EU court rules Austria's indexed child benefit for children abroad unlawful

On 16 June 2022 the Court of Justice of the European Union, the EU's highest court in Luxembourg, ruled in a case brought by the European Commission against Austria. It found that Austria had breached EU law by adjusting certain family benefits to the cost of living in the country where the child lives.

The Austrian government, a coalition of the conservative ÖVP and the right-wing FPÖ, had introduced this indexation from 1 January 2019. Families whose children lived in a lower-cost EU state, such as Romania, Hungary or Poland, received less money than before. Families with children in higher-cost countries received more. Affected benefits included the family allowance and several tax-related child benefits. The change mainly hit workers from central and eastern Europe employed in Austria, for example in care and agriculture.

The judges held that the family allowance counts as a social security benefit under EU coordination rules, which require equal treatment and prohibit cutting it because a child lives in another member state. They ruled the same for the tax advantages, because they would discriminate against migrant workers. The judgment ended Austria's model and became the main legal reference in later debates in Germany and elsewhere on adjusting child benefit for children abroad.