Austrian Case: Indexation of family allowance payments and family tax credits

The chapter summarises and analyses the CJEU’s judgement of 16 June 2022 in the case C-328/20, Commission v Austria. The case 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 European Commission claimed that the indexation of Austrian family tax credits infringed several European law provisions including Art. 4, 7 and 67 of Regulation No. 883/2004 and the requirement of equal treatment with respect to social advantages under Art. 7 para. 2 of Regulation No. 492/2011. The authors find that the Court’s reasoning has confirmed the prevailing opinion in literature, according to which cash payments qualifying as “family benefits” under Regulation No. 883/2004 must not be adjusted downwards based on costs of living in another Member State. However, the decision fails to provide new insight into whether Austrian family allowance payments (or similarly construed payments of other Member States) actually qualify as social law “family benefits” in the sense of Art. 1 (z) of Regulation No. 883/2004 (which was in the end assumed by the Court) or, alternatively, whether they are tax measures outside the scope of Regulation No. 883/2004. Therefore, the decision gives little guidance to Member States that wish to find the dividing line between the two categories in their legislation.