Can contributions to mutual support societies be deducted?

Many citizens have either statutory or private health insurance. An alternative form of coverage is membership in mutual benefit societies or solidarity communities, which have existed for almost 100 years. However, there are frequent disputes with the tax authorities over whether contributions to such societies can be deducted as special expenses. This is often rejected on the grounds that no legal entitlement to benefits is acquired, as confirmed by many tax courts.

However, in 2023, the Federal Fiscal Court (BFH) made an important decision. It overturned a ruling by the Hessian Finance Court and referred the case back for reconsideration. The BFH found that there might indeed be a legal entitlement that would allow the contributions to be deducted as special expenses (BFH ruling of 23.08.2023, X R 15/22). A similar case from the Münster Finance Court was also referred back for a new hearing (BFH court order of 23.08.2023, X R 21/22).

The decision of the Münster Finance Court has now been made (ruling of 01.03.2024, 11 K 820/19 E). It decided that contributions to health care at mutual benefit societies can be deducted as special expenses, as they provide a level of coverage equivalent to that of statutory and private health insurance. In addition, members have a legally binding entitlement to benefits in the event of illness. However, contributions to long-term care insurance remain non-deductible, as only statutory long-term care insurance is eligible.

Conclusion: Contributions to mutual benefit societies for health care can be deductible as special expenses under certain conditions, provided there is a legal entitlement to benefits. This does not apply to long-term care insurance.