Federal Constitutional Court - Press office -
Press release no. 126/2009 of 3 November 2009
Order of 13 October 2009 – 2 BvL 3/05 –
Adding of child benefit to tax liability according to § 31 sentence 5
and § 36.2 sentence 1 of the Income Tax Act even if it is not set off
against maintenance payments is compatible with the Basic Law
The burdens of parents arising from the maintenance and care for
children are equalised by tax allowances and child benefit. The
provisions which are relevant for the assessment period 2001, the one
under consideration in the present proceedings, are those of the Income
Tax Act in the version of the Financial Advancement for Families Act
(Gesetz zur Familienförderung) of 22 December 1999. Accordingly,
exemption from taxes to the amount of a child’s subsistence level
including the child-raising requirements is effected by the tax
allowances pursuant to § 32.6 of the Income Tax Act
(Einkommensteuergesetz – EStG) or by the child benefit, which is paid on
a monthly basis as a tax rebate. The tax allowances are only deducted
from the income of the taxpayer if the required exemption from taxes is
not effected by the child benefit paid on a monthly basis (examination
of whether financial advancement is more favourable through tax
allowances or through the payment of child benefit). Where the tax
allowances are to be subtracted for tax assessment, the child benefit
paid is added to the income tax that is payable. Parents who are not
assessed jointly are each entitled to half the tax allowance under §
32.6 EStG. Since the child benefit is only paid to one beneficiary –
normally to the parent liable to provide maintenance by caring for the
child (§ 64.1, § 64.2 sentence 1 EStG); this was also the case in the
initial proceedings of the present case – a claim for equalisation under
civil law is equivalent to the drawing of child benefit as regards the
addition for tax purposes (§ 31 sentence 5 EStG). According to the legal
provisions on maintenance which were valid in the assessment period,
half of the child benefit payable for the child had to be set off,
pursuant to § 1612b.1 of the Civil Code (Bürgerliches Gesetzbuch – BGB),
against the maintenance payment if it was not paid to the parent liable
to pay cash maintenance. Pursuant to § 1612b.5 BGB, however, the child
benefit was not set off against the maintenance payment if the person
liable to pay maintenance was unable to pay maintenance to the amount of
135 per cent of the standard amount according to the Standard Amount
Ordinance (Regelbetrag-Verordnung) (so-called shortage case).
In appeal proceedings on points of law lodged against the income tax
assessment of a divorced spouse liable to pay cash maintenance to his
minor children who do not live in his household, the VIII Senate of the
Federal Finance Court (Bundesfinanzhof) considered itself unable to pass
a decision and submitted to the Federal Constitutional Court the
question of whether in shortage cases concerning maintenance, adding
child benefit to the income tax pursuant to § 31 sentence 5 in
conjunction with § 36.2 sentence 1 EStG infringes the Basic Law,
The Second Senate of the Federal Constitutional Court decided that § 31
sentence 5 and § 36.2 sentence 1 EStG are compatible with the Basic Law
also to the extent that taxpayers are affected by the regulation under §
1612b.5 BGB (on the constitutionality of this provision, see the order
of the First Senate of 9 April 2003 – 1 BvL 1/01, 1 BvR 1749/01 –
Decisions of the Federal Constitutional Court (Entscheidungen des
Bundesverfassungsgerichts – BVerfGE) 108, 52 (70); German press release
no. 64/2003 of 5 August 2003). It is compatible with the constitutional
requirement of exempting from taxes the subsistence level of the
taxpayer and of his or her family entitled to maintenance, and with the
general principle of equality, that the income tax which is decreased by
the tax allowances is increased by half the amount of the child benefit
paid also for those taxpayers who are unable to pay maintenance to the
amount of 135 per cent of the standard amount according to the Standard
Amount Ordinance. The decision was reached by seven votes to one.
In essence, the decision is based on the following considerations:
In cases such as the one of the initial proceedings, which are the only
cases under consideration here, the exemption of the child-related
subsistence level from taxes, which is constitutionally required, is
effected by the taxpayer’s income being reduced by the tax allowances
under § 32.6 EStG. Thus, the legislature has opted in favour of a
constitutionally admissible generalising regulation which takes into
account the livelihood-securing minimum expenditure for child
maintenance in the same manner for all taxpayers in the tax assessment
base. To avoid the child’s subsistence level being taken into account
twice, the child benefit paid to the taxpayer on a monthly basis as a
tax rebate (§ 31 sentence 3 EStG) is to be granted back by adding it to
the income tax payable (§ 31.5 EStG).
In compliance with the recognisable will of the legislature, the child
benefit is paid to the parent liable to pay cash maintenance also in
those cases in which the child benefit had not, or only in part, been
set off against the cash maintenance pursuant to § 1612b.5 BGB because
it had to be used primarily to for replenishing the child maintenance
(so-called shortage cases).
A payment of child benefit which is to be equalised pursuant to § 31.5
EStG is not only to be assumed if the taxpayer can freely dispose of the
child benefit which is due to him or her for a child. As the parents are
paid child benefit above all for the benefit of the child for its
material subsistence level and for its care and education requirements,
the provision of § 1612b.5 BGB determines the purpose for the use of the
child benefit. What is behind this drafting of the provision is the
substantive obligation of the person liable to pay cash maintenance to
increase, in a shortage case, the maintenance due according to §
1612a.1, § 1612b.1 BGB to the subsistence level in cash (135 per cent of
the standard amount according to the Standard Amount Ordinance). Hence,
in economic terms, the regulation constitutes an increase of the
maintenance obligation of the person liable to pay cash maintenance.
Changes in the individual maintenance burden, however, do not affect the
system of tax relief by generalised tax allowances of the person liable
to pay maintenance as long as the tax allowances adequately cover the
child’s subsistence level, something that has not been doubted in the
present proceedings.
A violation of the limits, which follow from Article 3.1 of the Basic
Law (Grundgesetz – GG), of the power to issue statutory regulations
cannot be identified. The tax relief of the taxpayers affected by §
1612b.5 BGB regarding their child-reduced ability to pay follows the
same legal provisions as that of other persons liable to pay
maintenance. The financial restrictions which these provisions place on
the persons affected are the consequence of their lower ability to pay.
It is not apparent how this could result in an obligation of the
legislature to create special regulations for this group of persons that
deviate from the general mechanisms of the equalisation of family
benefits in order to comply with the principle of equality.
This press release is also available in the original german version.
|
