SteuerGo FAQs

What can be deducted for childcare by grandparents?

Since 2012, childcare costs have been deductible as special expenses, but only two-thirds and limited to 4,000 Euro per child (§ 10 para. 1 no. 5 EStG). If grandparents look after the child, payments cannot be deducted for tax purposes unless they are travel expense reimbursements.

Current Decisions

Unpaid childcare by the grandmother and travel expense reimbursement:

If you reimburse grandparents for travel expenses for childcare – whether for bus, train, taxi, or a flat rate of 30 cents per kilometre when using their own car – these expenses can be deducted for tax purposes (BFH ruling of 4.6.1998, III R 94/96).

The Baden-Württemberg Finance Court has ruled that the reimbursement of travel expenses is also considered deductible childcare costs if the care is provided free of charge. Care provided as a family favour does not affect tax deductibility (FG Baden-Württemberg, ruling of 9.5.2012, EFG 2012 p. 1439).

The grandmother does not have to declare the travel expense reimbursements in her tax return, as they are pure cost reimbursements and not taxable income. The condition is that the caregiver issues a “receipt” or invoice for the incidental costs incurred (BMF letter of 14.3.2012, BStBl. 2012 I p. 307, para. 5).

Payment for childcare by grandparents:

Parents can take into account a payment for childcare to grandparents for tax purposes if the grandparents do not live in the same household and the care agreement is concluded as it would be with third parties (BFH ruling of 6.10.1961, BStBl. 1961 III p. 549).

Childcare costs and bank statements:

A ruling by the Nuremberg Finance Court of 12.8.2019 (4 K 936/18) shows that it is important to provide clear evidence of childcare costs. In the case mentioned, the plaintiffs could not provide conclusive explanations for transfers, which led to the rejection of their childcare costs. Nevertheless, it was emphasised that travel expense reimbursements to grandparents generally lead to deductible childcare costs.

Tax advantage for employer benefits in childcare:

Employer benefits for the accommodation and care of employees' pre-school children in kindergartens or similar facilities are tax and social security-free (§ 3 no. 33 EStG). The benefits must be provided in addition to the salary owed anyway.

Combining tax benefits for childcare:

The Federal Finance Court states that kindergarten fees deductible as special expenses must be reduced by the tax-free employer subsidies provided for this purpose (BFH decision of 14.4.2021, III R 30/20).

Childcare: Household affiliation decisive

Only children who belong to the household are eligible. For parents living separately, the child's registered residence counts. Simultaneous affiliation to both households can be assumed if the child lives flexibly between both parents.

The Thuringia Finance Court has allowed the question of the compatibility of § 10 para. 1 no. 5 EStG with the Basic Law. The Federal Finance Court confirms the view that the care expenses of the non-custodial parent must be covered by the BEA allowance (BFH ruling of 11.5.2023, III R 9/22).