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2019 spring report – reporting item No. 05 "Extension of benefit scheme: Legislation on home ownership-related child benefit needs to be well aligned to the target"

Apr 02, 2020

The home ownership-related child benefit scheme has not been well aligned to the target. Eligibility is not adequately verified. In case this support scheme is extended, eligibility requirements need to be framed by statutory law.

Families with children are eligible for the benefit if their income does not exceed specific thresholds. The annual amount is €1,200 for each child for a period of 10 years. The federal government has earmarked a total of €10 billion for this scheme. The benefit approval is subject to applicable grant regulations and rules as appropriate. Families may not apply for the benefit until they have moved into the new home. Moving house is the one and only requirement set to decide if the benefit has been used for the intended grant purpose. As a result, the benefit scheme violates major principles of federal grant law. The benefit scheme has not been well aligned to the target because approval of grant applications is contingent upon the individual circumstances at the point of time when the application was submitted. Changes in living conditions occurring after grant approval are not taken into account. If the children reach majority age, if they move out of their family home or if the home owner draws an income upgrade, these facts are not reflected in the benefit scheme at all. Children that are born after submission of the application do not have an increasing effect on the benefit. In addition, benefit eligibility is not adequately verified. Although the benefit is expressly designed for a first-time home purchase, earlier possession of another residential home does not have an impact on benefit eligibility. The applicant is not required to submit any supporting documents such as eligibility for child benefit or a construction permit.

We recommend that, in case this support scheme is extended or revised, the eligibility requirements need to be framed by statutory law and the duration of the scheme needs to be limited. When reshaping the support scheme, the bodies responsible would be well advised to also consider a tax benefit scheme. As to the current funding period, we demanded the Ministry of the Interior to ensure verification of eligibility and the submission of documents substantiating that eligibility requirements are met.

 

 

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