In its decision of April 25, 2024 (Ref.: III R 43/22), the Federal Fiscal Court (BFH) clarified that, as a rule, there is no entitlement to child benefit during the performance of voluntary military service. This decision is based on the tax and social law systematics of granting child benefit and also raises further questions concerning the tax classification of voluntary military service.
Legal framework for entitlement to child benefit
The entitlement to child benefit is regulated in §§ 62 et seq. Income Tax Act (EStG). According to § 63 para. 1 sentence 2 EStG, children who are in training or performing voluntary service can also be eligible for child benefit. However, voluntary military service under § 58b Soldiers Act does not fall under this provision without restriction.
Distinction from other voluntary services
Voluntary services within the meaning of child benefit law include, for example, the Voluntary Social Year (FSJ) or the Voluntary Ecological Year (FÖJ), as explicitly mentioned in § 2 para. 1a Federal Child Benefit Act (BKGG). Recognized federal voluntary services (§ 3 BFDG) can also be taken into account. In contrast, according to the statutory system, voluntary military service is neither training nor a measure that automatically leads to privileged status under child benefit law.
Contents and objectives of voluntary military service
Voluntary military service under § 58b Soldiers Act enables young people to perform military service on a voluntary basis for up to 23 months. Although the service involves a certain amount of training and various further training measures, its primary purpose is national defense. The BFH refers to the lack of qualification of voluntary military service as vocational training within the meaning of § 32 para. 4 sentence 1 no. 2a EStG.
Relation to initial and subsequent training
Against this background, voluntary military service is not considered a phase of initial vocational training, which limits entitlement to child benefit. Rather, the entitlement to child benefit is generally suspended during military service, unless a qualifying training is started immediately afterward or another exceptional situation applies.
Significance of the BFH ruling for practice
With this decision, the previous administrative practice is confirmed, according to which § 32 para. 4 sentence 1 no. 2b EStG does not apply to voluntary military service members. Parental applicants cannot claim child benefit for children over 18 years of age who are exclusively performing voluntary military service. The reasoning of the BFH emphasizes the independent nature of voluntary military service in relation to recognized training phases or other eligible periods in the lives of young adults.
Exceptions and special circumstances
Exceptionally, entitlement to child benefit may exist if, for example, vocational or school training is commenced immediately after voluntary military service and the transitional period does not exceed certain deadlines (§ 32 para. 4 sentence 1 no. 2b EStG). Consideration is also possible for children who are registered as unemployed and available to the labor market. However, for the duration of military service itself, the entitlement is generally denied.
Tax and social law implications
Parents and guardians should note that, in the context of voluntary military service, not only tax but also social security regulations may become relevant. Claims related to family benefits, in particular child benefit, must be interpreted strictly according to statutory provisions and are regularly subject to review by the family benefits offices and tax courts.
Practical consequences for affected groups
The decision of the Federal Fiscal Court may have an impact on the financial planning of families whose adult children perform voluntary military service. Tax implications, for example in connection with the child allowance or the entitlement to the single parent relief amount (§ 24b EStG), must also be considered.
Source reference and ongoing proceedings
The BFH decision (Ref.: III R 43/22) is published on the website of the Federal Fiscal Court as well as in relevant tax law databases. It is legally binding and provides nationwide legal certainty; further pending proceedings on this subject are currently not known.
Subtle transition
For further questions regarding the tax treatment of child benefit entitlements, voluntary services, or related topics, interested readers are welcome to contact the lawyers at MTR Legal with their concerns in confidence.
