From July 1st, the amount of ‘Kindergeld' - or child support payments - went up by €10 per month.
For the first and second child, parents will receive €204 a month, up from the previous €194.
For the third child, parents will receive €210, up from €200. And for the fourth and each additional child, parents will get €235, up from €225. Starting in January 2021, this amount will go up by a further €15.
The move is part of the Family Relief Act (Familienentlastungsgesetz), which aims to take the financial burden off middle and lower class families. It’s part of an overall package which is slated to cost the federal government €9.8 billion during 2019 and 2020.
Who qualifies for Kindergeld?
The obvious answer might seem like parents with underage children living at home, but it’s not that clear-cut.
Normally it applies to parents who are paying into Germany’s social system and who have children under 18. Usually one parent receives the payment, yet if their children are still studying or taking part in an Ausbildung (training), the payments can last until their 25th birthday.
If a child is living outside of the home, then Kindergeld can be paid to them directly - but only if they don’t receive additional support from their parents.
The payments don’t just apply to biological children, but also step-children, grandchildren and foster children who are living in the home of their parents or care-givers.
Kindergeld recipients also don’t have to be living in Germany to qualify. Children of parents living in Germany can receive Kindergeld if they live in another EU country, Norway, Lichtenstein, or Switzerland.
For example, if the son of Polish parents in Berlin studies back in Poland, he could qualify for the same amount he would receive if living in Germany.
The Familienkasse of the Germany's work agency (Bundesagentur für Arbeit) is responsible for making the payments. Anyone who would like to apply for Kindergeld can do so through the Familienkassen's official website.
Children's allowances also on the rise
In addition to the increase in child benefit payments, the federal government is increasing the tax-free child allowances (Kinderfreibetrag), or the amount deducted from taxable salary.
As early as January 1st, 2019, the amount rose by €192 from €7428 to €7620. As of January 1st, 2020, the child allowance will climb again by €192 to €7812.
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Just who receives payments abroad?
According to the Familienkasse, 316,267 children recipients of Kindergeld in June were not living in Germany at the time. The largest group of them are children of Polish citizens with 131,448 children. They are followed by children of Germans (36,813), Romanians (28,572), Czechs (25,177) and Croats (23,982).
Although 308,504 children do not live in Germany, they still live in the EU: 3810 live in former Yugoslavia, and 2976 in other countries. Of these, 2568 are German citizens, and only 425 are foreigners.
The number of children living abroad has almost doubled since 2014. The Croats count the largest numbers: 756 per cent, followed by Bulgarians (+278 percent), Czechs (+250 percent) and Romanians (+240 percent).
The controversy behind Kindergeld abroad
In 2018, a total of €536 million went into payments for children or their parents living abroad, according to an parliamentary inquiry called for by the right-wing Alternative for Germany (AfD).
Yet the numbers aren’t always what they seem. As FOCUS Online reported, several foreigners living in Germany and receiving Kindergeld have that amount paid into a bank account in their home country so that it can be utilized by family there.
The statistics also don’t factor in, for example, a parent who receives Kindergeld to a German bank account but then transfers the payment abroad.
As a result, the AfD is pushing for Germany to follow Austria’s more conservative lead. The government there reformed their Kindergeld system according to nationality: that means that a Romanian parent working in Salzburg, for example, would receive less support if their child still lives in Romania.
Former Finance Minister Wolfgang Schäuble also attempted in 2017 to change the law so that children abroad would receive benefits at the level set in their home country. But the EU Commission rejected the proposal, according to Die Zeit.
€94 Kindergeld for Bulgarian children and €218 for Dutch children?
Despite all the confusion of figures, what would happen if Germany were to adjust Kindergeld for children living abroad to the Austrian model? Since it is difficult to answer this question for all foreign countries, we have concentrated on the top 10.
Based on the lower EU price levels published by Eurostat for 2017, children living in Poland would then receive only €109 instead of €204, reported FOCUS. Of the top 10, the children living in Bulgaria would be hardest hit and their child benefit would fall to €94.
But for citizens of other countries, Germany would have to pay even more: Children living in France would then receive €211, while those living in the Netherlands would get as much as €218 per month
There is not much that could be saved with such a reform. Only two percent of the qualifying children live abroad, with 98 percent in Germany. And only 1.1 percent of Kindergeld is paid into foreign accounts, with 98.9 percent going into domestic accounts.