Provisional text

delivered on 12 June 2025 (1)

Case C‑137/24 P

Michael Heßler

European Commission

( Appeal – Regulation (EEC, Euratom, ECSC) No 260/68 – Staff Regulations – Dependent child allowance – Tax abatement – Link between dependent child allowance and tax abatement – Relationship between an internal directive of an EU institution and hierarchically higher legislative acts )

I.Introduction

1.Persons employed by institutions of the European Union are entitled to certain social benefits. For employees with dependent children, such benefits include a dependent child allowance and a tax abatement.

2.Mr Michael Heßler, an official of the European Commission, made a request for tax abatement because of his daughter, who, although over 26 years of age, was still a student at the time of application. That request was rejected by the Commission. Mr Heßler lodged an appeal against the Commission’s decision to reject his request before the General Court, which dismissed his action by judgment of 20 December 2023, Heßler v Commission (T‑369/22, ‘the judgment under appeal’, EU:T:2023:855). By the present appeal, Mr Heßler challenges that judgment.

3.As requested by the Court of Justice, this Opinion will focus on only one of the questions raised on appeal, that is, whether a link exists between the dependent child allowance and the tax abatement for dependent children laid down in Regulation (EEC, Euratom, ECSC) No 260/68. (2)

4.In order to provide an answer to such a question, the Court must interpret two EU instruments: the Staff Regulations (3) and Regulation No 260/68.

II.Applicable legislation

European Union law

The Staff Regulations

5.The conditions of eligibility for the dependent child allowance are laid down in Article 2 of Annex VII to the Staff Regulations, entitled ‘Remuneration and reimbursement of expenses’, which provides:

‘1. An official who has one or more dependent children shall, in accordance with paragraphs 2 and 3 below, receive an allowance of … per month for each dependent child.

The same shall apply to a child for whom an application for adoption has been lodged and the adoption procedure started.

Any child whom the official has a responsibility to maintain under a judicial decision based on Member States’ legislation on the protection of minors shall be treated as a [dependent] child.

3. The allowance shall be granted:

(a)automatically for children under eighteen years of age;

(b)on application, with supporting evidence, by the official for children between eighteen and twenty-six who are receiving educational or vocational training.

4. Any person whom the official has a legal responsibility to maintain and whose maintenance involves heavy expenditure may, exceptionally, be treated as if he were a dependent child by special reasoned decision of the appointing authority, based on supporting documents.

6. Not more than one dependent child allowance shall be paid in respect of any one dependent child within the meaning of this Article, even where the parents are in the service of two different institutions of the European Union.

7. If custody of the dependent child within the meaning of paragraphs 2 and 3 has been entrusted by law or by an order of court or of the competent administrative authority to another person, the dependent child allowance shall be paid to that person in the name and on behalf of the official.’

Regulation No 260/68

6.The tax abatement is regulated by Article 3 of Regulation No 260/68 which, in the relevant parts, provides:

‘1. The tax shall be payable each month on salaries, wages and emoluments paid by the Communities to each person liable.

…

3. The family allowance and social benefits listed below shall be deducted from the basic taxable amount:

(a)family allowances:

…

—dependent child’s allowance,

…

4. Subject to the provisions of Article 5, an abatement of 10% for occupational and personal expenses shall be made from the amount obtained by applying the preceding provisions.

An additional abatement equivalent to twice the amount of the allowance for a dependent child shall be made for each dependent child of the person liable as well as for each person treated as a dependent child within the meaning of Article 2(4) of Annex VII to the Staff Regulations.

…’

III.Facts and proceedings

A.Background to the dispute

7.The appellant is a Commission official. He is a father of two daughters born in 1993 and 1994, in respect of whom he received a dependent child allowance until they each reached the age of 26 in 2019 and 2020, respectively.

8.In addition to the payment of the dependent child allowance, the appellant also benefited from the tax abatement provided for in the second subparagraph of Article 3(4) of Regulation No 260/68, up until 31 July 2021, in respect of each of his two daughters, who were still students on that date.

9.On 28 June 2021, the appellant sent his eldest daughter’s certificate of studies to the Office for the Administration and Payment of Individual Entitlements (‘the PMO’) of the Commission, in order to request an extension of the tax abatement in respect of that daughter.

10.By emails of 29 June 2021 in reply to that request, a case manager in the PMO’s service responsible for the file informed the appellant that, on the basis of the judgment in XB v ECB, (4) any application for the grant or extension of the tax abatement in the absence of entitlement to the dependent child allowance paid under Article 2 of Annex VII to the Staff Regulations was to be refused. (5)

11.On 15 July 2021, the appellant sent a note to the Head of the PMO’s service responsible for the file, in which he disputed the information contained in the emails of 29 June 2021. The appellant did not receive an explicit response to that note.

12.On 18 August 2021, the appellant requested that the PMO grant him the extension of the tax abatement in respect of his second daughter.

13.By email of 27 August 2021, the case manager of the PMO’s service responsible for the file replied to the appellant. The content of that reply was in principle the same as that concerning his eldest daughter.

14.On 24 November 2021, the appellant lodged a complaint against the refusal of the requested extension arising from the PMO’s failure to reply, requesting the grant of the extension of the tax abatement sought for his two daughters.

15.On 25 March 2022, the Director of the “finance, legal and partnerships” Service in the Commission’s Directorate-General for Human Resources and Security, acting as the appointing authority, rejected the appellant’s complaint (‘the decision rejecting the complaint’).

B.The action before the General Court

16.By the application submitted before the General Court on 24 June 2022, the appellant brought an action seeking that the court, on the one hand, annul the decision rejecting the complaint and, on the other hand, oblige the Commission to retroactively grant him the tax abatement in question, from 1 August 2021 and for as long as the conditions are met, and pay any interest on the unpaid sums.

17.By the judgment under appeal, the General Court dismissed the action in its entirety.

C.Grounds of appeal and forms of order sought by the parties before the Court of Justice

18.As indicated in point 3 above, although the appeal is based on three grounds, the present Opinion, as requested by the Court of Justice, will only examine the third ground. (6)

19.Even if they are not clearly separated, the appellant’s arguments in the third ground of appeal can be divided into several parts. Firstly, the appellant contends that the General Court erred in law by establishing a link, in paragraph 93 of the judgment under appeal, between the tax abatement and the actual payment of the dependent child allowance. Secondly, the appellant claims that the General Court, inter alia in paragraph 74 of the judgment under appeal, misinterpreted the concept of ‘dependent child’ and was therefore wrong to reject his request for the tax abatement claimed in relation to his daughter. Thirdly, the appellant asserts that, in paragraph 94 of the judgment under appeal, the General Court disregarded the binding nature of internal acts of the Commission. Fourthly, the appellant claims that, in paragraph 100 of the judgment under appeal, the General Court misconstrued the legal nature of the tax abatement applied for.

20.Based on the grounds of appeal raised, the appellant claims that the Court should:

–set aside the judgment under appeal;

–set aside the decision rejecting the complaint;

–order the Commission to retroactively grant, from 1 August 2021 and for as long as the conditions are met, the tax abatement established in the second subparagraph of Article 3(4) of Regulation No 260/68, as set out in the Conclusions of the Heads of Administration 222/04; (7)

–order the Commission to pay interest on the sums due in accordance with the fiscal regulation; and

–order the Commission to pay the costs.

21.The Commission contends that the Court should:

–dismiss the appeal; and

–order the appellant to pay the costs.

IV.Analysis

22.As requested by the Court of Justice, this Opinion focuses only on the applicant’s third ground of appeal and it is organised as follows.

23.Under Section A, I will address the appellant’s argument that the General Court erred by establishing a link between the grant of a child allowance and that of a tax abatement in respect of a dependent child. Under Section B, I will discuss the notion of ‘dependent child’ within the meaning of Article 3(3)(a) of Regulation No 260/68 read in conjunction with Article 2 of Annex VII to the Staff Regulations. Under Section C, I will examine the possible application of the internal decision of the Heads of Administration and the relationship between internal acts of EU institutions and EU legislative acts. Finally, under Section D, I will briefly assess the appellant’s claim that the General Court misunderstood the nature of the tax abatement.

A.The link between the dependent child allowance and the tax abatement

24.The appellant claims that by conditioning the entitlement to a tax abatement on receiving actual payment of a child allowance the General Court, in paragraph 93 of the judgment under appeal, misinterpreted the law.

25.I share the appellant’s view that the wording of Article 3(4) of Regulation No 260/68 does not link the entitlement to the tax abatement to the actual payment of the child allowance. However, the tax abatement is, as I will explain, connected to Article 2 of Annex VII to the Staff Regulations, as it is conditional on the fulfilment of the same requirements of dependency as the entitlement to the child allowance.

26.The wording of the second subparagraph of Article 3(4) of Regulation No 260/68 suggests that the tax abatement is conditional only upon the existence of a dependent child within the meaning of Article 2(2) of Annex VII to the Staff Regulations. Additionally, where a person qualifies as a dependent child under Article 2(4) of Annex VII to the Staff Regulations, the existence of that dependent child may result in the entitlement to tax abatement for an official having responsibility for that child. Thus, that provision does not make the entitlement to the tax abatement conditional upon actually receiving the dependent child allowance on the basis of Article 2(3) of Annex VII to the Staff Regulations.

27.Therefore, there is no such link between the dependent child allowance and the tax abatement to the effect that the dependent child allowance has to be effectively paid in order for the official to become entitled to the tax abatement. In that sense, the General Court has indeed erred when it stated in paragraph 93 of the judgment under appeal that an official is entitled to the tax abatement only when the dependent child allowance is actually being paid to that official.

28.In that respect, the General Court was also wrong to rely on paragraph 103 of the judgment in XB v ECB and to conclude that only actual payment of the dependent child allowance may give entitlement to the tax abatement. The main issue in that case was whether a person employed under a short-term contract with the European Central Bank was entitled to the tax benefits, and not whether a link exists between child allowance and tax abatement. The judgment in XB v ECB is therefore not directly relevant for the present case.

29.While I agree with the appellant that entitlement to the tax abatement for a dependent child does not depend on the actual payment of the child allowance, I do not share the appellant’s view that no link exists between those two types of benefits.

30.The case-law has already clarified that a link between tax abatement and dependent child allowance exists in that they both pursue the same social objective and reflect the same concern, both being justified by the costs arising from a present and certain need in connection with the child and his or her effective maintenance. (8) Furthermore, there is a link between the two benefits in the sense that the conditions for receiving both types of benefits are the same, as they both depend on the concept of ‘dependent child’.

31.As the entitlement to the tax abatement is dependent on the existence of a dependent child, and that Article 3(4) of Regulation No 260/68 refers to the Staff Regulations for the definition of that notion, it is necessary to analyse next whether the General Court erred in its interpretation of the concept of ‘dependent child’.

B.The concept of ‘dependent child’

32.The appellant considers that the General Court misinterpreted the concept of ‘dependent child’ in paragraph 74 of the judgment under appeal where it concluded that, when defining a dependent child, account must also be taken of the other paragraphs of Article 2 of Annex VII to the Staff Regulations, and not just its second paragraph. In support of his argument, the appellant claims that it stems from the judgment in Brems v Council (9) that the definition of ‘dependent child’ must be assessed only on the basis of Article 2(2) of Annex VII to the Staff Regulations.

33.I disagree with the appellant.

34.The entitlement to the tax abatement on the basis of Article 3(4) of Regulation No 260/68 arises in relation to dependent children within the meaning of Article 2 of Annex VII to the Staff Regulations.

35.Article 2(2) of Annex VII to the Staff Regulations defines a dependent child as a ‘legitimate, natural or adopted child of an official, or of his spouse, who is actually being maintained by the official’. That provision does not establish any age limit for the purpose of defining the concept of ‘dependent child’.

36.However, as the General Court rightly established in paragraph 79 of the judgment under appeal (which has not been expressly disputed by the appellant), that provision cannot be read in isolation from other provisions of that article. Instead, it is only by reading that article as a whole that the intent of the EU legislature can be discerned.

37.In that respect, Article 2(3) of Annex VII to the Staff Regulations suggests that the EU legislature’s intention was to introduce an age limit beyond which a person could no longer be considered a dependent child, with the exceptions provided for in Article 2(4) and (5) thereof. That limit was set at the age of 18, under which it is not necessary to prove dependency. However, that age limit may be prolonged to the age of 26 in certain cases where ‘dependency’ exists due to the child being engaged in educational or vocational training, and proof thereof is provided. After the age of 26, however, the child is no longer considered dependent, even if he or she still studies.

38.One can debate the appropriateness of the chosen age limit of 26 years of age, given the possible length of certain types of studies. However, such a debate is a matter for the legislative process, and not for the courts.

39.Furthermore, the EU legislature provided for other possibilities that entitle officials to additional benefits, in situations where a person can be considered a dependent child on the basis of the conditions stated in Article 2(4) or (5) of Annex VII to the Staff Regulations. Therefore, an official may be entitled to the tax abatement for a child over the age of 26 who still studies if the maintenance of that child involves heavy expenditure for the official, as provided for in Article 2(4). The official would, however, have to prove that that condition is fulfilled.

40.In the present case, the appellant did not claim that his entitlement to the tax abatement arises on the basis of Article 2(4) of Annex VII to the Staff Regulations. The appellant claimed that he is entitled to the tax abatement solely on the basis of the fact that his daughter still studies, even if she is over 26 years of age.

41.In support of the appellant’s argument that the concept of ‘dependent child’ is expressed in Article 2(2) of Annex VII to the Staff Regulations read in isolation, and therefore does not contain an age limit, the appellant relied on the judgment in Brems v Council.

42.I disagree with the appellant’s reading of that judgment. While it is true that, in that judgment, the General Court stated that the definition of ‘dependent child’ is provided for in Article 2(2) of Annex VII to the Staff Regulations, that court also made reference to other paragraphs of that article when it provided answers to the questions referred. (10)

43.The Court of Justice confirmed such a reading in the judgment in Council v Brems, (11) in which it stated that Article 2(4) of Annex VII to the Staff Regulations cannot be interpreted as precluding persons whom the official maintains, and who are in a different position from those referred to in Article 2(3) and (5) thereof, from being treated as dependent children.

44.In conclusion, I share the Commission’s view that the concept of ‘dependent child’ has to be interpreted by taking into account Article 2 of Annex VII to the Staff Regulations as a whole, as it cannot be assumed that the EU legislature intended to provide benefits to the children of EU officials irrespective of their age or special circumstances.

45.In the same vein, if a dependent children over the age of 26 cannot be considered as entitling an EU official to child allowance, the same holds true for tax abatement, as Regulation No 260/68 makes explicit reference to the concept of ‘dependent child’, as defined in the Staff Regulations.

46.The General Court was, therefore, right in holding that the entitlement to tax abatement depends on the same criteria as those established for the entitlement to child allowance, as both are determined by the concept of ‘dependent child’. That concept has to be interpreted in the light of Article 2 of Annex VII to the Staff Regulations taken as a whole and, in principle, excludes children over the age of 26 even if they still study.

47.The appellant’s arguments that the General Court erred in its interpretation of the concept of ‘dependent child’ should therefore be discarded as unfounded.

C.Can internal acts of an institution raise the age limit for considering a child a ‘dependent child’?

48.The appellant argues that, in paragraph 94 of the judgment under appeal, (12) the General Court misconstrued the nature of the Commission’s internal directive 36-2004 of 24 May 2004.

49.By that internal act, the Commission transposed Conclusions No 222/04 of the Heads of Administration of 7 April 2004, in which the Heads of Administration agreed to grant the tax abatement under the second subparagraph of Article 3(4) of Regulation No 260/68 in respect of dependent children over 26 years of age. Such an abatement is to be approved only if the child has commenced education before reaching the age of 26 and is regularly pursuing the education in question. They also agreed that the tax abatement on that basis would no longer be granted from the date on which the child received an income exceeding 40% of the salary of an official of grade 1, step 1, or when the child reached the age of 30.

50.The appellant argues that the abovementioned act is not an internal decision of a general nature established on the basis of the Staff Regulations, but a decision established on the basis of Article 10 of Regulation No 260/68 in order to guarantee uniform interpretation of that regulation. Moreover, the appellant considers that Conclusions No 222/04 of the Heads of Administration of 7 April 2004 are lex specialis , whose ultimate purpose is a simplification of the administrative procedure. In essence, the appellant argues that children who are still dependent because they study, but who are over the age of 26, would in any case be entitled to tax abatement on the basis of Article 2(4) of Annex VII to the Staff Regulations, applicable on the basis of Article 3(4) of Regulation No 260/68. The agreement of the Heads of Administration only simplified the procedure to acquire the benefit on that basis.

51.I disagree with the appellant’s arguments.

52.It is established case-law of the Court of Justice that internal acts of the institutions must be regarded as a rule of conduct, indicating the practice to be followed, which the administration imposes on itself and from which it may not depart without specifying the reasons. (13) As such, those acts place limits on the discretion of the institution issuing them. (14)

53.However, such internal acts adopted by an EU institution may not, in any circumstance, derogate from hierarchically higher binding acts, such as Regulation No 260/68 or the Staff Regulations. (15)

54.In other words, an internal directive cannot legally set rules that derogate from provisions of the Staff Regulations or any other legislative or implementing EU act.

55.It is unclear from the file on which basis the Commission adopted the internal directive at issue. Nevertheless, the same reasoning would apply if the internal directive were, as the appellant submits, a decision adopted on the basis of Article 10 of Regulation No 260/68 in order to guarantee uniform interpretation of that regulation, or if it were an internal decision of a general nature established on the basis of the Staff Regulations. Irrespective of the basis on which it was adopted, such an internal decision is inapplicable if it contravenes EU legislation.

56.An internal directive, such as the one at issue in the present case, cannot be considered consistent with the wording or the aims of either the Staff Regulations or Regulation No 260/68. Instead, it derogates from those legislative acts by introducing an age limit that is not provided for by those regulations or by unjustifiably superseding the need to prove the existence of conditions established in Article 2(4) of Annex VII to the Staff Regulations in order to acquire the entitlement to the tax abatement.

57.The appellant’s arguments according to which the General Court erred in paragraph 94 of the judgment under appeal should therefore also be discarded as unfounded.

D.The nature of the tax abatement

58.The appellant submits that the General Court, in paragraph 100 of the judgment under appeal, misconstrued the real nature of the tax abatement. He considers that the tax abatement is not subject to payment, but only causes a reduction of taxable income, for which reason he requested reimbursement only of the tax amounts he had paid, calculated on the basis of the amount that the taxable income would have been reduced by had he benefited from the tax abatement.

59.I agree with the appellant that the tax abatement is not an amount payable by the Commission to an official, but rather an amount taken off the taxable basis for calculation of the amount due.

60.However, to my mind, nothing in paragraph 100 of the judgment under appeal indicates that the General Court is of a different opinion. The reason why that Court considered the appellant’s claim to be a pecuniary claim is because, by its action, the appellant requested from the Commission the payment of unduly paid sums. That qualification of the claim served to establish the jurisdiction of the General Court over the appellant’s (then applicant’s) claim, which was a finding in his favour.

61.In conclusion, even if the General Court erred in finding that the entitlement to tax abatement for a dependent child depends on the actual payment of the child allowance, that court did not err in finding that there is a link between the two types of benefits. The entitlement to tax abatement is conditional upon fulfilling the requirement provided for in Article 2 of Annex VII to the Staff Regulations, which has to be read as a whole for the purpose of determining the concept of ‘dependent child’. That concept does not include children over 26 years of age, even if they still study, unless they fulfil other conditions as set in Article 2(4) of Annex VII to the Staff Regulations. The rules on entitlement to the tax abatement thus established by EU legislation cannot not be modified by internal acts of EU institutions.

V.Conclusion

62.In the light of the foregoing considerations, I propose that the Court reject the appellant’s third ground of appeal.