Kindergeld for children living abroad

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Hi everyone. How's this for a situation:

German wife, Australian husband.

Both working in Azerbaijan (not German residents for taxation purposes) and not receiving any child benefits in Azerbaijan.

Have 2 kids under 4 - both German citizens.

Any chance we could be eligible for some cash for our kids?

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10 minutes ago, danz said:

not German residents for taxation purposes ...

Any chance we could be eligible for some cash for our kids?

 

No. Child benefit is only paid if Germans live abroad but are subject to unlimited taxation in Germany or are treated accordingly. Or if they are employed in Germany subject to social insurance contributions.

 

See 

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9 hours ago, someonesdaughter said:

 

No. Child benefit is only paid if Germans live abroad but are subject to unlimited taxation in Germany or are treated accordingly. Or if they are employed in Germany subject to social insurance contributions.

 

See 

Thank you! :) 

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I see in Germany that parents of children over 18 and in full time education can claim kindergeld. What if that child (a german citizen) is at university in a non EU country, such as the UK or USA. Can child benefit (kindergeld) in Germany still be claimed if both parents are living in Germany. If not, perhaps then Kinderfreibetrag?

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@scook17

Not answering your question but I guess many parents in such a situation, if in doubt, or if they know the answer is "no", will simply keep quiet, not inform the German authority, and continue to benefit from Kindergeld and Kinderfreibetrag.

Once there are rules people simply play to their advantage, honest or not.

 

I think when it comes to Kindergeld, or Kinderfreibetrag, nationalities do not matter, neither parents nor children.

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1 hour ago, scook17 said:

I see in Germany that parents of children over 18 and in full time education can claim kindergeld. What if that child (a german citizen) is at university in a non EU country, such as the UK or USA. Can child benefit (kindergeld) in Germany still be claimed if both parents are living in Germany. If not, perhaps then Kinderfreibetrag?

UK maybe, since parts of the EU social security agreements continue being applied for a few years after Brexit.

USA no, since the social security agreement between Germany and the USA doesn't foresee it. Though you may get it through for the 1st year of studying, see this article written by a lawyer: https://www-pss--rechtsanwaelte-de.translate.goog/2021/02/kindergeld-bei-auslandsstudium/?_x_tr_sl=auto&_x_tr_tl=en&_x_tr_hl=en-US&_x_tr_pto=wapp

 

For details of which countries your child could go to study in and you would still get Kindergeld (or the Kinderfreibetrag, if you're a high earner) until that child finishes university or reaches age 25 (whichever happens soonest), please see here: 

 

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1 hour ago, Gambatte said:

I guess many parents in such a situation, if in doubt, or if they know the answer is "no", will simply keep quiet, not inform the German authority, and continue to benefit from Kindergeld and Kinderfreibetrag.

Once there are rules people simply play to their advantage, honest or not.

Since to still get Kindergeld (or the Kinderfreibetrag if you're a high earner) for any child over 18, you have to actively fill into Anlage Kind of the income tax return that that child is still being educated (and the Finanzamt often asks you to back up this claim by asking you to provide the child's Immatrikulationsbestätigung = confirmation of enrolment in university):

  • 6263f742a5e4c_2022-04-2314_53_48-Kind000

and also the address where that child is living, if the child no longer lives at home:

  • 6263f74eb261c_2022-04-2314_54_13-Kind000

that person could not claim to "have made a mistake" when filling in the tax return, that person would need to actively lie in the tax return.

--> that person would be charged with tax evasion, which is a crime in Germany, see §370 AO (in English): https://www.gesetze-im-internet.de/englisch_ao/englisch_ao.html#p2615

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7 minutes ago, PandaMunich said:

and also the address where that child is living, if the child no longer lives at home:

Question 61 asks for dates when the child is abroad. Typically UK term time is Sept-Dec, Jan-March and May-June, which is three dates not two.

So I see at least in year one, they are mostly in Germany as courses start in September and the German tax year finishes in December.

However, what about year 2 onwards. They are perhaps resident for 3 months. Do parents therefore get some percentage of kindergeld, or nothing at all?

 

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6 hours ago, scook17 said:

Question 61 asks for dates when the child is abroad. Typically UK term time is Sept-Dec, Jan-March and May-June, which is three dates not two.

So I see at least in year one, they are mostly in Germany as courses start in September and the German tax year finishes in December.

However, what about year 2 onwards. They are perhaps resident for 3 months. Do parents therefore get some percentage of kindergeld, or nothing at all?

 

Kindergeld

Kindergeld paid out according to the EStG = German income tax law (as opposed to the social security agreement exceptions), is governed by section X of EStG, which §62 EStG to §78 EStG: https://www.gesetze-im-internet.de/estg/BJNR010050934.html#BJNR010050934BJNG023403140

In §63 EStG, they define for which children Kindergeld is not paid out: 

  • 6Kinder, die weder einen Wohnsitz noch ihren gewöhnlichen Aufenthalt im Inland, in einem Mitgliedstaat der Europäischen Union oder in einem Staat, auf den das Abkommen über den Europäischen Wirtschaftsraum Anwendung findet, haben, werden nicht berücksichtigt
  • 6Children who have neither a domicile nor their habitual residence in Germany, in a member state of the European Union or in a state to which the Agreement on the European Economic Area applies are not taken into account

The only thing I can see your child who is attending a UK university as having in Germany is a Wohnsitz (domicile), which is defined in §8 AO as:

  • Einen Wohnsitz hat jemand dort, wo er eine Wohnung unter Umständen innehat, die darauf schließen lassen, dass er die Wohnung beibehalten und benutzen wird.
  • A person has a domicile where he or she occupies a dwelling in circumstances which indicate that he or she will maintain and use the dwelling.

Since people who have a Wohnsitz in Germany have unlimited tax liability here (see §1 (1) Satz 1 EStG), the Finanzamt usually sees a Wohnsitz in Germany very easily: You have a room in Germany that is permanently available to you? --> done deal, you have a Wohnsitz in Germany. Now please pay tax to Germany!

 

Of course, the question is whether the Finanzamt will be as eager to see your child having a Wohnsitz in Germany when they have nothing to gain, but rather to lose, namely the Kindergeld.

In my experience, as soon as you want to have a Wohnsitz in Germany, because it is in your interest, e.g. to get the tax-free allowance, the Finanzamt suddenly argues that you do not have a Wohnsitz, by citing the AEAO: https://datenbank.nwb.de/Dokument/500001_8/

 

In your case, the relevant section of the AEAO is Nr. 6.2.7 in "Auslandsaufenthalt eines Kindes":

  • 6.2.7 Kinder, die sich länger als ein Jahr ins Ausland begeben, behalten ihren Wohnsitz in der inländischen elterlichen Wohnung nur bei, wenn sie diese in ausbildungsfreien Zeiten zumindest überwiegend nutzen. Eine Aufenthaltsdauer von jährlich fünf Monaten in der Wohnung der Eltern genügt jedenfalls, um einen inländischen Wohnsitz beizubehalten, sie ist aber dafür nicht stets erforderlich (BFH-Urteil vom 28.4.2010, III R 52/09, BStBl II S. 1013). Durch die Eltern-Kind-Beziehung begründete Besuche – d. h. kurzzeitige Besuche und sonstige Aufenthalte zu Urlaubs- oder familiären Zwecken, die keinem Aufenthalt mit Wohncharakter gleichkommen und daher nicht „zwischenzeitliches Wohnen“ in der elterlichen Wohnung bedeuten – reichen nicht aus, um den inländischen Wohnsitz des Kindes beizubehalten oder einen solchen zu begründen. Keinen Wohncharakter haben nach der Lebenserfahrung kurzzeitige Aufenthalte von zwei bis drei Wochen im Jahr (BFH-Urteil vom 25.9.2014, III R 10/14, BStBl 2015 II S. 655).
  • 6.2.7 Children who go abroad for more than one year only maintain their domicile in the domestic parental home if they use it at least predominantly during periods when they are not undergoing training. A period of residence of five months per year in the parents' home is sufficient in any case to maintain a domicile, but it is not always necessary (BFH ruling of 28 April 2010, III R 52/09, BStBl II p. 1013). Visits justified by the parent-child relationship - i.e. short-term visits and other stays for holiday or family purposes that are not equivalent to a stay with residential character and therefore do not mean "interim living" in the parental home - are not sufficient to maintain the child's domicile or to establish such a domicile. According to life experience, short-term stays of two to three weeks per year do not have residential character (BFH ruling of 25.9.2014, III R 10/14, BStBl 2015 II p. 655).

--> if your child's term holidays are at least 5 months per year and he/she spends them in Germany, you should be "safe".

But expect to be made to prove these German stints through plane tickets.

 

But from what you write, you only expect your child to be in Germany for 3 months a year.

--> child doesn't have a Wohnsitz in Germany.

--> no Kindergeld.

 

*************************************************************************************************************

 

Kinderfreibetrag

The Kinderfreibetrag is given to you even if the child studies outside one of the "eligible" countries, i.e. also if the child studies in the UK or in the US.

The reason for this is that the Kinderfreibetrag is governed by a different section of German income tax law, §32 EStG. And nowhere in §32 EStG does it say something about the child needing to live in the EU or EEA :)

The Kinderfreibetrag is is 8,338€ per child for a married couple in 2021.

If the child lives in a country with a lower cost of living, only 75%, or 50% or 25% of that amount are considered, according to the Ländergruppeneinteilung.

 

You can only get one or the other, if you opt for the Kinderfreibetrag, you have to repay the Kindergeld you received for that child.

Which will not be a problem, since your child will anyway no longer have a domicile in Germany, i.e. you will anyway not get any Kindergeld for that child as soon as he/she moves to the UK to study, so there will be nothing to repay.

You will just have the tax advantage through the Kinderfreibetrag.

 

In the year in which the first uni term falls, you will have still received Kindergeld, until the child moves away to study.

You will lose the Kindergeld claim immediately, as soon as your child moves to the UK to study, see no. 12 in the BFH ruling of 28 April 2010, III R 52/09, BStBl II p. 1013

So for that year, in your tax return, the Finanzamt compares your tax burden between the two following cases:

  • tax on your taxable_income (which is roughly: gross salary + freelance profit + rental profit + other income - social security contributions)
  • tax on taxable_income - Kinderfreibetrag

If the tax saving through the application of the Kinderfreibetrag is more than what was paid out in Kindergeld during that year, the Finanzamt gives you the difference between that tax saving and the Kindergeld (you can think of it like that: the Finanzamt with one hand gives you the tax saving caused by Kinderfreibetrag, but with the other hand makes you repay the Kindergeld you had previously received). 

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