When and how can I transfer the BEA allowance?

With an amendment to Section 32 (6) sentence 6 of the Income Tax Act (EStG) from 2021, it has been stipulated that the transfer of the child allowance always also leads to the transfer of the allowance for care, upbringing, or education needs (BEA allowance).

If you are separated from your partner, you can have their allowance transferred to you, or it will already be transferred by law.

However: Although the transfer of the child allowance through a legal fiction (Section 32 (6) sentence 6 EStG) always also leads to the transfer of the BEA allowance, the possibility of objection remains - but only for minor children.

The transfer of the BEA allowance must be made in the "Form Kind". The transfer is not possible if the child is registered at the homes of both parents. The parent liable for cash maintenance, with whom the child is not registered, can object to the transfer of the BEA allowance for minor children if they bear childcare costs or regularly care for the child to a significant extent. If one parent does not sufficiently meet their maintenance obligations (at least 75 percent), the other parent can have the child allowance transferred to them. This also involves the transfer of the BEA allowance.

The parents of Hans (12 years old) are separated. Hans is registered with his mother for the whole year.

Case 1: The father fulfils less than 75 percent of his maintenance obligation. The mother can have the child allowance transferred to her in this case. The BEA allowance is automatically transferred to the mother as well.

Case 2: The father fulfils his maintenance obligation. In this case, the mother can have the BEA allowance transferred to her, but not the child allowance.

(2023): When and how can I transfer the BEA allowance?

How can the child allowance for a grandchild or stepchild be transferred?

If the grandparents or stepparents have taken the child in, the child allowance can be transferred to them. The BEA allowance (allowance for care, education, or training needs) is automatically transferred to the grandparents or stepparents as well.

Since 2012, it has also been possible to transfer the allowances under certain circumstances if the child does not live with the grandparents. This applies if they have a maintenance obligation towards their grandchildren because the parents are without means.

For the transfer of the allowance, the consent of one parent or, in the case of jointly assessed parents, both partners is required. This consent is given in Form K of the tax return. Consent can be revoked at any time, but not for past calendar years.

(2023): How can the child allowance for a grandchild or stepchild be transferred?

Is it possible to transfer the child allowance / BEA allowance to another person?

In certain cases, you can transfer your half of the child allowance and the half allowance for care, education, or training needs (BEA allowance) to the other parent. This is possible if you are not married, permanently separated, or divorced. However, a mutual agreement is not sufficient.

You, as the custodial parent, can apply for the transfer of the child allowance if the parent obliged to pay maintenance does not fulfil their maintenance obligation to at least 75 per cent. In this case, you will receive not only the full child allowance but also the full BEA allowance automatically. Since 2012, the allowance can also be transferred if the other parent is not obliged to pay maintenance due to lack of financial capacity. If you are forced to support the child alone, you are also entitled to the full child and BEA allowance.

Maintenance obligations are not only monetary. If the child lives with the respective parent, they are already fulfilling their maintenance obligation.

Regardless of the maintenance issue, the child allowance can also be transferred if one parent lives permanently abroad or if their residence is unknown.

The BEA allowance can also be transferred. However, due to a Federal Fiscal Court ruling and a subsequent change in the law, the transfer of the BEA allowance has become very complex.

The previous administrative practice was that for both minor and adult children, the BEA allowance followed the transfer of the child allowance. The practical case was often as follows:

The child lives with parent Anna; parent Bruno does not pay maintenance and does not particularly care for the child. Parent Anna is therefore entitled to both allowances in full upon application.

However, the Federal Fiscal Court ruled that the BEA allowance to which parent Bruno is entitled in principle - after the child reaches adulthood - cannot be transferred to Anna even in the event of a breach of maintenance obligations. This means that the single parent is denied half of the BEA allowance for the adult child, even though they bear the child's maintenance costs alone (BFH rulings of 22.4.2020, III R 61/18 and III R 25/19). This seems unfair, and the legislator has responded: With an amendment to § 32 paragraph 6 sentence 6 EStG, it has been stipulated that the transfer of the child allowance always also leads to the transfer of the BEA allowance - but only from 2021 onwards.

Up to this point, it is already quite complicated. But it gets even more complicated! Because the legislator has not changed sentence 9 of § 32 para. 6 EStG, which states: "A transfer .... is excluded if the transfer is objected to because the parent with whom the child is not registered bears childcare costs or regularly cares for the child to a significant extent."

This means that although the transfer of the child allowance by legal fiction (§ 32 para. 6 sentence 6 EStG) always also leads to the transfer of the BEA allowance, the possibility of objection for minor children remains. But which case is affected by this?

A minor child lives with the mother. The father fulfils his maintenance obligation, so the mother cannot have half of the child allowance transferred. However, the mother believes that the father does not care for the child and applies for the transfer of the BEA allowance.

The father can object if he proves that he also bears childcare costs or cares for the child to a significant extent. In this case, the child allowance and BEA allowance remain equally shared between both parents. This transfer and the corresponding right of objection only apply to minor children.

The question is when care is provided "to a significant extent". The law does not further explain the criterion of regular care "to a significant extent". However, the Federal Fiscal Court has clarified what is meant by care "to a significant extent":

• This is the case if the time spent caring for the child by the parent obliged to pay maintenance amounts to an average of 10% per year, with other indicators in this case regularly being negligible (BFH ruling of 8.11.2017, III R 2/16).

• According to the Federal Fiscal Court, the extent of care requires an overall assessment taking into account all objective circumstances of the individual case. The assessment may depend on a variety of factors that naturally vary in weight depending on the circumstances of the case. These include, in particular, the frequency and length of contact between the objecting parent and the child, which are themselves influenced by the child's age and the distance between the parents' residences. For reasons of simplification, the Federal Fiscal Court arrives at the aforementioned limit of 10% for the time spent caring for the child.

If the child lives with grandparents or a stepparent, the child allowance and BEA allowance can also be transferred to them. This requires the application of one parent. This transfer can be revoked at any time with regard to future years. Parents who are jointly assessed may only transfer allowances to the grandparents together. In this case, please enclose the "Form K" with your tax return.

(2023): Is it possible to transfer the child allowance / BEA allowance to another person?

What impact does my child's stay abroad have on the child allowance?

The child allowance and the BEA allowance (allowance for care, education or training needs) are both independent of your child's place of residence. However, you as a parent must be fully liable to income tax in Germany.

However, the place of residence of the child is decisive for the amount of the child allowance, as the allowance is reduced by one, two or three quarters depending on the country. To assess the local cost of living, the Federal Ministry of Finance issues a country group classification.

The country group classification is relevant whenever children are abroad and affects 

• the child allowance,
• the BEA allowance (for care, education and training),
• the amount of the training allowance,
• the calculation of childcare costs.

Short-term stays abroad, such as holidays, do not lead to a reduction. This also applies to temporary stays, such as for vocational training.

Note: You are also entitled to child benefit for children living in an EU or EEA country, unless benefits comparable to German child benefit are already being paid abroad. Double funding is to be excluded. The prerequisite is that the child is fundamentally to be taken into account, i.e. is of compulsory school age or, for example, is studying and has not yet reached the age of 25.

If the child is staying outside the EU or EEA for training purposes, another important condition applies: To receive child benefit, the place of residence or at least the usual place of residence must (continue to) be in Germany. In simple terms: if a child lives permanently in a third country outside the EU and EEA, such as the USA, there is no entitlement to child benefit in Germany. Child benefit is only paid if the child stays in Germany at least temporarily and actually maintains their residence in Germany.

Currently, the Federal Fiscal Court has ruled as follows: If a minor child who initially lived in Germany stays outside the EU and EEA for more than a year for training purposes, they retain their residence in Germany in the home of one or both parents only if,

• they have rooms in this home suitable for permanent living,
• they can use them at any time, and
• they actually use them with a certain regularity.

In general, the residence in Germany is only maintained if the child actually uses this home for at least the majority of the training-free periods, i.e. school or semester holidays (BFH ruling of 28.4.2022, III R 12/20). In the case in question, a child lived for more than a year in a third country with their grandparents to learn Arabic at school. The BFH did not make a final decision but referred the case back to the lower court. The lower court must now make findings on the existence of a residence in Germany, as the investigation of the facts was incomplete.

For the retention of a residence in Germany at the parents' home during multi-year stays abroad, only short visits, usually based on the parent-child relationship, are regularly not sufficient. A lack of financial means for the child's home visits cannot compensate for the lack of significant stays in Germany during the training-free periods (BFH ruling of 25.9.2014, III R 10/14). The BFH judges do point out that all circumstances of the individual case must be considered when determining whether the residence in Germany has been maintained. However, in the end, it will be important whether the child travelled home during the holidays and spent the holidays mostly with the parents. Parents should definitely take precautions with their child to provide evidence, such as keeping train and flight tickets, making copies of the passport, presenting study plans, etc.

The Federal Fiscal Court has recently ruled that a child does not give up their residence at the parents' home if the study abroad - for example in Australia or the USA - is initially planned for only one year. The child benefit entitlement therefore remains. In the case of a multi-year stay abroad, a child usually retains their residence in Germany at the parents' home only if they spend the majority of the training-free periods in Germany and the stays in Germany allow conclusions to be drawn about interim living (BFH ruling of 21.6.2023, III R 11/21).

If a stay abroad was initially planned for only one year, but the child decides to extend the stay, the criteria for a multi-year stay abroad apply (only) from the point at which the child decides to extend. The absence of stays in Germany during the first year does not result in the loss of residence. In the first year, child benefit is therefore retained. From the decision to stay abroad for more than one year for training purposes, the child usually retains their residence in Germany only if they regularly spend more than half of the training-free period in Germany and use the German home - apart from short interruptions. This also applies if the child decides from year to year to extend their stay abroad by one year at a time.

When determining whether the training-free period was mostly spent in Germany, a purely factual (objective) assessment is required. If travel was not possible due to lack of funds or due to travel restrictions related to the coronavirus, this may be detrimental to the child benefit entitlement. This is at least the view of the Bremen Finance Court in its ruling of 7.3.2023 (2 K 27/21 (1)).

For the sake of good order, it should be noted that there are special features regarding child benefit in connection with countries with which a social security agreement exists (e.g. Turkey).

(2023): What impact does my child's stay abroad have on the child allowance?

What is the child allowance?

Child benefit and child allowance are tax reliefs for expenses incurred by parents due to their children. The entitlement to child benefit exists automatically from birth but must be applied for in writing. It is not the children who are entitled to the child benefit, but the parents or guardians responsible for the child's welfare.

Child Benefit
Child benefit is a monthly payment that parents usually receive from the family benefits office. Child benefit is not taxable. The amount of child benefit depends on the number of children.

Child Allowance
In contrast to child benefit, the child allowance is not paid out. The allowance is deducted from the taxable income, thus reducing the income tax. The child benefit already paid monthly is an advance payment on the child allowance. In 2023, the child allowance is 6.024 Euro for jointly assessed parents, otherwise 3.012 Euro per parent. The BEA allowance (for care, education, and training needs) is 2.928 Euro.

Child benefit and child allowance are linked. The tax office automatically determines which is more favourable for the taxpayer at the end of a tax year through a favourable assessment.

Entitlement to Child Allowance or Child Benefit
Parents are entitled to the child allowance from the birth of the child until the

• 18th birthday.
• 25th birthday if the child is still in education or training or doing voluntary service.

If the child is disabled and unable to support themselves, the entitlement to child benefit or child allowance is unlimited.

(2023): What is the child allowance?