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Payment of Estonian family benefits in the European Union and elsewhere in the world

A lot of countries pay various allowances to families in connection with raising children. When taking up employment in or moving to another country as well as when settling in Estonia it is important to know that as a rule one cannot receive full allowances from several countries at the same time.
If family members live and work in several countries, then the most important aspect of granting family benefits in the Member States of the European Union, Norway, Liechtenstein, Iceland and Switzerland (hereinafter all collectively the European Union) is whether or not the parents work and in which country. For other countries the important thing is the country of residence of the children.

 
 

Family benefits system in the European Union

In all the Member States of the European Union and in the EEA countries Norway, Liechtenstein, Iceland and Switzerland (hereinafter all collectively the EU) one is free to choose one’s place of residence and employment. The right to various benefits, including family allowances, in one’s country of residence or employment is guaranteed by Regulations (EC) No. 883/2004 and 987/2009 of the European Parliament and of the Council.

These regulations give rise to the principle that the country where the person (or their family member) actually works or lives is responsible for paying family benefits. The person’s nationality is irrelevant.

Every country has the right to decide on which grounds and to whom they will pay family benefits. However, all countries must work together to make sure that a family/family member going from one country to another will not be worse off compared to those living and working in only one Member State.
 

Priority rules

It is not allowed to pay full family benefits for one and the same child in two countries at the same time.

In order to determine which country must pay benefits to a family, the EU applies priority rules:

1. Rights gained on the basis of work

For determining who must pay allowances the most important role is played by whether and in which country the parents work. Receipt of unemployment insurance benefit or unemployment allowance and being on parental leave (if one’s employment relationship is suspended) is taken into account on an equal basis with work.

The primary country responsible for providing family benefits is always the country where a parent works (or is in a situation equal to work). If both parents work but have their places of employment in different countries, the primary country responsible for providing family benefits is the country of residence of the child(ren). The primary country responsible for paying benefits is determined separately for each child. It means that if there are several children in one family and they live in different countries, the primary country responsible for paying family benefits is different for each child.

If the amount of family benefits paid by the country with primary responsibility is lower than that paid by the secondary country, the secondary country will pay a supplement. If the amount of family benefits paid by the country with primary responsibility is higher, the secondary country is not required to pay any supplement. In that case, benefits are paid by only one country.

N.B. Being posted abroad for an assignment is not equal to working in another country! If an Estonian employer has posted you for an assignment in another country, you are still insured in Estonia and benefits are only paid by Estonia (see also Applying for form A1). The country of destination is not required to pay any supplement either.

Example 1. The father of a 10-year-old child works in Finland, the mother in Estonia and the child lives in Estonia. The primary country responsible for paying family benefits is Estonia because both parents work, which means that the child’s place of residence is decisive.
In 2019, the family is paid family benefit (child allowance) of 60 euros per month in Estonia. In Finland the amount of family benefits is 94.88 euros.
The amount of family benefits in Finland is higher than the monthly family benefit paid in Estonia. Since the father of the child works in Finland, Finland is required to pay a supplement to the family. To this end, the father must submit to the competent authority of Finland (KELA) an application for family benefits from Finland.

(KELA will make an inquiry to Estonia. Kela and the Estonian Social Insurance Board will exchange information about who belongs to the family, the employment relationships of the mother and father, and family benefits paid in Estonia/Finland.)

Since the family benefit in Finland is higher (94.88 euros for raising one child) than in Estonia, the father will be calculated a supplement in Finland as follows:  94.88 eurot - 60 eurot = 34.88 eurot. So the monthly supplement received from Finland is 34.88 euros.

Example 2. The father of a 10-year-old child works in Finland but the mother who lives with their child in Estonia does not work and she is not registered as an unemployed person.
The primary country responsible for paying family benefits is Finland because it is the only country where either parent (in this case the father) works.
The Finnish Kela pays monthly family benefit of 94.88 euros.
The Estonian amount of family benefits is lower than the Finnish one. Consequently, Estonia is not required to pay a supplement and only Finland will pay benefits to the family.
(The father submits to the competent authority of Finland (KELA) an application for family benefits.  KELA will make an inquiry to Estonia. The Finnish KELA and the Estonian Social Insurance Board will exchange information about who belongs to the family, the employment relationships of the mother and father, and family benefits paid in Estonia/Finland.)

If the mother of the child takes up employment in Estonia, the primary country responsible for paying family benefits will change as of the following month. Both parents work in different countries now – the child’s country of residence will become the primary country responsible for paying family benefits and the father’s country of employment must pay a supplement.
(The family is required to notify the Estonian Social Insurance Board that the mother has taken up employment in Estonia – the Estonian Social Insurance Board and the Finnish KELA will exchange information then. Estonia will start paying the family Estonian family allowances in full and Finland will be required to pay a supplement to the family.
If the family fails to notify the Estonian Social Insurance Board that the mother has taken up employment in Estonia, the Finnish Kela will continue paying full family benefits, which means Finland will make overpayments that will be reclaimed.)

2. Rights gained on the basis of pension

The second thing considered after work is the receipt of a pension. The primary country responsible for paying benefits is definitely the country where one of the parents works. However, if the other parent lives with their child(ren) in another country and receives a pension there, it is taken into account upon granting a supplement. If the amount of family benefits in the country which pays the pension is higher, that country must pay a supplement.

If both parents receive a pension and neither of them works, the primary country responsible for paying benefits is the country of residence of the child. 

Example 3. The father of a child lives in Finland; he does not work but receives a pension for incapacity for work; the mother of the child works in Estonia and the child lives in Estonia. The primary country responsible for paying family benefits is Estonia; Finland pays a supplement to the father of the child on the basis of his pension for incapacity for work.

3. Rights gained on the basis of residence

If neither parent works, receives a pension or is in another situation equal to working, benefits are paid by the country where the children live. If the children of the family live in different countries, benefits are calculated separately for each child according to their country of residence.

Example 4. The father of a child lives in Finland and does not work, the mother of the child and the child live in Estonia and the mother does not work either. Since the child lives in Estonia, family benefits are paid by Estonia. Finland is not required to pay a supplement because the right to benefit is based solely on residence.

Example 5. One child of a family lives with the father in Finland and the other with the mother in Estonia. Neither parent works, receives a pension or is in a situation equal to working. Family benefits in connection with the child living in Finland are paid by Finland and in connection with the child living in Estonia by Estonia. The secondary country is not required to pay a supplement.
 

Calculation of amount of supplement

If a family is entitled to family benefits from several countries, the primary country responsible for paying benefits is determined under priority rules. If the amount of benefits paid by the secondary country is higher, the secondary country must pay a supplement. The amount of the supplement is the difference between the amounts of family benefits of the two countries.

Only benefits of the same type can be compared. Benefits are divided into two types and the amount of the supplement is calculated separately for both types:

  • Universal family benefits, the amount of which is the same for all recipients (amount determined by law). In Estonia such benefits are the child allowance, child care allowance, single parent’s child allowance and allowance for families with many children.
    We get the amount of the supplement by comparing the universal family benefits of the two countries and subtracting the lower amount from the higher one.
  • Benefits the amount of which depends on the person’s previous income subject to social tax. In Estonia such benefit is the parental benefit which is the family’s substitute income.
    We get the amount of the supplement by comparing the substitute incomes of the two countries and subtracting the lower amount from the higher one.

These two types cannot be added up.
For example, substitute income which is of the same type as the Estonian parental benefit is not paid in many other countries. Therefore, if a parent receives parental benefit in Estonia, Estonia may be required to keep paying the parental benefit in full amount in a situation where another country starts paying other family benefits.

Example 6. The father of a 10-year-old child and a 6-month-old child works in Finland, the mother lives with the children in Estonia and does not work. The primary country responsible for paying family benefits is Finland because one of the parents of the family works there and the other parent has no employment relationship.
In connection with the 10-year-old child Finland pays 104.84 euros per month; for the 6-month-old child Finland pays child allowance of 94.88 euros per month. No parental benefit is paid in Finland.

Let’s compare the universal allowances (child allowance) and substitute incomes (parental benefit) of Estonia and Finland.
The child allowance paid in Finland is higher than in Estonia and so Estonia is not required to pay a supplement in this respect.
But an allowance corresponding to the Estonian parental benefit is not paid in Finland and so Estonia is required to pay parental benefit.

Example 7. There are 3 children in a family – a 12-year-old, a 10-year-old and a 4-year-old. Their mother lives with them in Estonia and does not work. The father of the children works in Finland and applies for allowances in Finland. The payment of family allowances in full amount is suspended in Estonia and a supplement is granted.

According to the competent authority of Finland (KELA), child allowance for raising the 4-year-old child is paid in the amount of 94.88 euros per month, for raising the 10-year-old in the amount of 104.84 euros and for raising the 12-year-old in the amount of 133.79 euros. In Estonia, the child allowance for the third child in a family is 100 euros per month and child care allowance 19.18 euros per month; child allowance for the first and second child in a family is 60 euros per month. In addition, the family has the right to the allowance for families with many children in the amount of 300 euros per month, which is divided equally among the children. Consequently, Estonia pays a supplement as follows:
For the third child in the family 100 euros + 19.18 euros + 100 euros - 94.88 euros = 124.30 euros per month. No child care allowance is paid in Finland.

For the second child in the family 100 euros + 60 euros - 104.84 euros = 55.16 euros per month.

For the first child in the family 100 euros + 60 euros - 133.79 euros = 26.21 euros per month.

The total amount of the supplement paid to the family is 205.67 euros per month.

N.B. The priority rules do not include childbirth allowance, adoption allowance, guardianship allowance or maintenance support. The grant and payment thereof depends on whether or not the family is entitled to them in its country of residence. Only national requirements are taken into account. If the national requirements for these allowances (in Estonia in the Family Benefits Act) are not met, they will not be granted or paid to the family


What is overpayment?

It is not allowed to pay full family benefits for one child in two countries at the same time.

Otherwise an overpayment is created.

Overpayment arises, for example, when:

  • Family moves to another EU country but fails to inform the Social Insurance Board thereof;
  • Family fails to update the population register with its new place of residence (or information on the other country reaches Estonia with a great delay);
  • A family member takes up employment in another EU country where they are paid family benefits in full and the other family member works and lives in Estonia with their children and keeps receiving Estonian family allowances in full;

Family fails to inform in due course the authority which pays benefits of the termination or start of their employment relationships, activities equal to work or receipt of a pension, changed place of residence of the family members, changes in the family (divorce, end of registered partnership, child leaving the family) and so on.

In that case, the social security authorities of the relevant countries will determine which country is the primary country responsible for paying benefits and in which country overpayment has arisen. Family benefits paid for each child are reviewed separately and any overpayment is calculated separately for each child’s benefits.
 

Offset
If it turns out that benefits have been overpaid, these are offset.

We will offset them against future payments of family benefits. If the family is no longer paid benefits in Estonia, we will ask the country where the family receives their benefits now to offset the overpayment.

The country which pays allowances will ask the family to provide explanations and a consent for offset. It is important for the family to cooperate. Together it is possible to find a way for the overpaid amount to be refunded in a way most convenient for the family.

Read more about offset of overpayments.

Disabled child allowance

The disabled child allowance is not included in other family benefits. The cross-border payment of allowances related to disabilities takes place according to the Social Benefits for Disabled Persons Act under the health insurance scheme. It means that the disabled child allowance (likewise disabled parent’s allowance and education allowance) is a sickness benefit and it is compared with the benefit of the same type of another country. It is important in which country the child’s one or the other parent works and which country’s health insurance applies to the family.
The disabled child allowance is only paid by one country at a time. Finland is an exception; under national rules additional allowance may be paid.

Example 8. A mother and her child move to Latvia and the mother works in Latvia. The father stays working in Estonia. Both parents work and therefore have health insurance in different countries. On the basis of the child’s place of residence the mother applies for the disabled child allowance in Latvia. If Latvia grants it, the disabled child allowance will be paid by Latvia. However, if for some reason the mother is not entitled to the disabled child allowance in Latvia and the allowance is not granted, Estonia will keep paying the allowance on the basis of the father working in Estonia.

N.B. If one of the parents works in another EU country and the disabled child lives in Estonia with a parent who does not work, the disabled child allowance must first be applied for in the country of employment of the first parent. If the country of employment of the first parent does not grant the allowance for some reason, Estonia can still grant the allowance to the child living in Estonia.

 

What shall I do...

...when my family moves to another EU country

If your family moves to another EU country, the national laws of the new country of residence will apply to the family. The payment of the Estonian family benefits is terminated and family benefits will be paid by the new country of residence.

If your family moves to another country:

  • Contact the social security authority of your new country of residence to receive family benefits. Family benefits will be granted by the new country of residence according to its laws.
     

...when my family member takes up employment in another EU country

If one parent takes up employment in another EU country, that parent has the right to apply for family benefits for their family in that country. Whether the new country of employment will be the primary country responsible for paying family benefits or whether only a supplement is possible depends on whether the other parent also works and in which country their children live. The family cannot choose the primary country responsible for paying benefits; that will be determined by the social security authorities of the relevant countries by way of mutual communication.

The parent who has taken up employment abroad shall:

  • Contact the social security authority of their country of employment and submit an application for family benefits
  • Inform the Estonian Social Insurance Board of applying for family benefits in another country – the social security authorities of Estonia and the other country will communicate and in cooperation determine which country will be paying family benefits to your family and to which extent.

If both parents take up employment in another EU country, they will no longer be entitled to any family benefits from Estonia. Even if their child or children remain living in Estonia.  

If the family member stops working in the European Union, the EEA countries or Switzerland and returns to Estonia, they are required to inform the social security authorities of both the country of employment and Estonia. The Estonian Social Insurance Board will communicate with the social security authority of the country of employment and determine as of when the right to benefits from Estonia arises.

...when my family moves to Estonia from abroad

When your family moves to Estonia, the family is entitled to family benefits paid in Estonia. It is important to ensure that the former country of residence and Estonia not pay full allowances for overlapping periods. If you have the right to benefits in Estonia retroactively, we will first request from the other country information about to which date it has paid benefits and which country should have paid the family benefits during that period of time.

Upon leaving another country:

  • Inform that country’s social security authority of leaving the country (e.g. Kela in Finland, Familienkassa in Germany and so on).
  • Having arrived in Estonia update your information and that of your family members in the population register.
  • Inform the Social Insurance Board that you have settled in Estonia.
  • When you have been issued a decision or an official letter on the termination of the payment of family benefits in your former country of residence, attach it to your application for family benefits in Estonia. This way you can expedite the grant of family benefits.
 

Rest of the world


If your family moves to Estonia from outside the European Union
 

If your family permanently moves to Estonia from outside the European Union (all EU Member States, Norway, Liechtenstein, Iceland and Switzerland), the family is entitled to family allowances in Estonia. A prerequisite is that the child or children of the family lives or live in Estonia and at least one of the parents and children older than 1 year of age have Estonian citizenship, residence permit or right of residence.
It is also important for the former country of residence to not pay benefits of the same type as the Estonian family benefits any longer.

The most important thing is that the family lives in Estonia. If a parent keeps working in the former country of residence outside the EU it is irrelevant to the receipt of family allowances. (If a person who has settled in Estonia takes up employment in a Member State of the European Union, Norway, Liechtenstein, Iceland or Switzerland, read more about the Family benefits system in the EU.)

If a family has several places of residence – one in Estonia and another outside the European Union – the following is important for being granted family benefits in Estonia:

  • In which country the child or children permanently reside
  • The country the residents of which the parents are (one is required to be a resident of Estonia in order to receive family benefits in Estonia)
  • Whether and which allowances are paid to the family in the other country.

We review the situation of each family separately. For smooth proceedings it is vital for the family to cooperate – this way allowances will reach the family faster.

Example 1. A family lived in the USA. All family members settled in Estonia on 15.12.2018. As of that date the family has the right to family benefits in Estonia.

Example 2. The father of a child lives and works in Russia. The residence of the mother of the child is registered in Estonia and the child is born in Estonia. But the entire family actually lives in Russia. After the birth of the child the mother and the child return to the father of the child in Russia. Although the residence of the mother of the child is registered in Estonia, the family is not entitled to family allowances in Estonia because the family’s permanent place of residence is in Russia.

Example 3. The father of a child lives in Estonia. The mother of the child lives in Australia where the child is also born. They decide to move in together in Estonia. The mother of the child gets her residence permit on 10.01.2019 and comes to Estonia with the child on 15.02.2019. As of that date no family benefits are paid in Australia any longer and the family has the right to family benefits in Estonia.

In order to receive allowances in Estonia, an application must be submitted. Read more about applying for family benefits.

 

If a family moves away from Estonia and settles outside the European Union
 

If a family moves away from Estonia, the right to Estonian family allowances also ceases to exist. Even if the place of residence remains registered in Estonia and the plan is to return to Estonia some day. 
The Social Insurance Board must be informed of the family’s departure from Estonia and an application for waiving benefits must be submitted. Read more about the suspension and termination of payment of family benefits.

Please note that the payment of family benefits is also suspended if the family leaves Estonia on a temporary basis. If, for example, a parent takes up employment or studies abroad and takes their child with them, they are not entitled to Estonian allowances during that period of time. We will resume the payment of family benefits when the family returns to Estonia.

If one parent lives in Estonia and the other in another country outside the European Union
 

If one parent lives in Estonia and the other in another country outside the EU, it is decisive whether or not the child lives in Estonia. If the child does not live here but in a foreign country outside the EU, no allowances in connection with that child are paid in Estonia. One can inquire about family allowances in the country of residence of the child.

Example 4. The father of a child lives and works in Estonia. The mother of the child lives in Russia and the child goes to school in Russia.
Since the child lives with their mother in Russia, the father of the child is not entitled to family allowances in Estonia.