More and more young adults want to study internationally. Countries such as the USA, the United Kingdom and Australia (non-EU countries) are quite popular. This raises the question for parents of whether child benefit will continue to be paid. The requirements for this are explained below on the basis of a recent BFH ruling.
The case in dispute
The claimant's daughter began a course of study in Australia in year 01 and obtained the corresponding degree in year 04. Until graduation, the daughter visited her parents' home only twice. The first visit took place in the second year of study and lasted a total of 60 days during the period free of studies. The second visit to the parental residence then took place between December of year 03 and January of year 04 for a total of 14 days. The matter in dispute with the family benefits office (Familienkasse) was for which months the mother could receive child benefit for her daughter studying abroad. The Familienkasse took the view that the daughter's domestic residence had already ceased at the start of her studies abroad and that, consequently, no entitlement to child benefit existed for the entire period of study.
Background: When is entitlement to child benefit lost in the case of studies abroad?
According to settled case law, a child who lives abroad for educational purposes retains its domestic residence at the parents' home if accommodation suitable for permanent living continues to be available to the child there and the child visits the parental home with a certain regularity. With regard to the question of how frequently the child must visit the parental home in order to establish a domestic residence within the meaning of § 8 AO, a distinction must be drawn between a one-year stay abroad and a multi-year stay abroad for educational purposes.
In the case of a one-year stay abroad for educational purposes, the absence of visits to the parental home does not lead to a relinquishment of the domestic residence (Senate judgment of 28 April 2022 – III R 12/20, BFHE 277, 143, BStBl II 2022, 681, marginal note 20, and of 25 September 2014 – III R 10/14, BFHE 247, 239, BStBl II 2015, 655).
In the case of a multi-year stay abroad for educational purposes, a child only retains its domestic residence in the parental home if it predominantly stays at the parental residence during the periods free of studies (e.g. semester breaks).
If a stay abroad for educational purposes was initially planned for only one year and the child then decides to stay longer, the entitlement to child benefit through the domestic residence in the case of a multi-year stay abroad is only to be examined from the time of that decision onwards.
For the assessment of the domestic residence in the case of a multi-year stay abroad for educational purposes, a period of one training or academic year is generally to be taken as the reference. That is, during that training or academic year, the child must have spent more than half of the time free of studies at the parents' domestic home.
If it is already apparent during the ongoing training period that the child will not spend more than half of the time free of studies at the parental home, this indicates a relinquishment of the domestic residence already at that point in time, and not only at the end of the training or academic year.
BFH ruling (judgment of 21 June 2023, III R 11/21) – Child benefit payment until December of year 03
The BFH contradicted the Familienkasse in its ruling, holding that child benefit must be paid to the mother until December of year 03. It was only in December of year 03 that it became apparent for the first time that the daughter would not spend more than half of the time free of studies at the parental home.
The lack of visits home during the daughter's first academic year is not to be taken into account, since the stay in Australia for educational purposes was initially limited to one year (see background: one-year stay abroad). This means that an examination of whether the daughter, in the course of a multi-year stay abroad for educational purposes, spent more than half of the time free of studies at the parental home is only to be carried out from the second academic year onwards. The daughter visited the parental home during the semester breaks of the second academic year for a total of 60 days, thereby spending more than half of her time free of studies at the parents' domestic home. The daughter's domestic residence therefore only ceased in the third academic year (December of year 03), since her two-week visit to the parental home does not meet the criteria for a multi-year stay abroad for educational purposes. Accordingly, entitlement to payment of child benefit for the claimant's daughter lapses as of January of year 04.
It should be noted in general that a room remained available for the daughter at the parental home at all times.
Frequently asked questions
Frequently asked questions
When does a child studying abroad retain a domestic residence for child benefit purposes?
A child retains a domestic residence at the parents' home if rooms for living are permanently available there and the child visits the parental home with a certain regularity. The decisive provision is § 8 AO. Without these two conditions, the domestic residence — and thus generally the entitlement to child benefit — ceases to exist.
What requirements apply to a one-year study abroad for child benefit (Kindergeld) entitlement?
For a stay abroad for educational purposes that is initially planned for only one year, the absence of return visits home does not result in the loss of the domestic residence. During this period, the child therefore does not need to regularly visit the parental home in order to maintain the residence — and thus the entitlement to Kindergeld.
What visitation rule applies during multi-year studies abroad for child benefit eligibility?
During a multi-year stay abroad, the child must spend the majority of the training-free periods (e.g., semester breaks) — more than half of that time — at the parents' domestic residence. The relevant assessment period is generally one academic or training year. If this threshold is not met, the domestic residence is deemed abandoned.
When does the entitlement to Kindergeld (German child benefit) end if a one-year study abroad turns into a multi-year stay?
If the stay abroad was initially planned for only one year, the domestic residence is assessed under the stricter standards for multi-year stays only from the point at which the decision to extend was made. If it becomes clear during the ongoing academic year that the child will not spend more than half of the study-free periods at home, the domestic residence ceases as of that moment and not only at the end of the academic year.
What did the BFH rule in judgment III R 11/21 of 21 June 2023 regarding child benefit during studies abroad?
The BFH ruled that child benefit must be paid through December of the third year of study. In the first year, the absence of home visits was harmless because the studies were initially planned for only one year. In the second year, a 60-day visit met the predominance criterion. Only in the third year, with a visit of just 14 days, was it established that the daughter would not spend more than half of her vacation time at home, so her domestic residence – and thus the entitlement to child benefit – ceased as of January.