Automatic child benefit: reform could provide families with tangible relief

In future, child benefit in Germany is to be paid automatically following the birth of a child, without parents having to submit an application. The Bundestag passed this resolution at its sitting on 9 July 2026. The law is due to come into force on 1 January 2027.

In practical terms, this means that, following the birth of a child, the registry office will in future automatically inform the Federal Central Tax Office, which in turn will notify the family benefits office. The family benefits office will then transfer the child benefit to the parents without the need for any further application procedure.

A recent study by three professors from Berlin, Frankfurt and Würzburg – who have been examining precisely this issue over the past few months – shows just how much of a burden this new procedure will lift from families in future.

People surveyed on reform scenarios

What is the study about? Steffen Altmann, Head of the Chair of Labour and Organisational Economics at the University of Würzburg, explains:

“We are investigating the extent to which people’s burdens are eased when applications or administrative procedures become simpler or are handled entirely automatically – and what positive consequences this can have for other areas of life.”

For their analysis, the researchers carried out, amongst other things, a survey of the German population focusing on reforms to child benefit, parental allowance and tax returns. The proposed child benefit reform examined in the study corresponds exactly to the law now passed by the federal government.

80 per cent less time spent on child benefit

Initial analyses of the survey show that the application-free child benefit scheme will save parents an average of almost four hours. As not all steps in this process are eliminated entirely, this still represents a reduction of around 80 per cent in the time required compared with the current application process. Respondents also expect the reform to significantly reduce their mental strain. On a scale of 0 (low strain) to 10 (high strain), assessments of complexity, stress and uncertainty each fell by around 1.5 to 2.5 points.

A time saving of four hours – that may not sound like much, but: “Young parents in particular are under a lot of stress. They are entering a new phase of life and have to juggle a wide variety of administrative tasks at the same time – such as applying for child benefit, parental allowance and a birth certificate, sorting out health insurance, organising nursery care, finding a paediatrician and attending appointments for compulsory health checks,” says Professor Altmann.

In this situation, any time saved is a benefit. Further reforms – such as to the parental allowance scheme – could provide young families with further tangible relief. If the financial value of the time saved is calculated using the hourly wage of young parents, the researchers estimate that simplifying the procedures for both child benefit and parental allowance together could result in savings of up to 107 million euros a year.

Huge potential in other areas too

“The simplification of administrative processes must not stop at child benefit and parental allowance: our study shows that simplifications in other areas of life also hold great potential,” says Andreas Grunewald, Professor of Microeconomics at the Frankfurt School of Finance & Management.

Take tax returns, for example. The researchers have also analysed how simplified procedures would affect this area: they examined the effects of switching to an automated tax return system, such as that commonly used in Denmark. There, the tax authority collates most of the data via an online portal; taxpayers simply have to check the result and make corrections if necessary.

The study’s participants estimate that, on average, they would spend three hours and twenty minutes less on their tax returns if this model were introduced in Germany.

“When you consider how many citizens have to complete their tax returns every year, the Danish model could save millions of hours that people could spend on other activities,” said the Frankfurt professor.

Tax returns: pilot scheme can only be the beginning

“If politicians want us to work more, they must also create the right conditions for this and not burden citizens with unnecessary red tape,” says Jonas Radbruch, Juniorprofessor in the Microeconomics Research Group at Humboldt University in Berlin.

There is enormous untapped potential here: “Pilot schemes such as the project ‘The tax office now does it for you’, modelled on the Danish system and launched in Hesse before recently being extended to other federal states, should therefore be just the beginning,” said the Berlin-based researcher.

Accordingly, the three academics welcome the simplification of tax returns agreed as part of the federal government’s reform package, as reported by ARD. To this end, the federal and state finance ministers are now to draw up joint proposals. The federal government intends to present its plans for tax simplification on this basis. As a first step, an automatically pre-filled digital tax return could indeed be introduced.

However, the experts stress that it is important for these projects to be comprehensively monitored and evaluated by scientists.

Facts about the study

In the survey, the three researchers gathered feedback from two sample groups on their experiences with the current application procedures and their views on various reform proposals. They surveyed

• around 500 parents with young children living in Germany on child benefit and parental allowance procedures
• around 1,000 tax-paying employees on tax returns.

The questions concerned, amongst other things,

• the time required to apply for child benefit, parental allowance or to complete a tax return under the current procedures, as well as the stress, uncertainty, etc. experienced in the process
• the time the respondents expect to spend under the respective reform scenarios:
  • Child benefit without the need to apply
  • Pre-filled parental allowance application
  • Automated tax return based on the Danish model
• The ‘monetary value’ of the time saved
• Other assessments of the reform proposals, for example with regard to reduced burden / stress, data protection concerns, and trust in the respective processes