Are the transition periods before and after voluntary service also eligible for tax benefits?
For children in school or vocational training or in voluntary service, parents receive child benefit or the tax-free child allowances and all related child-related tax benefits as long as the children are under 25 years old. Transition periods between two training phases and between a training phase and voluntary service, and vice versa, are also taken into account.
The transition period must not exceed four full calendar months. The next training phase must therefore begin at the latest in the fifth month after the end of the last phase. The four-month period includes four full calendar months and is not calculated to the exact day. If the child has to wait longer than four months before continuing their training or starting voluntary service, the parents lose the child benefit and the child allowance - even for the first four months of the transition period. Unfortunately, this also applies if the child has no influence on the start of the service or is not at fault for exceeding the four-month period.
Until 2014, transition periods between a training phase and voluntary military service were not eligible. However, this changed in 2015, as parents now receive child benefit or tax allowances for a child who interrupts their training to perform voluntary military service, for a transition period of up to four months both before and after this service.
Current decision by the Federal Fiscal Court: if voluntary service is terminated due to illness, this leads to the loss of the child benefit entitlement (BFH ruling of 9.9.2020, III R 15/20).
Note: Even if the child is waiting to start their voluntary social year after leaving school, child benefit is paid for the transition period. BUT: The transition period may not exceed four months - this is stated in the law (§ 32 para. 4 sentence 1 no. 2b and d EStG). In recent years, the Corona pandemic has meant that many children could not start their training or voluntary social year within four months of leaving school, but perhaps only after five or six months. The question then is whether § 32 para. 4 sentence 1 no. 2b and d EStG must still be interpreted literally or whether there can be an equity regulation for this special case.
Current decision by the Münster Finance Court: an equity regulation was rejected. If the child had to wait longer than four months due to Corona before starting their voluntary social year, the parents lost their child benefit entitlement, and this applies to the entire transition period, not just the period exceeding the four-month limit. The child should not have simply waited for the start of the voluntary social year but should have registered as seeking work or training. Only then would the child benefit entitlement (at least until the age of 21) have been maintained (ruling of 14.6.2022, 13 K 745/21 Kg).
