INDEXING AUSTRIA

On Thursday, the European Court of Justice (ECJ) will announce the ruling on the indexation of family allowances introduced under the turquoise-blue government in Austria. The family allowance was linked to the place of residence of the children, which led to losses, especially for caregivers from Eastern Europe. The EU Commission considered the indexation to be discriminatory and filed a lawsuit in May 2020.

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ECJ ruling on family allowance expected

On Thursday, the European Court of Justice (ECJ) will announce the ruling on the indexation of family allowances introduced under the turquoise-blue government in Austria. The family allowance was linked to the place of residence of the children, which led to losses, especially for caregivers from Eastern Europe. The EU Commission considered the indexation to be discriminatory and filed a lawsuit in May 2020.

In January, an ECJ opinion declared the indexing of family allowances to be inadmissible. The indexing was a prestige project of the ÖVP-FPÖ government of the then Chancellor Sebastian Kurz and the then Family Minister Juliane Bogner-Strauß (both ÖVP). Family benefits and child tax credits for EU citizens working in Austria have been adjusted to the cost of living in the country where the children live.

The ÖVP-FPÖ coalition wanted to save 114 million euros a year – a goal that was obviously missed: According to the responses to inquiries, the state paid 62 million euros less in 2019, 87 million in 2020 and 141 million in 2021 compared to 2018.

Controversial from the start

While you get more through indexing for children who live in Switzerland, Great Britain or Ireland, for example, children in Romania do not even get half of what is paid for a child in Austria. Children in Bulgaria receive even less. The indexation of family allowances was controversial from the start. When the law was passed in Austria, the argument was that the cost of living depends on where you live. It is therefore unfair if the same amount is paid out everywhere.

Both the neighboring countries and European law experts considered the request to be incompatible with European law even before the decision was taken. The EU Commission said that the indexing of family allowances was not only illegal, but also discriminatory. It does not apply to Austrian citizens who work for Austrian authorities abroad and whose children live with them there – “although their situation is comparable”. The EU authority filed a complaint with the ECJ.

ECJ Advocate General: Indexing inadmissible

The ECJ Advocate General Richard de la Tour has already declared indexing to be inadmissible. You violate EU law. According to the Opinion published in January, workers from other EU countries should be able to receive the same benefits and tax benefits in Austria as Austrian workers, regardless of where their children live.

After all, those affected would contribute to the financing of the Austrian social and tax system in the same way as Austrian employees, argued de la Tour. Determining the amount of family benefits based on the place of residence constitutes a violation of the right to freedom of movement.

Family Ministry: Are prepared

Although these opinions are of no consequence for states and non-binding for ECJ judges, the judges mostly stick to them. Should that also be the case on Thursday, Austria could have to make additional payments. The Family Ministry said it was “prepared for any possible legal consequences of the Court’s judgment”. According to a parliamentary response in May, Family Minister Susanne Raab (ÖVP) has already made provisions of 220 million euros for possible repayments.

red, ORF.at/ agencies

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