Child Benefits when Child Moves to other Parent

When parents live separated and the child moves to the other parent. Who is entitled to the child benefits? The parent entitled to custody or the one with whom the child is living? The Federal Tax Court decided this question with its judgment of June 25, 2009 (re III R 2/07).


Mommy and Daddy were once married. After time passed, a daughter was born to the then married parents; they later got divorced. As their daughter turned 15 (and adolescently crazy), she moved to her father who does not have legal custody. Greedy Mom really got furious as the Social Services stopped paying her child benefit and even more when she noticed that Daddy was being paid. In a fit of rage, she sought legal recourse and got a real put down.

§64 II 1 EStG determines that when more than one person is entitled to this benefit, the person, in whose household the child is, will receive the benefit. This is typically the case when parents do not live together - just as in this report. Mom argued; because of having the right of sole legal custody of the child, and she expressly countermanded the move, the father is illegally caring for the joint child - comparable to a child abduction. The child's wish does not legitimize her illegal status. The father is not in the position to establish legal custody of the child. Since the child is already 15, neither parent can sue the other for custody.

The court held that when a child of parents living separated by its own decision moves from one parent to the other, it is generally to be assumed that the parent having the child is entitled to these benefits because the child is in this parent's household. A child has been integrated into the household of a parent, when the child is being taken care of there. Formalities, like official registration, or court assigned custody have only supplementary character. This remains true even when this parent is not entitled to custody. However, when the child only switches between parents like a ping pong ball, then the benefits remain with the parent to whom custody is entitled. It is required that the child live at the new parents place at least three months, then it will be assumed that this move is final. The same is applicable for short-terms visits like on holidays or vacations. The rules for the case of a child abduction are not applicable in this scenario because when an adolescent child decides to move to another parent, there is generally no grounds for an abduction.


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