Initial vocational training as opposed to a second course of vocational training
In the context of an initial vocational training, it is possible to draw child benefit for a child until their 25th birthday. The initial vocational training has to be completed on a publicly approved training course where a qualification is acquired via an examination. For example, if a bachelor’s degree course is followed by a master’s degree course this is then referred to as initial vocational training that constitutes a whole programme [in German referred to as einheitliche Erstausbildung] (Münster tax court, in its ruling of 22.1.2019, case reference: 12 K 3654/17 Kg). A distinction also needs to be made between employment pursued alongside that and any work-related further training that is undertaken (second course of vocational training).
Recent rulings on study-related issues
Advanced education and training to become a specialist physician
The tax court in Lower Saxony, in its judgement of 17.11.2021 (case reference: 9 K 114/21), had to rule on whether or not it was still possible to draw child benefit for a student, who had already completed her medical studies, during her advanced education and training to become a paediatrician. In the case in question, the claimant’s daughter, after having completed her medical studies, started her advanced education and training, as of 1.1.2021, to become a paediatrician. On the basis of the assessment notice dated 11.3.2021, the child benefit payments were stopped as of April 2021 because, according to the documentation provided, the daughter had finished her university course in March 2021.
The legal action was not successful. While there was a close temporal and material link between the medical studies and the advanced education and training to become a paediatrician, nevertheless, in the opinion of the tax court, the training within the framework of advanced specialist education and training was subordinate to the child’s professional activity. The daughter had taken up her advanced specialist education and training together with 42 hours of work a week for a period of 60 months and was, therefore, tied to one employer for the long term. The remuneration she received for her work as a physician undergoing postgraduate training was, above all, for the work that she performed and not for taking part in the vocational training programme.
Bracketing undergraduate studies and second degrees together
The Federal Fiscal Court (Bundesfinanzhof, BFH), in its uling of 7.4.2022 (case reference: III R 22/21), expressed its view on the conditions for the possibility of bracketing undergraduate studies and second degrees together so that they constitute one whole initial vocational training programme. In principle, adult children who have already completed initial vocational training or an undergraduate course of study may only claim child benefit during a subsequent second course of vocational training if they are not employed for more than 20 hours per week.
Accordingly, there is no longer an entitlement to child benefit if, after a ‘dual course’ of study to become a Diplom-Finanzwirt [graduate in financial economics] the child works for more than 20 hours per week at the local the tax office and, alongside that, pursues a course of law studies in the process. There was indeed a close temporal and material link between the two training courses because the second course of study was taken up directly after the ‘dual course’ of study had finished and there was a content-related proximity between the ‘dual course’ of study and the course of law studies. However, a further condition for bracketing courses of study together so that constitute one whole initial vocational training programme is that the training element during the second training period has to form the child’s main activity and not be subordinate to their gainful employment. This condition appeared, at first, to have been satisfied because the student had invested an equal amount of time into training and employment and the training periods were determined by the non-working periods. Ultimately, the child benefit entitlement was however revoked because the total limit of 20 hours was exceeded.
In summary, it can be said that in the case of children who are employed, in particular, the entitlement to child benefit can be a matter of dispute. While in the case of a second degree it will be necessary to carry out an employment test, however, the extent of the employment would be irrelevant if all the training courses still belong to a single initial vocational training programme. In such a case, the Family Benefits Office (Familienkasse) would continue to pay child benefit irrespective of the number of hours worked per week.
Recommendation: Generally, you first have to differentiate as to whether or not this constitutes one whole initial vocational training programme. Here, it should be ensured that there is a close temporal and material link between the two vocational training courses. Furthermore, the continuing education programme has to constitute the child’s main activity while the employment may only constitute a secondary activity.