Adjustment of family benefits to foreign price level contrary to EU law

The indexation affects the family allowance, the child deduction, the family bonus plus, the sole earner or single parent deduction and the maintenance deduction. An adjustment to higher as well as to lower living costs in the child's country of residence is possible. France, Norway and Switzerland, for example, have a higher index factor, while Germany, Italy, Hungary and the Czech Republic have a lower one. The indexation applies to benefit receipt between Jan. 1, 2019, and June 30, 2022.

Infringement proceedings against Austria

Whether the indexation is EU-compliant was disputed from the beginning. As a result of infringement proceedings brought against Austria by the European Commission, the ECJ has now ruled as follows:
The family allowance and the child deduction constitute family benefits within the meaning of a regulation. This regulation stipulates, among other things, that cash benefits may generally not be reduced on the basis of the fact that the beneficiaries or their family members reside in a country other than the country of residence of the institution liable for payment. Furthermore, with regard to family benefits, it is explicitly stated that family members who reside outside the competent Member State are to be treated "as if" they "resided in that Member State".

Furthermore, according to the ECJ, the restriction of family-related benefits with regard to children residing abroad constitutes indirect discrimination on the basis of nationality, for which there is no objective justification.
With the amendment to the Family Burden Equalization Act and the Income Tax Act passed by Parliament, the indexation provisions have already been repealed. Furthermore, a legal basis was created for back payments of family allowances for the group of persons affected by the indexation "downward". In addition, Parliament decided that the "upwardly" indexed additional amounts of family allowances compared to the Austrian amounts do not have to be repaid. From the entitlement month of July 2022, all beneficiaries will receive the regular amounts of family benefits.