children’s mother was no longer entitled to child benefit for the period following the end of her lawful residence. Nor does it contravene EU law to make the receipt of child benefit conditional upon lawful residence in Germany. The right of residence was lost as a result of and following the receipt of social security benefits.

Should an appeal be lodged, the Federal Fiscal Court (BFH) will have to decide whether the Fiscal Court’s decision is in accordance with the Constitution and whether it may, if applicable, contravene EU law. Whether an appeal had been lodged was not yet known at the time of going to press.

Source: Münster Finance Court, judgment of 15 January 2025, ref. 13 K 26/23 AO