BFH: Child benefit remains with the parents
Child benefit remains with the parents: No entitlement to payment to the adult child in the absence of need
If adult children are economically independent with their own income, there is no entitlement to child benefit being paid to them directly. This was decided by the Federal Fiscal Court (BFH) in its ruling of 20.02.2025 (case no. III R 10/24) and thus clarified this: A so-called diversion of child benefit in accordance with § 74 para. 1 EStG is ruled out if the child is no longer in need of maintenance.
The background:
Child benefit is generally paid to the parents – even for children who have reached the age of majority and are still in education, for example. In certain cases, however, the child can apply for child benefit to be paid directly to them (known as “bifurcation”), especially if the parents do not meet their maintenance obligations.
However, this presupposes that the child is dependent on maintenance in the first place.
What the BFH says:
The BFH has now clarified that § 74 Para. 1 EStG does not apply if the child no longer needs any maintenance at all due to their own income or earnings. In such a case, there is no “need for maintenance” – a mandatory requirement for the deduction. An analogous application of the provision is excluded because there is no unintended loophole.
Conclusion:
Even if adult children sue parents who are entitled to child benefit or hope to receive it themselves, parents are still entitled to it if there is no need for maintenance. Children who are financially independent cannot invoke § 74 EStG.
Note:
The ruling creates more clarity for parents and children in training or studying, particularly in the event of family conflicts regarding the use of child benefit.
