The Bundesfinanzhof has settled how German Familienkassen must compute Differenzkindergeld where a parent works in Switzerland and Swiss family benefits are paid alongside a German Kindergeld claim.
Bundesfinanzhof In its judgment of 9 July 2026Bundesfinanzhof (III R 37/23)Bundesfinanzhof, the III. Senat holds that the Swiss Kinderzulage offsets the German claim at its gross amountBundesfinanzhof, while the Swiss cantonal tax child deduction (Kinderabzug) is left out of the calculation entirelyBundesfinanzhof because it is not a family benefit under Article 1(z) of Regulation (EC) No 883/2004Bundesfinanzhof.
The dispute concerned a German family living in Rheinland-Pfalz whose father has been employed in Switzerland since November 2011, keeping a second residence there and returning to Germany at weekends, while also working as a self-employed lawyer in Germany. For the two older children, the Swiss Ausgleichskasse paid a Kinderzulage of 200 Swiss francs per child per monthBundesfinanzhof for December 2013 to June 2016Bundesfinanzhof, disbursed retroactively on 25 April 2016 for the period up to March 2016Bundesfinanzhof and monthly thereafter. The Familienkasse therefore cancelled the German Kindergeld of 368 euros per monthBundesfinanzhof and demanded repayment of over 8,000 eurosBundesfinanzhof, granting only a small monthly difference.
On coordination, the court confirms that Switzerland is the primarily competent stateBundesfinanzhof: the father's employment-triggered claim outranks the mother's residence-triggered German claim under the priority rules of Article 68(1)(a) of Regulation (EC) No 883/2004Bundesfinanzhof, so Germany owes only the difference under Article 68(2) sentence 2 where the German benefit exceeds the Swiss oneBundesfinanzhof. That priority also holds for January to June 2016Bundesfinanzhof, even though the father worked about one day per month in Germany: at circa 5 percent of total working time, that share falls short of the threshold in Article 14(8) of Regulation (EC) No 987/2009, under which a share of less than 25 percent of working time and/or remuneration in an overall assessment indicates that no substantial part of the activity is pursued in that Member State, so the employer's seat in Switzerland governsBundesfinanzhof.
Two computation rules follow. First, only the Kinderzulage counts against the German claim, at the gross amount Switzerland paysBundesfinanzhof; whether the amount paid is subject to tax is not to be taken into accountBundesfinanzhof, as it is an immaterial collateral detriment. The cantonal Kinderabzug of 10,300 francs per child does not countBundesfinanzhof: it takes effect only where taxable income exists in SwitzerlandBundesfinanzhof and its value depends on the income levelBundesfinanzhof, so following the Court of Justice's Erasmus+ judgment of 16 January 2025 (C-277/23) it is a tax advantage, not a cash benefit compensating family burdensBundesfinanzhof. Second, francs are converted at the rate prevailing on the day the Swiss allowance is actually paidBundesfinanzhof, as the Court of Justice held in Bundesagentur für Arbeit – Familienkasse Baden-Württemberg West of 4 September 2019 (C-473/18) — here 0.91 euros per franc on 25 April 2016Bundesfinanzhof, 0.90 euros for May 2016Bundesfinanzhof and 0.92 euros for June 2016Bundesfinanzhof.
Applied to the two older children, the court fixes monthly Differenzkindergeld of 4 euros for January 2013 to December 2014Bundesfinanzhof, 12 euros for 2015Bundesfinanzhof, 16 euros for January to April 2016Bundesfinanzhof, 20 euros for May 2016Bundesfinanzhof and 12 euros for June 2016Bundesfinanzhof, cutting the repayment to 8,008 eurosBundesfinanzhof. An enrichment defence failsBundesfinanzhof: unlike in social law, spent money does not defeat a tax-law recoveryBundesfinanzhof. The claimant bears the costs of the proceedings throughoutBundesfinanzhof.
Legal basis: § 62 EStG; Articles 1(z), 11, 13 and 68 of Regulation (EC) No 883/2004; Article 14(8) of Regulation (EC) No 987/2009; BFH judgment III R 37/23 of 9 July 2026.
In Kindergeld cases where one parent works in Switzerland, check that the Familienkasse offset the Kinderzulage at its gross amount, left the Kinderabzug out of account, and converted at the payout-day rate.
