Child Benefit and Parental Allowance Fraud in Germany

Child benefit and parental allowance look at first sight like two family benefits of the same kind. In criminal law they belong to different worlds. Someone who wrongly receives child benefit (Kindergeld) is not accused of fraud but of tax evasion, because under the Income Tax Act child benefit is a tax refund. The investigation is therefore not run by the police but by the penalty and criminal matters unit of the Family Benefits Office. Parental allowance (Elterngeld), by contrast, involves fraud under Section 263 StGB or a regulatory offence. Knowing these differences helps in assessing what is at stake and which options are open.

Typical situations

With child benefit it is almost always changes that were not reported. An adult child has dropped out of or finished training and is working. The child has moved abroad or lives permanently with the other parent, who has also applied for benefit. The family has moved to another EU country and payments continue in Germany. Or benefit is paid for a child who no longer lives in the household. This is usually discovered through data matching with registration offices, foreign authorities or training companies, sometimes years later.

With parental allowance the issue is often income while receiving the benefit. Parental allowance requires the parent to work no more than 32 hours a week, and it is calculated on income before the birth. If side income is not declared, working hours are misrepresented or income before the birth is artificially inflated, an allegation follows.

Duty to report and omission

Under Section 68(1) of the Income Tax Act, anyone applying for or receiving child benefit must report relevant changes immediately to the Family Benefits Office. Failing to do so and continuing to receive benefit amounts to evading tax by omission under Section 370 AO. The penalty is up to five years or a fine. Gross negligence is a regulatory offence of reckless tax evasion under Section 378 AO, punishable by a fine.

The decisive question is therefore whether the person knew they had to report the change. Many parents assume the office already knows about a dropped course or a move because the school, registration office or employer has been informed. That is an understandable mistake and can exclude intent, but only if it is credible. Someone who was expressly informed of the duty and left several letters unanswered will find it harder.

Because this is tax criminal law, a voluntary disclosure under Section 371 AO is possible. It requires all incorrect information to be fully corrected before the offence is discovered and before an audit is announced. Once a hearing letter from the Family Benefits Office has arrived, this route is usually closed.

Parental allowance: a different standard

Parental allowance is not a tax refund but a social benefit under the Federal Parental Allowance and Parental Leave Act. Municipal parental allowance offices are responsible. Anyone obtaining it through false statements commits fraud under Section 263 StGB. Anyone who breaches the reporting duties under the Act without fraud being provable commits a regulatory offence under Section 14 of the Act, punishable by a fine of up to 2,000 euros.

Parental allowance is often granted provisionally at first and finalised only after proof of income is submitted. If an overpayment emerges, that is initially a repayment matter, not a criminal case. Criminal proceedings require deliberately false statements.

How proceedings run

With child benefit, the person usually first receives a letter asking for documents, then a decision cancelling the benefit and demanding repayment. In parallel or afterwards, the penalty unit opens criminal proceedings. In tax criminal cases it has the powers of a prosecutor and can apply for penalty orders and discontinue cases. Only for larger sums or difficult cases does it pass the matter to the public prosecutor.

Repayment and the criminal case run separately. Repayment is unaffected by whether the criminal case is dropped. Conversely, prompt repayment helps considerably in the criminal case. More on this in our guide on repayment and criminal proceedings.

How these cases end

For smaller amounts and first-time offenders, many child benefit cases end with a dismissal, sometimes under Section 153 StPO, frequently under Section 153a StPO subject to a payment once the repayment has been settled. For medium amounts a penalty order imposing a fine is usual. Charges are brought for large sums, double receipt across several countries or where false documents were submitted. In tax criminal law the limitation period is five years, starting only with the last payment wrongly received.

With parental allowance much depends on whether fraud can be proved or only a breach of duty. Reducing the case to a regulatory offence is a clear success.

What you should do now

Do not answer hearing letters from the Family Benefits Office or the parental allowance office about why you did not report something without legal review. Such explanations end up in the criminal file. Gather documents showing what you knew when and what you reported to whom: letters to the school, changes of address, your children’s employment contracts. Check the repayment decision for deadlines, as an objection must be lodged within one month.

You can reach us on +49 228 504 463 36. This article is a general explanation and does not replace advice on an individual case.

Written by attorney Philip Bafteh, criminal defense attorney in Bonn. Philip Bafteh publishes regularly on criminal and commercial law and defends accused persons in investigative and trial proceedings.

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Last updated: November 2026