Austrian ministers had written a letter to the EU Commission requesting that if, for example, a Romanian couple are resident in Austria but their children live in Romania - then the child benefit money they are eligible for should be reduced to the amount they could claim in Romania.
The child benefit allowance is much lower in countries like Romania and Bulgaria. Austria's benefits for families are very generous, accounting for around 2.8 percent of the country's GDP compared to the EU average of 2.4 percent.
Figures show that the amount of child benefit paid in 2015 to the children of EU migrants living outside of Austria was €249 million. Ministers say they could save around €100 million if the benefit was withheld under certain conditions or based on the cost of living in the migrant's home country.
In June, the European Court of Justice said it was lawful for the UK to withhold family benefits to EU migrants who were not working if they did not have the right to reside in the UK. It said it was justified on the basis of "protecting" a state's finances. However, since Britain later voted to leave the EU in a referendum on June 23rd, the ruling no longer applies.
Some Austrian ministers have said that Austrian families are being “discriminated against” as the child benefit payment covers about half of their monthly costs whereas for parents with children in other member states where the cost of living is lower the benefit payment allows them to live very comfortably.
However, an internal paper from the EU Commission, which has been seen by Austria's Kurier newspaper, says that there will be no EU-wide indexing of child benefits as such a system would be too complicated to implement and would not have significant economic advantages.
A spokesman from the EU Commission told the Kurier that the goal is to ultimately make social systems across the EU fairer. He added that some members of the commission are in favour of reducing social benefits, but that they are not the majority.