(2022)
Are boarding school fees partially deductible as childcare costs?
Expenses for boarding school accommodation for a healthy child for educational purposes are unfortunately not tax-deductible. These expenses are considered typical education costs, which are covered by child benefit or the child and BEA allowance (for care, education, and training). Boarding school costs are also not deductible if the accommodation is for social, psychological, or educational reasons, such as if the child is difficult to educate, has learning disabilities, or the parents are unable to care for the child.
However, if a stay at a boarding school is due to illness or disability, boarding school costs may be deductible as extraordinary expenses. It is important that medical treatment is the primary focus and school attendance is incidental and secondary to this treatment. In such cases, boarding school costs are direct medical expenses and are fully deductible as extraordinary expenses under Section 33 of the Income Tax Act, subject to the deductible burden. Recently, the Thuringia Tax Court opened a new door: boarding school costs - except for catering costs - are childcare costs and are two-thirds deductible, up to a maximum of 4.000 Euro, as special expenses under Section 10 (1) No. 5 of the Income Tax Act (Thuringia Tax Court, 25.10.2016, 2 K 95/15).
The case: The 11-year-old daughter attends a full-day school. During the school weeks, the child is accommodated in the boarding school affiliated with the school. The care of the students living in the boarding school is based on a concept coordinated with the school for holistic education and care. According to the educational agreement, the boarding school is responsible for accommodation, meals, education, health care, and leisure activities.
The boarding school costs amount to 2.435 Euro, of which 1.035 Euro is for accommodation and 1.400 Euro for meals. The tax office does not want to recognise the accommodation costs - let alone the meal costs - because "personal and nurturing care for the child was not the main focus, so the boarding school costs were not considered eligible care services." The tax judges:
If the tax office believes that only nurturing or supervisory care is eligible and personal care for the child must be the main focus, the Federal Fiscal Court has already rejected this narrow view (BFH ruling of 19.4.2012, III R 29/11).
Rather, the term childcare, which is not defined by law, should be interpreted broadly according to BFH case law. In addition to nurturing and supervisory care in the sense of protection from dangers, injuries, and damage, it generally also includes personal care. It also extends to elements of care and education, i.e., concern for the child's mental, emotional, and physical well-being, thus pedagogically meaningful supervision.
Care services can take different forms: out-of-home care, in kindergartens, day-care centres, children's homes, crèches, as well as with childminders, weekly mothers, and in full-day care facilities, but also by childcare workers, educators, and household help, as well as supervision of homework at home. It is not clear why accommodation in a "children's home" should be eligible, but accommodation in a "boarding school" should not.
