Action brought on 22 July 2020 — European Commission v Republic of Austria

(Case C-328/20)

(2020/C 297/48)

Language of the case: German

Parties

Applicant: European Commission (represented by: D. Martin and B.-R. Killmann, acting as Agents)

Defendant: Republic of Austria

Form of order sought

The applicant claims that the Court should:

— declare that, by introducing an adjustment mechanism in relation to the family allowance and the child tax credit for workers whose children reside permanently in another Member State, the Republic of Austria has failed to fulfil its obligations under Article 7 and Article 67 of Regulation (EC) No 883/2004 (1) and under Article 4 of Regulation No 883/2004 and Article 7(2) of Regulation (EU) No 492/2011; (2)

— declare that, by introducing an adjustment mechanism in relation to the Familienbonus Plus (‘Family Bonus Plus’ tax credit), the sole earner’s allowance, the single parent’s allowance and the tax credit for maintenance payments, for migrant workers whose children reside permanently in another Member State, the Republic of Austria has also failed to fulfil its obligations under Article 7(2) of Regulation No 492/2011;

— order the Republic of Austria to pay the costs.

Pleas in law and main arguments

Austria grants to persons who work in Austria, for their children, in the form of single lump sums, the family benefit and social advantage of the family allowance and the child tax credit as well as the tax advantage of the Family Bonus Plus, the sole earner’s allowance, the single parent’s allowance and the tax credit for maintenance payments. Since 1 January 2019, Austrian rules have provided that those State benefits are to be adjusted in line with the general price level of the child’s Member State of residence.

First plea in law:

The Commission submits that the family allowance and the child tax credit are a family benefit within the meaning of Regulation No 883/2004. Article 7 and Article 67 of that regulation prohibit a Member State from making the granting and the amount of family benefits dependent on the residence of the members of the worker’s family in the Member State providing the benefits. However, by introducing the adjustment, Austria is making its treatment of family benefits for children dependent on the children’s Member State of residence. In doing so, Austria is infringing Article 7 and Article 67 of Regulation No 883/2004.

Second plea in law:

The Commission also submits that the adjustment, as introduced by Austria, places beneficiaries whose children reside in Member States with a higher price level in a better position than persons whose children reside in Austria, whereas persons whose children reside in Member States with a low price level are treated less favourably. When it introduced the adjustment, Austria, however, expected savings in its national budget, which can only mean that there are more recipients of such benefits and advantages whose children reside in Member States with a lower price level than in Austria.

By introducing the adjustment mechanism, Austria has therefore effectively established indirect discrimination against migrant workers. There is clearly no legitimate aim justifying that discrimination. Austria is therefore infringing, in relation to the family allowance and the child tax credit, the requirement of equal treatment as set out in Article 4 of Regulation No 883/2004 and in Article 7(2) of Regulation No 492/2011, and, in relation to the Family Bonus Plus, the sole earner’s allowance, the single parent’s allowance and the tax credit for maintenance payments, the requirement of equal treatment under Article 7(2) of Regulation No 492/2011.

(1) Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems (OJ 2004 L 166, p. 1).

(2) Regulation (EU) No 492/2011 of the European Parliament and of the Council of 5 April 2011 on freedom of movement for workers within the Union (OJ 2011 L 141, p. 1).