Can school fees for a child's education be considered exceptional expenses?
In principle, school fees are 30% deductible as special expenses, up to a limit of 5,000 Euro. However, if boarding is for social, psychological or educational reasons, accommodation and meal costs are not deductible.
Recently, the Düsseldorf Tax Court ruled that 28,000 Euro in boarding school costs for a child with ADHD at an English private school could not be deducted as extraordinary expenses, as the school attendance was not for medical treatment. A public health officer's certificate prior to the boarding was missing.
The rules change if a child is placed in a special needs boarding school due to disability or illness. In this case, boarding school costs are deductible as extraordinary expenses if the medical treatment is the main focus and is proven in advance by a public health officer's certificate.
Most recently, the Münster Tax Court ruled that the costs of a private school for a gifted child do not qualify as extraordinary expenses. This is because these costs are considered private living expenses rather than direct medical expenses.
In this case, the daughter attended a state-recognised boarding grammar school because her special learning ability and high intelligence were not sufficiently supported, leading to psychosomatic complaints. A public health service recommended attending a boarding grammar school for health reasons.
The parents applied for the boarding school costs to be recognised as extraordinary expenses, but this was rejected. The tax office and the Münster Tax Court argued that the expenses for attending a private school cannot be considered medical expenses unless the attendance is for medical treatment and includes special medical care.
However, in 2011, the Federal Fiscal Court ruled that expenses for the schooling and boarding of a gifted child are deductible as extraordinary expenses if the schooling is medically necessary. It does not matter that the boarding also serves educational purposes.
The BFH judges emphasised that the medical indication does not necessarily have to be proven by a prior medical certificate. The tax court is obliged to examine the medical necessity and, if necessary, obtain an expert opinion.
A non-admission appeal was lodged with the Federal Fiscal Court, and if it follows the plaintiff's view, the costs for schooling and boarding could be recognised as direct medical expenses. This would mean that the school fees paid could be fully deducted as extraordinary expenses and not just 30% up to 5,000 Euro as special expenses. However, the training allowance for adult children of 1,200 Euro would be forfeited due to the external accommodation, to prevent double tax relief.
