Can adoption costs be deducted to reduce tax?
Adoption costs cannot be deducted as exceptional expenses under the current legal framework according to § 33 EStG. This regulation is based on the consistent case law of the Federal Fiscal Court (BFH), which holds that adoption is a conscious, voluntary decision and not a compulsory necessity.
Historical development of case law:
- Previous legal situation (1987): The BFH ruled as early as 1987 that adoption costs are not deductible as exceptional expenses because adoption is not considered "unavoidable" but is based on a voluntary decision (BFH ruling of 13.3.1987, III R 301/84).
- Attempt to change (2012): In 2012, the VI Senate of the BFH wanted to change the case law and recognise adoption costs, but this failed due to the resistance of the responsible III Senate. An attempt to reach a final clarification by the Grand Senate in 2013 was unsuccessful.
- Confirmation of the old case law (2015): In 2015, the VI Senate of the BFH confirmed the previous case law and ruled that adoption costs are still not deductible as exceptional expenses, even if the adoption is related to an organically caused sterility of one partner (BFH ruling of 10.3.2015, VI R 60/11).
- Constitutional complaint: A constitutional complaint was lodged against this ruling with the Federal Constitutional Court (BVerfG), but it was not accepted for a decision due to lack of prospects of success (BVerfG decision of 13.6.2016, 2 BvR 1208/15). Thus, it remains final: adoption costs are not tax-deductible.
Current case law:
Current ruling (2024): In 2024, the Münster Finance Court again ruled that adoption costs do not constitute exceptional expenses (FG Münster, ruling of 25.6.2024, 14 K 1085/23 E). In this case, the plaintiffs had adopted two children born abroad and claimed the adoption costs as exceptional expenses. They argued that the costs had arisen out of necessity, as they had previously undergone unsuccessful fertility treatment. However, the Finance Court and the tax office dismissed the claim, emphasising that adoption is not a medical treatment and the decision to adopt is always based on free will, even after unsuccessful fertility treatment.
Reasoning:
- Not medical expenses: The BFH has repeatedly clarified that adoption costs are not considered medical expenses, as there is no medical necessity for adoption. Adoption is not a medical treatment and is not subject to medical guidelines.
- Voluntary decision: The decision to adopt, even after unsuccessful fertility treatment, is based on a voluntary decision and is not a compulsory consequence of infertility.
Conclusion:
Adoption costs are not tax-deductible under current law and case law. Even in cases of involuntary childlessness or previous unsuccessful fertility treatment, adoption remains a voluntary decision and is therefore not recognised for tax purposes as an exceptional expense.
