Ladies and gentlemen,
Today the Commission has opened an infringement procedure against Austria for introducing indexation of child benefits and family tax reductions.
On 1 January, Austria introduced new legislation, making family benefits and family tax reductions paid for children residing in another Member State dependent on the costs of living of that Member State.
Many EU citizens, who work in Austria and contribute to its social security and tax system in the same way as local workers, now receive fewer benefits only because their children are living in another Member State.
With indexation you are not doing anything against social dumping or social tourism. On the contrary, you are hitting those who get up in the morning, work hard and make a real contribution to the Austrian economy.
This is about EU citizens who work in another Member State and contribute there in the same way to the social security and tax system as local workers. Therefore they are entitled to the same social security benefits and tax advantages. This is a question of fairness and equal treatment. And for me, the decisive element is fairness. Indexation is deeply unfair.
There are no second-class workers in the EU and no second-class children either. I have always insisted on "equal pay for equal work at the same place". This is a key principle we ensured for posted workers and which has been very important to Austria in these discussions. For me that also means "equal benefits for equal contributions at the same place".
Let me now go in a bit more detail into the legal arguments.
I have always been clear that such a mechanism is not allowed under EU law.
We have analysed the new Austrian legislation, and our analysis fully confirms that it is indeed not in line with EU rules.
One of the fundamental principles of the European Union is that citizens are treated equally without distinction based on nationality. Moreover, EU legislation explicitly prohibits family benefits being withheld or reduced solely because of the place of residence. [article 7 of regulation 883]
The fact that a given Member State has a lower cost of living than Austria is of no relevance for a benefit that is paid out as a lump sum and not linked to the actual expenses for maintaining a child.
I am also well aware of the peculiarities of the Austrian system, namely that a big part of the benefits is financed by the employers. But this is of no relevance for this case. Employers pay the same amount of contributions for their employees regardless of their nationality or the place of residence of their children.
If we open the door to indexation, the question is what will be next? Allow Member States to reduce pension rights when workers retire to Member States where it's cheaper to live?
In our Union, such measures are never a zero-sum game where one side wins and the other loses. Don't forget that Austria is among the Member States that benefited most from all stages of EU integration. Overall, Austrian GDP increased by 0.5 to 1 percentages points every year.
I strongly believe that mobility needs to be based on clear, fair and enforceable rules. It benefits Austrians, Slovaks, Germans, Belgians and all other EU citizens alike by protecting their social rights when they are on the move.
I am all for fairness and fighting abuse. This is at the core of our 2016 proposal updating EU rules on social security. And I am glad that, under the Austrian Presidency we managed to get the European Labour Authority on track.
Based on this principle of fairness and our analysis of the legislation at stake, we have therefore sent a letter of formal notice to Austria today. Austria now has 2 months to provide a response.
SPEECH/19/664
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