How the granting of child benefit is to be assessed following the completion of an initial degree and the commencement of a concurrent second degree is set out below based on the case before the BFH.
Case in dispute: tax official with subsequent law studies
The claimant is the mother of a daughter born in 1999, who successfully completed her dual degree as a Diplom-Finanzwirtin (qualified tax administrator) in August 2020. Following this, the daughter took up a position in the tax administration, which she initially performed full-time (40 hours per week) and, from December 2020, part-time (28 hours per week). At the same time, she began studying law in October 2020. The family benefits office (Familienkasse) refused to grant further child benefit upon completion of the dual degree in August 2020. The reason for this was, on the one hand, that with the qualification as Diplom-Finanzwirtin the daughter had completed a full-fledged stage of training and, on the other hand, that she was subsequently engaged in gainful employment exceeding the statutory threshold of 20 hours per week pursuant to § 32 Abs. 4 S. 2 EStG. Section 32 Abs. 4 S. 2 f. EStG states that, after completing an initial vocational training or course of study, a child is only taken into account if it is not engaged in gainful employment. Gainful employment with regular weekly working hours of up to 20 hours, an apprenticeship-type employment relationship, or a marginal employment relationship within the meaning of §§ 8 and 8a of Book IV of the German Social Code is not detrimental. The fiscal court (FG) dismissed the mother's subsequent action against the decision of the family benefits office, whereupon the claimant lodged an appeal on points of law against the judgment.
BFH ruling (judgment of 7 April 2022, III R 22/21): child benefit in the case of concurrent second training
The BFH agreed with the FG's fundamental decision that no child benefit was to be granted in the present case. In reaching its decision, the BFH first pointed out that, in principle, two stages of training can be combined into a single initial training if several factors are met. First, a single initial training requires a close temporal and substantive connection between the two vocational training programmes. In the BFH's view, the FG had rightly ruled that such a connection existed in the present case. The law studies were taken up only a short time after completion of the dual degree and show a substantive proximity to the preceding stage of training. Furthermore, for a combined initial training, it is relevant whether the practice of the profession takes a back seat to the vocational training. To this end, the temporal relationship between the vocational training and the gainful employment was first examined. No clear conclusion could be drawn here, which is why this criterion is to be classified as neutral. In addition, it is relevant whether the child, through the employment taken up after the first stage of training, is already making use of the qualifications acquired. This criterion was met in the present case, in particular because the daughter was tied to the tax administration on a long-term basis. In the event of an early termination of this activity, the graduate would have to repay her pro-rata tuition fees. This therefore indicates that the practice of the profession was in the foreground. In an overall assessment, the BFH therefore held that the practice of the profession took precedence over the vocational training. In addition, the extent of the gainful employment exceeded the statutory threshold of 20 hours per week pursuant to § 32 Abs. 4 S. 2 EStG.
Frequently asked questions
Frequently asked questions
When does a second course of training still qualify as part of the initial training for child benefit purposes?
Two training phases can be combined into a single initial training if there is a close temporal and substantive connection and gainful employment is secondary to the training itself. The decisive factor is an overall assessment, examining, among other things, the time spent on employment and the use of qualifications already acquired. If the employment is the primary focus, the second phase counts as separate further training.
Which gainful employment is permissible for child benefit purposes after completing the initial vocational training?
Under § 32 Abs. 4 S. 2 f. EStG, a child who has completed initial vocational training is only taken into account if they do not pursue any harmful gainful employment. Permissible are a regular weekly working time of up to 20 hours, an employment relationship that is part of vocational training, or marginal employment under §§ 8, 8a SGB IV. If the 20-hour threshold is exceeded, the entitlement to child benefit ceases.
Why did the BFH rule against a child benefit claim in the case of the Diplom-Finanzwirtin?
The BFH (judgment of 07.04.2022, III R 22/21) held that the subsequent law studies did not constitute the continuation of a single initial training, but rather a second course of education pursued alongside employment. Although there was a close temporal and substantive connection, the professional activity within the tax administration took precedence, particularly due to the long-term commitment to the employer. In addition, the employment exceeded the 20-hour threshold under § 32 Abs. 4 S. 2 EStG.
What role does long-term commitment to the employer play in distinguishing initial from secondary vocational training?
A long-term commitment to the employer, for example through repayment obligations upon early termination of the employment relationship, is an indication that professional activity is the primary focus. This means the qualification acquired in the first training phase is already being used on a permanent basis. This argues against a unified initial training and therefore against entitlement to child benefit.
Which criteria do the Familienkasse and the courts examine regarding the relationship between training and employment?
The review focuses in particular on the time ratio between training hours and working hours, and on whether the child is already using the qualifications acquired in the first stage through the employment. The contractual ties to the employer are also taken into account. If the time criterion remains neutral, the other indicators can be decisive in determining whether the employment takes precedence over the training.