CJEU – Recent Developments in Direct Taxation 2022

1. Introduction

The Austrian case discussed in this chapter challenged Austrian legislation introduced in 2018 that increased or decreased the amounts of family allowance payments and family tax credits granted to parents resident in Austria with children living in another EU or EEC Member State or Switzerland. The adjustments were based on the difference between the costs of living in Austria and the country of residence of the children. The indexation of family allowance payments also affected non-residents with children living abroad.

S. 42Although at face value the mechanism was applicable irrespective of the parents’ nationality, its introduction had been accompanied by a heated political and scientific discussion regarding the legality and fairness of such an instrument. It was presumed that the measure would mostly affect non-nationals, and negatively at that. Additionally criticised was that downward adjustments of Austrian family allowance payments disproportionately affect low income households for whom the benefits make up a considerable part of the family budget.

The concept of adjusting family benefits based on the costs of living in a child’s country of residence first gained...