This exclusion can be applied universally to all EU citizens, meaning the German welfare centre will not need to consider each application for benefits individually, the EU's highest court ruled.
The point of contention was a rule in the German social law which excludes all non-German EU citizens from picking up unemployment benefits or child support benefits during the first three months in Germany.
Judges considered the case of a Spanish family which moved to Germany in two stages. The father and his son moved to Germany in June 2012, a couple of months after the mother and daughter.
While the mother performed a job which legally obliged her to pay into social security, the father and son were both denied welfare payments because they hadn't been in the country for three months.
The verdict does not concern refugees and is specifically aimed at preventing EU citizens from engaging in so-called “welfare tourism.”
Latest setback for foreign unemployed
The ruling followed a string of verdicts which have negatively affected the rights of unemployed EU citizens living abroad.
In December 2015, the German social court ruled that EU citizens would have to wait six months before they were entitled to receive jobless benefits.
And Labour Minister Andrea Nahles of the Social Democratic Party (SPD) has said that she wants to toughen the law even further, Die Welt reports.
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“It isn't right that someone only needs to move inside the EU and then have access to another country's welfare system despite having a functioning one in their own country,” she said.
In September 2015, meanwhile, the ECJ previously struck a blow against the rights of workers abroad when it ruled that foreigners living in Germany did not have an immediate right to welfare payments, even if they had already had a job there.
The ruling ruling meant that EU citizens living in Germany are only able to collect Hartz IV – an unemployment benefit of €399 a month – for a period of six months. Only after five years' residency in Germany will they be entitled to the same benefits as German citizens.