(2022)
What special features apply to care and support services?
Household-related services also include home care and support for individuals in need of care by mobile care services or self-employed carers, either in the household of the carer or the person in need of care.
Such care and support services can be deducted as household-related services up to 20.000 Euro with 20 percent, a maximum of 4.000 Euro per year, from the tax liability.
Unlike before 2008, proof of care needs and a distinction between care levels or grades are not required. It is sufficient if services for basic care, i.e. direct personal care (body care, nutrition, and mobility) or support, are used.
In 2019, the Federal Fiscal Court unfortunately ruled against the generous stance of the tax authorities, deciding that the tax reduction according to § 35a EStG is only granted for expenses incurred by a taxpayer for their own accommodation in a home or for their own care. However, the tax benefit is excluded for expenses incurred for another person, i.e. if children cover the costs for their parents (BFH ruling of 3.4.2019, VI R 19/17).
A few months after the BFH ruling, the Berlin-Brandenburg Fiscal Court also dealt with the assumption of care costs for a parent. However, this time it was not about covering the costs for residential care, i.e. accommodation in a home, but about covering the costs for outpatient care. The FG decided as follows: § 35a EStG favours - if at all - only expenses for outpatient care of relatives in the taxpayer's own household (i.e. the carer's), not for outpatient care of relatives in their household (BFH ruling of 11.12.2019, 3 K 3210/19). However, a revision was explicitly allowed at that time. And now the positive BFH ruling is available.
Currently, the Federal Fiscal Court has ruled as follows: The tax reduction according to § 35a para. 2 sentence 2 first half-sentence EStG can also be claimed by taxpayers who incur expenses for the outpatient care and support of a third party. Consequently, children can deduct the costs for outpatient care of their parents if they have borne the costs. This also applies if the care and support services are not provided in the taxpayer's own household but in the household of the person being cared for or supported (BFH ruling of 12.4.2022, VI R 2/20).
However, the BFH also adds a complication, as it upholds its aforementioned ruling from 2019. It distinguishes between covering the costs for residential care (= still not deductible) and covering the costs for outpatient care (= deductible), where in the second case it depends on who signed the care contract. Only if the payer, usually a daughter or son, is contractually obliged, i.e. pays off their own debt, are the costs deductible. If, on the other hand, payment is made on the debt of the person being cared for, i.e. father or mother, because they signed the care contract, it is a tax-irrelevant third-party expense.
