Sweden Finland Austria

Having children
Only ’ordinary’ family allowances, i.e. allowances for couples with children, are consid-
ered here. In addition all countries also have special or additional allowances for single
parents.
Seven of the countries have cash benefits and one, that is Germany, has (from 1996)
refundable tax credits or, if that is advantageously for the families, allowances which are
deductible in taxable income. Austria has, in addition to the cash benefit, also refundable
tax credits for families with children. Superficially most of the family allowance schemes
look alike, but there are, however, some significant differences in the criteria applied.
The family allowance schemes were categorized according to these criteria:
Is the family allowance a cash transfer or/and a tax credit/deductible tax allowance?
Is the allowance for all families (couples) with children?
Is there a graduation of the allowance according to the number and/or age of the child-
ren?
Is the allowance means tested?
For how long can it be received?
The result of the categorization is contained in table 2.13.

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Table 2.13.
Characteristics of ordinary family allowance schemes in 8 countries, 1997.
DK
S
FIN
A
Type of scheme
Cash benefit
Cash benefit
Cash benefit
Cash benefit/
1)
tax credit
Eligible groups
All families with
All families with
All families with 
All families with
children
children
children
children
Graduation 
Flat rate
Flat rate
Flat rate 
Flat rate benefit
according to 
per child.
per child.
per child. 
increasing with
number and age
Highest for
Same rate for all
Increasing from
age.
infants
2nd child
Tax credit 
(0-2 years)
increasing from
2nd child
Means-testing
No
No
No
No
Max. duration
Until:
Until:
Until:
Until:
(age of child)
18
16/end of school
17
19/27
1)
Up until 1994 there were tax deductions in the Finnish scheme.
2)
The deductible tax allowance has the same nominal value for all children.
3)
In some special cases up to 25 years.
4)
Canada also has a supplementary scheme for low income families.
Comments on table 2.13
The German tax credit scheme works very much like a cash scheme, the tax is reduced
every pay day or, if there is no tax, the tax credit is paid in cash to the recipient (it is a
refundable tax credit). Most families in Germany will receive tax credits, only relatively
few with high incomes will have the deductible tax allowance (in these cases the tax
credits will be reclaimed).
There is some variation where graduation according to number and age of the children is
concerned. In Denmark, the cash benefit is highest when the child is an infant (0-2 years),
a little lower from 3-6 years and lowest from 7-17 years. In the Netherlands the allowance
is highest when the child is in the upper age bracket, that is also the case in Austria for the
cash component. In Finland, Austria (tax credit), Germany (tax credit) and Great Britain
there is graduation according to the number of children. In Finland, Austria and Germany
it is the ’youngest’ children who receive the highest allowance, in Great Britain it is the
first, the oldest child. Sweden had a scheme similar to the Finnish, but from 1996 new
entrants stopped, implying that in the longer run there would be no graduation according
to the number of children if the rule was maintained. This was changed in 1998, when the
graduation according to number of children was reintroduced. In the Netherlands the al-
lowance for all children increased with the number of children, but this ’bonus’ was
stopped for new entrants from 1995. In Canada there is graduation according to both the
number of children and their age.

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