Who can claim medical expenses as exceptional costs?

Anyone who can provide evidence of medical expenses can also declare them in their tax return. You will need a receipt, an invoice and, in some cases, a medical certificate. It does not matter whether you incurred the expense for your own illness, for that of your spouse or for a child for whom you are entitled to child benefit. What counts is the date you paid the invoice, not the date it was due.

If you have medical expenses related to a commuting accident or a work accident, you should declare them as income-related expenses or business expenses. This also applies to costs incurred due to an occupational illness or retraining due to illness. The advantage is that in this case a reasonable burden is not deducted.

(2023): Who can claim medical expenses as exceptional costs?

What medical expenses can I deduct?

As medical expenses, you can deduct all costs incurred in connection with an illness. You can enter these in your tax return as extraordinary expenses without any limit.

The tax office automatically deducts the reasonable deductible, which depends on your income, marital status, and number of children. This deductible ranges from one to seven percent of your annual income and is taken into account for all general extraordinary expenses, including medical expenses.

Expenses you can claim as medical costs include:

• medical treatment
• health spas, physiotherapy, etc.
• care services
• alternative practitioners or homeopaths
• medications
• pharmacy co-payments
• medical aids
• hospital stays
• trips to the doctor, hospital, physiotherapy, etc.

Travel expenses: If you travel to the doctor by public transport, you can deduct the actual costs incurred, so keep the tickets (ticket, train ticket). However, if you travel by car, you can deduct a flat rate of 0.30 Euro per kilometre.

You can also claim the costs for dental prostheses or a cure. However, not the expenses for visiting a sick person or measures to prevent illness, such as a diet or a back massage for relaxation, for example.

For health courses aimed at fitness or weight reduction that are not prescribed by a doctor, you should try to get a credit from your health insurance company through a bonus booklet. Many statutory health insurance companies offer this – ask your health insurance company directly.

Conversely, you must also deduct reimbursements or co-payments from the health insurance, pension, or accident insurance from your expenses before you enter them in the tax return. However, you do not have to have payments from daily sickness allowance insurance credited.

Statutory health insurance companies often offer their customers bonus programmes for health-conscious behaviour under § 65a SGB V and then pay cash bonuses for this. The health insurance companies can determine for themselves which services are rewarded, e.g. preventive examinations, vaccinations, healthy eating, or sporting activities. Such bonus payments to promote health-conscious behaviour are not a refund of contributions. Therefore, the health insurance contributions deductible as special expenses are not reduced (BFH ruling of 1.6.2016, X R 17/15; BFH ruling of 6.5.2020, X R 16/18).

However, there are still services provided by statutory health insurance companies that are considered "genuine" refunds of contributions and therefore reduce the deduction for special expenses.

Currently, the Federal Ministry of Finance has once again commented on the distinction between bonus payments and refunds of contributions (BMF letter of 16.12.2021, BStBl 2022 I p. 155). According to this, among other things:

• Refunds of contributions that reduce the deduction for special expenses also include premium payments under § 53 SGB V. These are, for example, premiums for insured persons participating in general practitioner-centred care. If the benefit is granted in the form of bonus points, these must be converted into Euro and reported as a refund of contributions. Bonuses for family-insured bonus programme participants are to be attributed to the main insured person.
• A refund of contributions also exists if a bonus from the statutory health insurance relates to a measure covered by basic health insurance (in particular health prevention or protection measures, e.g. for the early detection of certain diseases) or is paid for behaviour independent of expenditure (e.g. non-smoking status, healthy body weight).
• If the statutory health insurance reimburses or rewards costs for health measures under a bonus programme according to § 65a SGB V that are not included in the regular insurance coverage of basic health insurance (e.g. osteopathy treatment) or serve to promote health-conscious behaviour (e.g. membership in a sports club or gym) and have been or are privately financed by the insured, this is not a refund of contributions. The health insurance contributions deductible as special expenses are therefore not to be reduced by the amount of the cost reimbursement or the bonus attributable to it. A flat-rate bonus payment does not have to cover the actual costs incurred exactly.

Tip 1: For simplification purposes, it can be assumed that bonus payments made on the basis of § 65a SGB V do not reduce the deduction for special expenses up to an amount of 150 Euro per insured person. If the bonus payments exceed this amount, the amount exceeding this is a refund of contributions that reduces the deduction for special expenses. The taxpayer is free to prove that there is no refund of contributions for bonus payments of more than 150 Euro. This means they must demonstrate that the bonus payments under § 65a SGB V were made to promote health-conscious behaviour. This regulation applies in all open cases and for payments made up to 31 December 2023.

Tip 2: In fact, statutory health insurance companies are required to check whether a payment that is neutral or reduces special expenses has been granted. They must inform the tax authorities electronically, and the corresponding data is then automatically included in the respective tax assessment. However, experience shows that the programme-controlled notifications are not always correct. And the current non-objection limit of 150 Euro is likely not to have been observed in many cases. Therefore, check whether the correct values have been applied in your tax assessment.

Tip 3: At the end of 2020, the Federal Fiscal Court ruled that bonus payments from private health insurance "to promote cost-conscious behaviour" are to be regarded as a refund of contributions and therefore reduce the deductible special expenses if the bonuses are paid regardless of whether the policyholder has incurred financial health expenses or not (BFH ruling of 16.12.2020, X R 31/19).

(2023): What medical expenses can I deduct?

How do I provide evidence of medical expenses?

You must provide evidence of expenses for medication, remedies, and other medical costs with receipts. The tax office also requires proof that the medication or treatment is medically necessary. You usually need a doctor's prescription for this. If you have a chronic illness, presenting the medical certificate once is usually sufficient. If your ophthalmologist has prescribed glasses for you once, a confirmation from the optician is sufficient for the necessity of expenses for further glasses.

As soon as you have a medical certificate from your doctor recommending a specific measure or medication, collect the receipts. Only at the end of the year will you know the total amount of your expenses for remedies and treatments. Medical costs, together with expenses for other general extraordinary burdens, form a total. You can then use our overview to calculate whether it is worthwhile to include them in your tax return, as the tax office deducts your reasonable personal contribution from the actual expenses. Only the amount that exceeds the reasonable burden has a tax-reducing effect.

In certain cases, the medical necessity must be proven by a certificate from the public health officer or a statement from the Medical Service of the Health Insurance. It is important that this proof is obtained before the treatment begins or before the medical remedy is purchased. This strict proof is required in the following cases:

• Bath or spa treatment; in the case of a preventive spa treatment, the risk of an illness to be averted by the treatment, in the case of a climate treatment, the medically indicated spa location and the expected duration of the treatment must also be certified,
• psychotherapeutic treatment,
• medically necessary accommodation away from home for a child of the taxpayer suffering from dyslexia or another disability,
• need for the taxpayer to be accompanied by a carer, unless this is already evident from the severely disabled person's pass,
• medical aids considered to be general everyday items,
• scientifically unrecognised treatment methods, such as fresh and dry cell treatments, oxygen, chelation, and autologous blood therapy.

The certificate must contain sufficiently specific information about the spa location in accordance with § 64 para. 1 sentence 1 no. 2a EStDV. The statement "in a tropical climate" alone is not sufficient to determine the spa location. The certificate must show that the taxpayer is ill and that a stay at a specific spa location for a certain period is medically indicated. The public health officer must specify in their statement where exactly a climate treatment is medically indicated due to the existing conditions (FG Münster, judgement of 23.2.2022, 7 K 2261/20 E).

The Federal Fiscal Court has recently ruled in favour of taxpayers that expenses for liposuction to treat lipoedema are deductible, and from 2016 onwards, they can be considered as extraordinary burdens without the need for a medical report from a public health officer or a medical certificate from a Medical Service of the Health Insurance before the operations (BFH judgement of 23.3.2023, VI R 39/20).

(2023): How do I provide evidence of medical expenses?

Can I also claim over-the-counter medication for tax purposes?

Expenditure on medication is tax-deductible as extraordinary expenses if prescribed by a doctor or alternative practitioner.

Many non-prescription medicines are on the so-called negative list, which the doctor is not allowed to prescribe at the expense of the health insurance (trivial medicines). Such medications are often purchased without a prescription at one's own expense as part of self-medication, but the tax office often refuses to recognise them for tax purposes.

However, non-prescription medicines and remedies can also be tax-deductible as extraordinary expenses if their purchase is medically indicated. This is the case if the doctor prescribes medication on a private prescription.

(2023): Can I also claim over-the-counter medication for tax purposes?

When are costs for alternative healing methods deductible?

Alternative healing methods are treatments that are not yet generally recognised scientifically. This includes, for example, fresh and dry cell treatment, oxygen, chelation and autologous blood therapy, ozone therapy, Ayurveda method, consumption of mare's milk for hepatitis, magnetic field therapy, dolphin therapy, etc.

You can also deduct expenses for such alternative healing methods as medical expenses under extraordinary burdens - but under the following condition: You must prove the medical necessity of the treatment with a public health officer's certificate or a certificate from the Medical Service of the health insurance companies and obtain this certificate before the start of treatment. The legal basis for this is § 33 para. 4 EStG and § 64 para. 1 EStDV.

(2023): When are costs for alternative healing methods deductible?

How are costs for disability-related structural modifications taken into account?

If you are suddenly affected by a disability and wish to continue living in your usual environment, significant alterations to your home may often be necessary. The costs for adapting your home to be disability-friendly can be deductible as extraordinary expenses under § 33 EStG, although the tax office will apply a reasonable burden.

This applies to disability-related building measures on existing buildings as well as when building a new house. According to the new opinion of the Federal Fiscal Court, it is irrelevant "whether the additional costs due to illness or disability arise in the context of a new build, the modernisation of an old building, or the conversion of an already self-used home or rented flat" (BFH ruling of 24.2.2011, BStBl. 2011 II p. 1012).

Eligible measures include, for example, the construction of a wheelchair ramp, the creation of a barrier-free house entrance, the installation of a disability-friendly bathroom, converting a ground-floor room into a bedroom, the wheelchair-accessible widening of doors, etc.

The expenses for the disability-friendly design of the home are not covered by the disability allowance, as this only compensates for ongoing and typical additional expenses of the disabled person. Instead, the expenses can be deducted additionally.

According to the new opinion of the Federal Fiscal Court, the tax office can no longer refuse the tax recognition of the construction costs with the argument that you would gain an asset. The objection that the building measures are not only beneficial for the disabled person but also for non-disabled people and therefore constitute a marketable advantage is also no longer valid.

Currently, the Federal Fiscal Court has unfortunately ruled that expenses for the creation of a wheelchair-accessible path in the garden of a detached house are not necessary if there is a terrace on the other side of the house that is accessible by wheelchair. Consequently, the expenses cannot be deducted as extraordinary expenses. However, the labour costs can be deducted as a craftsman service at 20 percent (maximum 1.200 Euro) from the tax liability (BFH ruling of 26.10.2022, VI R 25/20, BStBl 2023 II p. 372).

(2023): How are costs for disability-related structural modifications taken into account?

What travel expenses can disabled persons deduct?

People with disabilities may deduct expenses for private journeys as general extraordinary expenses under Section 33 of the Income Tax Act, provided they are within a "reasonable limit". This valuable tax benefit is in addition to the disability allowance. However, the extent of the tax relief depends on the type and severity of the disability. Two groups are distinguished:

• People with a degree of disability of 80 or more, or with a degree of disability of 70 or more and the "G" mark.
• People with the "aG" mark, the "Bl" mark, the "TBl" mark, or the "H" mark.

Since 1 January 2021, the "Disability Allowance Act" has established a disability-related travel allowance for the aforementioned individuals: This amounts to

• first group: 900 Euro,
• second group: 4.500 Euro.

The tax office applies a reasonable burden to these allowances (Section 33, Paragraph 2a of the Income Tax Act).

Group 2 includes - in addition to people with the "aG", "Bl", and "H" marks - also people with the "TBl" mark (deafblind). This mark was newly introduced in social law in 2017 to clarify equal status with the "Bl" mark. The extension is declaratory, as people with the "Bl" and/or "TBl" mark always also receive the "H" mark.

• Beyond these travel allowances, no further disability-related travel or vehicle costs are to be considered as extraordinary expenses.
• If the higher allowance of 4.500 Euro is claimed, the 900 Euro allowance cannot also be claimed.
• For proof of entitlement, uniform regulations are to apply for the disability-related travel allowance and the disability allowances under Section 33b of the Income Tax Act. This also includes the equal status of the "H" mark with care levels 4 and 5. No deviations from the current restrictions on the group of eligible persons are planned. This is to be clarified by supplementing Section 64 of the Income Tax Implementing Regulations and a direct reference to Section 65 of the Income Tax Implementing Regulations. Section 65 of the Income Tax Implementing Regulations specifies the proof of a disability in detail.

(2023): What travel expenses can disabled persons deduct?

How are care home costs taken into account?

If you are accommodated in a care home, nursing home or in the care section of a retirement home or residential facility due to the need for care, the high costs can fortunately be deducted as extraordinary expenses.

Deductible expenses include not only the costs for medical services and care but also the costs for accommodation and meals. This is because the expenses for home accommodation are considered medical expenses.

However, the deductible costs must be reduced by

• the care allowance from statutory or private care insurance.
• the household saving if the household is dissolved. The household saving amounts to 909 Euro per month and 30.30 Euro per day in 2023.
• the reasonable burden, which depends on your marital status and income and ranges between 1 and 7%.

Note: If elderly people move into a "normal" retirement home, the home costs are unfortunately not tax-deductible. In this case, the accommodation costs are considered living expenses. However, if care is needed later, the home and care costs can be fully deducted as extraordinary expenses from that point on, with the tax office applying a reasonable burden (BMF letter dated 20.1.2003, BStBl. 2003 I p. 89).

(2023): How are care home costs taken into account?

What is the significance of the official medical certificate?

It is difficult for tax officials to assess whether expenses are for the treatment or alleviation of an illness and are therefore tax-deductible, or whether they are for general prevention and health maintenance and therefore cannot be deducted for tax purposes.

In any case, tax officials do not have the expertise to objectively assess the medical indication. Therefore, in certain cases, they require a certificate from the public health officer or the Medical Service of the Health Insurance Funds, clearly stating the illness and the medical indication. This certificate must be obtained before the start of treatment. Many honest citizens have failed at these two hurdles and have been left with often high medical costs.

The cases in which a certificate from the public health officer or the Medical Service of the Health Insurance Funds must be obtained and submitted to the tax office are explicitly stated in the law (§ 64 para. 1 no. 2 EStDV):

• Bath or spa treatment; in the case of a preventive cure, the risk of an illness to be averted by the cure must also be certified, in the case of a climate cure, the medically indicated spa location and the expected duration of the cure must be certified,
• psychotherapeutic treatment,
• medically necessary accommodation away from home for a child of the taxpayer suffering from dyslexia or another disability,
• necessity for the taxpayer to be accompanied by a carer, unless this is already evident from the severely disabled person's pass,
• medical aids considered to be general everyday items,
• scientifically unrecognised treatment methods, such as fresh and dry cell treatments, oxygen, chelation, and autologous blood therapy.

In other cases, the tax office must accept the submitted costs and may not require a public health officer's certificate. For example, expenses for curative eurythmy treatments are deductible as extraordinary expenses in accordance with § 33 EStG. It is not necessary to submit a public health officer's certificate; a prescription from the GP is sufficient. Curative eurythmy is not a scientifically unrecognised method but is recognised as a special therapy within the framework of anthroposophy in the law of statutory health insurance (BFH ruling of 26.2.2014, VI R 27/13).

The Federal Fiscal Court recently ruled that the costs of liposuction for the treatment of lipoedema are tax-deductible. From 2016, these expenses can generally be considered as extraordinary expenses without the need for an expert opinion from the public health officer or a medical certificate from the Medical Service of the Health Insurance Fund issued before the operation (BFH ruling of 23.3.2023, VI R 39/20).

(2023): What is the significance of the official medical certificate?

Are expenses for liposuction tax deductible?

Fat removal is generally considered a cosmetic treatment. This means that the costs are not recognised as medical expenses under extraordinary burdens for tax purposes. However, such procedures are not always carried out for cosmetic reasons, but often for medical reasons.

Liposuction to treat lipoedema is a procedure where fat cells are removed from specific areas under the skin using cannulas. Lipoedema is a fat distribution disorder that mainly occurs in the thigh, buttock, and hip areas, as well as the inner knees and lower legs. This condition is better known as saddlebag phenomenon or column legs. The question is whether liposuction is always considered a cosmetic procedure (which is recognised for tax purposes) or whether it can also be a medically necessary treatment whose costs are tax-deductible.

The Finance Court of Baden-Württemberg did not recognise the costs for liposuction to treat lipoedema in the legs and upper arms as an extraordinary burden because liposuction is not a scientifically recognised treatment method. Such treatment costs are only deductible if the medical necessity is proven by a public health officer's certificate. This was not the case here (FG Baden-Württemberg, 4.2.2013, 10 K 542/12).

Currently, the Federal Fiscal Court has rejected the Finance Court's view that liposuction is not a scientifically recognised treatment method. There was a lack of logical, rational evidence. "If the Finance Court lacks the necessary expertise to assess scientific recognition, an expert opinion should be obtained" (BFH ruling of 26.6.2014, VI R 51/13).

The question, therefore, is whether liposuction is a scientifically recognised method for treating lipoedema.

According to the BFH, a treatment method is scientifically recognised "if its quality and effectiveness correspond to the generally accepted state of medical knowledge. This is assumed if the vast majority of relevant experts (doctors, scientists) support the treatment method and there is consensus on the appropriateness of the therapy. This usually requires that reliable, scientifically verifiable statements can be made about the quality and effectiveness of the method. The success must be evident from scientifically sound studies on the number of cases treated and the effectiveness of the method. The therapy must have been successful in a sufficient number of treatment cases for a reliable assessment" (BFH ruling of 26.6.2014, VI R 51/13).

From the decision, it can be inferred that the BFH wishes to recognise the costs for the treatment as extraordinary burdens. The Finance Court must now clarify whether liposuction is a scientifically recognised method. The problem with this treatment method is that it is often mistaken for a purely cosmetic operation. Therefore, in similar cases, it is advisable to appeal against the negative tax assessment and refer to the BFH ruling.

Currently, the Saxon Finance Court has recognised the costs of liposuction for lipoedema as an extraordinary burden. These costs are tax-deductible if there is a medical prescription. A prior public health officer's certificate is no longer required, deviating from previous financial court rulings (Saxon FG, 10.9.2020, 3 K 1498/18, revision VI R 39/20).

The Federal Fiscal Court recently ruled that the costs for liposuction to treat lipoedema are tax-deductible. This applies from 2016 and generally does not require public health officer reports or medical certificates (BFH ruling of 23.3.2023, VI R 39/20).

(2023): Are expenses for liposuction tax deductible?

How to Claim Tax Relief for Your Gym

More exercise is one of the most popular New Year's resolutions. What many may not know: You can claim the costs for a gym as exceptional expenses on your tax return.

Reducing excess weight, quitting smoking, or alleviating back pain: exercise helps with many bad habits and ailments. Many people use a gym to get physical exercise. If you do this due to an illness, you can deduct your membership fee for tax purposes. Two conditions must be met, reports the Vereinigte Lohnsteuerhilfe e. V. (VLH):

1. The exercise alleviates or cures the illness

The costs for a gym are tax-deductible if the facilities are used for health reasons: the exercise must be necessary to alleviate or cure an illness – for example, a slipped disc. The tax office requires a corresponding certificate from the relevant public health officer.

For such a public health certificate, a certificate from your GP is initially required. Once your GP has issued such a certificate, you can arrange an appointment with the relevant health office and the public health officer. If they confirm the GP's diagnosis, the public health certificate will also be issued.

Very important: The certificate from the public health officer must be available before taking out a gym membership.

2. A doctor or alternative practitioner supervises the training

The relevant tax office also accepts the costs for a gym only if the training there takes place “according to precise individual prescription and under the responsibility of a doctor, alternative practitioner or other person authorised to practise medicine,” as the judges of the Federal Fiscal Court ruled on 14 August 1997. The exercise must therefore be carried out regularly under the supervision of a qualified person.

If both conditions are met – the public health certificate and regular supervision by a doctor, alternative practitioner or similarly qualified person – the gym fees can be claimed as exceptional expenses.

By the way: If the health insurance company covers the gym membership fee, the costs must not be entered in the tax return.

For exceptional expenses, there is a so-called reasonable burden. This depends on your income, marital status and the number of children and is calculated by the tax office. The reasonable personal burden is one to seven per cent of total income. If your expenses are below the reasonable personal burden, it is not worth entering the costs in the tax return.

The expenses are forfeited and there is no tax relief. You can calculate the amount of the individual reasonable burden yourself on the website of the Oberfinanzdirektion Niedersachsen.

Judgment 1: The Cologne Fiscal Court ruled that expenses for attending a fitness and health club are not deductible even if a doctor certifies the necessity of muscle-building training due to a serious physical condition. Rather, recognition of the relevant costs requires the prescription of a specific and individual therapy measure (judgment of 30.1.2019, 7 K 2297/17).

Judgment 2: The Lower Saxony Fiscal Court ruled that gym membership fees are not deductible as exceptional expenses if these fees also cover services that can be used not only by sick but also by healthy people, such as sauna use and aqua fitness courses. Proximity to home and cost savings cannot justify the compulsion of the contributions. The claim was only partially decided in favour of the claimant.

However, contributions to a rehabilitation club that conducts medically prescribed courses in a gym were recognised as exceptional expenses, as were travel costs to the gym incurred exclusively in connection with the medically prescribed courses.

However, it was left open whether the court would have decided differently if the claimant had had no reasonable alternative to carrying out the medically prescribed courses in a gym. The appeal is pending before the Federal Fiscal Court (Ref. I R 1/23).

(2023): How to Claim Tax Relief for Your Gym