Can I also claim tax relief for assisting a person in need of care?
Yes and no. For the care of a person in need of care in your household, you can claim 20 percent of the costs, up to a maximum of 4,000 Euro (§ 35a EStG). You can deduct the care costs if the person being cared for is yourself or your spouse. In the past, the tax authorities also allowed the deduction of costs for the care of parents, even if they did not belong to your household. However, the Federal Fiscal Court (BFH) rejected this (BFH ruling of 3.4.2019, VI R 19/17).
Eligible services include basic care, i.e. direct care for the person (personal hygiene, nutrition and mobility) or supervision. The tax relief is only granted if the care and supervision take place in the household of the carer or the person being cared for. This can also be a household in a residential home or nursing home. The tax relief is household-related. So if two people in need of care are looked after in one household, the tax relief is only granted once. Care and support services also exceptionally include personal services, provided they are listed in the care insurance service catalogue, e.g. hairdressing, cosmetics, manicure, pedicure.
Depending on the amount of your costs, it may be worthwhile to forgo the care allowance. This is always worthwhile if 20 percent of your care expenses exceed this allowance. In this way, you can potentially deduct up to 4,000 Euro of care costs directly from your tax liability.
In 2019, the Federal Fiscal Court unfortunately ruled - against the generous stance of the tax authorities - 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 advantage is excluded for expenses incurred for another person, i.e. when 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 Finance Court also dealt with the assumption of care costs for a parent. This time, however, it was not about covering the costs for inpatient care, i.e. accommodation in a home, but about covering the costs for outpatient care. The Finance Court ruled 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, an appeal was explicitly allowed at that time. And now the positive ruling of the BFH 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 supervision 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 supervised (BFH ruling of 12.4.2022, VI R 2/20).
However, the BFH also complicates matters, as it upholds its above-mentioned ruling from 2019. It distinguishes between covering the costs for inpatient care (= still not deductible) and covering the costs for outpatient care (= deductible), whereby in the second case it depends on who concluded the care contract. Only if the payer, usually a daughter or son, is contractually obliged, i.e. pays for their own debt, are the costs deductible. However, if payment is made for the debt of the person being cared for, i.e. father or mother, because they concluded the care contract, it is a tax-irrelevant third-party expense.
In 2021, the care allowance for home care with care level 4 or 5 was doubled and an allowance for care levels 2 and 3 was introduced. The allowance is:
- for care level 2: 600 Euro
- for care level 3: 1.100 Euro
- for care level 4 or 5 or helplessness: 1.800 Euro, however, you can only deduct this if the person in need of care cannot cover the care costs themselves.
