One of the measures of social support for families with children in Germany is the monthly state child benefit (Kindergeld). Responsibility for granting and paying this benefit lies with the Family Benefits Office (Familienkasse), a unit of the Federal Employment Agency (Bundesagentur für Arbeit). Entitlement to the benefit extends to both German citizens and foreigners lawfully resident in Germany, provided a number of statutory preconditions are met.
The main condition for receiving the benefit is living together with the child in Germany and bearing the greater part of the costs of the child's upkeep. The child's own nationality is irrelevant. What matters is that the applicant (one parent) holds a valid residence permit that allows lawful residence and, as a rule, employment.
Our client Mikhail (name changed), an engineer specializing in mechatronics, came to Germany on the invitation of a German company that had signed an employment contract with him. He was issued a temporary residence permit under § 18 of the German Residence Act (Aufenthaltsgesetz – AufenthG), granting him the right to work for a specific employer. Mikhail settled in Germany together with his wife and children, and the family duly applied to the Familienkasse for child benefit.
Important: calculating maintenance
He was issued a temporary residence permit under § 18 of the German Residence Act (Aufenthaltsgesetz – AufenthG), granting him the right to work for a specific employer.
The Familienkasse, however, refused the application, relying on § 62(2) No. 2 of the German Income Tax Act (Einkommensteuergesetz – EStG), under which foreigners holding certain types of residence permits listed as exceptions in that provision have no entitlement to child benefit despite having the right to work. In the Familienkasse's view, the permit issued to Mikhail under § 18 AufenthG fell within that exception, and the family's application was therefore refused.
Having reviewed the case file, we found that the Familienkasse's position rested on an overly broad and incorrect reading of the law. It is true that § 62(2) No. 2 EStG provides for a number of cases in which holders of a temporary residence permit, despite having the right to work, are nonetheless not entitled to the benefit. However, this exception applies not to everyone holding a permit under § 18 AufenthG, but only to a narrowly defined category — seasonal, posted, or transferred workers ("entsandte bzw. versetzte Arbeitnehmer") employed within one and the same undertaking whose branch or representative office is located abroad (intra-company transfer).
Mikhail, by contrast, had been hired directly by the German company under an ordinary employment contract, and was not an employee of any foreign undertaking posted or transferred to Germany. Classifying his case under the exceptions set out in § 62(2) No. 2 EStG was therefore legally unfounded.
Moreover, we drew attention to Directive 2011/98/EU of the European Parliament and of the Council of 13 December 2011 on a single application procedure for a single permit for third-country nationals to reside and work in the territory of a Member State and on a common set of rights for third-country workers legally residing in a Member State (Richtlinie 2011/98/EU des Europäischen Parlaments und des Rates vom 13. Dezember 2011), which expressly guarantees foreign workers lawfully employed under a permit issued pursuant to § 18 AufenthG the right to social security equal to that of German nationals, including child benefit.
Relying on these arguments, together with case law on comparable cases, we prepared and filed a complaint with the Finance Court (Finanzgericht) challenging the Familienkasse's refusal. In the complaint we set out our legal position in detail, distinguishing our client's case from cases that genuinely fall within the exceptions under § 62(2) No. 2 EStG, and relied on the explicit terms of the above-mentioned EU Directive concerning foreign workers' equal right to social benefits.
After examining all the arguments presented, the court found the Familienkasse's position to be mistaken and ordered it to pay Mikhail the child benefit due to him for the entire period starting from the date of his original application.
This case once again confirms that decisions by state authorities are by no means always final and beyond challenge. A formal refusal based on a superficial reading of the law can very often be successfully challenged with sound legal argumentation and a thorough understanding of both national and European law. We recommend that all foreign nationals who encounter a refusal of social benefits in Germany not give up, and seek qualified legal assistance in good time.
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