How must I employ a domestic help in order to deduct the costs?
How you can claim expenses for your domestic help in your tax return depends on the basis on which your domestic help is employed. If you have employed help in a mini-job, you can claim 20 percent of the expenses, up to a maximum of 510 Euro per year, as a tax reduction.
If you have employed domestic help subject to social insurance contributions or hired a self-employed service provider, you can claim 20 percent of the costs, up to a maximum of 4.000 Euro per year. This also applies to care and support services. For craftsmen's services, you can claim 20 percent of the expenses, but only up to a maximum of 1.200 Euro; material costs do not reduce taxes.
If you employ domestic help subject to social insurance contributions, you should know the following: You will need the tax identification number so that you or your tax advisor can access the electronic wage tax deduction features (ELStAM), which are stored in a file at the tax office, and calculate the monthly wage tax correctly. You must register your domestic help with the relevant health insurance company and pay the employer's share of the health insurance.
You also pay half of the contributions to unemployment and pension insurance. For the tax reduction in your tax return, both the wages and the social security contributions are accepted. You can also have household-related work carried out by a self-employed service provider and deduct 20 percent of the invoice from your taxes.
The costs for an au pair can be declared as household-related services for one half and as childcare costs for the other half. This also includes the non-cash benefits for free accommodation and meals. You can also employ domestic help on a mini-job basis to work in your private household.
You must register this employment as a mini-job with the Minijob-Zentrale - the Knappschaft Bahn See. You must use the household cheque procedure for this. The Minijob-Zentrale collects the flat-rate deductions twice a year. The deductions for the second half of the previous year are still credited to the previous year for tax purposes, even if they were not collected until January of the current year.
As the employer of the mini-jobber, you can choose whether the wages are taxed according to the electronic wage tax deduction features with monthly wage tax deduction or at a flat rate of two percent (including solidarity surcharge and church tax). In the tax return, you can declare the wages of your domestic help and the additional amounts such as flat-rate contributions and wage tax.
Even if the value of free board and lodging is not included in the calculation of the flat-rate contribution and flat-rate tax, this value is still part of your expenses for which you can claim the tax reduction. The official non-cash benefit values are decisive.
How must I employ a domestic help in order to deduct the costs?
What types of childcare costs can be claimed?
Regardless of whether they are work-related or not, you may claim up to 6,000 Euro per child in childcare costs as special expenses. The tax office covers two-thirds of this, up to 4,000 Euro.
It does not matter whether the care takes place in your home or elsewhere. The only requirement is that it involves direct care or supervision. Therefore, tutoring, piano lessons, or ballet classes are not considered childcare costs. However, the following are deductible:
- accommodation in a kindergarten, day nursery, after-school care centre, crèche, or with a childminder
- employment of childcare workers, educators, or babysitters in the household
- employment of domestic helpers and au pairs, provided they care for the child
- travel expenses for the caregiver. Also, free board and lodging if no wages are paid.
- Food for the child is not considered a childcare cost. If it is not itemised separately, it must be estimated and deducted.
Care by a relative
Even if a relative looks after your child, the costs may be deductible under certain circumstances. However, this relative must not be entitled to child benefit or the child allowance for the child and must not live in your household, otherwise the tax office will consider the supervision a favour. However, if the grandparents travel to look after their grandchildren, you can deduct the travel expenses incurred from your taxes. You should be able to provide a corresponding agreement.
If you wish to deduct childcare costs, you must not pay the money in cash, but transfer it. The tax office may require the invoice and, if applicable, the transfer receipt as proof. A receipt from the recipient is not sufficient.
Note: If the employer provides tax-free benefits for pre-school childcare, the deduction for special expenses must be reduced by the amount of these benefits, as the deduction for special expenses requires expenses that actually and definitively burden the taxpayer financially (BFH ruling of 1.9.2021, III R 54/20).
What types of childcare costs can be claimed?
How old can my child be for me to deduct childcare costs?
Until your child's 14th birthday, you can claim childcare costs; after that, you cannot.
For children with disabilities, there is no age limit if the disability occurred before their 25th birthday. A disability card is sufficient as proof.
How old can my child be for me to deduct childcare costs?
How do I provide evidence of my childcare costs?
Childcare costs can be proven through invoices and the corresponding transfer documents. A receipt from the recipient is not sufficient! Even small amounts, such as to the babysitter, must not be paid in cash if you wish to claim the costs later.
You do not need to include the documents with your tax return, but you must present them if requested by the tax office.
How do I provide evidence of my childcare costs?
How much childcare costs can I deduct?
You can claim up to 6,000 Euro per child per year for childcare costs. The tax office deducts two-thirds of this amount, up to a maximum of 4,000 Euro, from your tax. It does not matter whether the child was cared for throughout the entire year or only for a few days.
If you are jointly assessed as a married couple, it does not matter who paid for the childcare. In the case of individual assessment, the partner who paid the costs can deduct them. If this applies to both, each can deduct their share up to 2,000 Euro. You can also agree on a different allocation.
This can also make sense, as the following example shows:
Childcare costs amount to 5,500 Euro per year. The mother pays 4,000 Euro, and the father pays 1,500 Euro per year.
If both partners do not intervene in the allocation, the following picture emerges:
Mother: 2/3 of 4,000 Euro = 2,667 Euro
Father: 2/3 of 1,500 Euro = 1,000 Euro
Total: 3,667 Euro (2/3 of 5,500 Euro)
Since each parent can deduct a maximum of 2,000 Euro, the total amount both parents can jointly deduct is 3,000 Euro.
If, for example, the father and mother agree that the mother may claim a maximum amount of 3,000 Euro and the father 2,500 Euro, they can claim 667 Euro more in childcare costs.
It becomes more complicated if you are not married. If you do not live together, the person with whom the child lives may deduct the childcare costs. Single parents can claim up to 6,000 Euro, just like married couples. However, if you live with your partner without being married, you can split the childcare costs. This is particularly worthwhile if one of you earns little and therefore does not benefit from the tax advantage.
For unmarried parents, the tax office only recognises the childcare costs of the person who signed the contract with the childcare facility. If both parents want to claim childcare costs, they should both sign the contract.
Important note:
The Federal Fiscal Court (BFH) has ruled that in the case of parents living separately, the child's household membership is decisive. According to § 10 para. 1 no. 5 EStG, this does not violate the Basic Law if the childcare expenses of the parent who has not taken the child into their household are covered by the BEA allowance (allowance for care, education and training) (BFH ruling of 11.5.2023, III R 9/22).
Shared custody model:
In cases where the shared custody model is practised (child lives alternately with both parents), childcare costs may only be deducted by the person who actually paid them. The decisive factor is who transferred the childcare expenses to the account of the childcare facility (Thuringia Finance Court, judgment of 23.11.2021, 3 K 799/18). An appeal against this judgment was dismissed by the Federal Fiscal Court (BFH ruling of 10.7.2024, III R 1/22).
Tax-free employer benefits:
If the employer provides tax-free benefits for pre-school childcare, the deduction for special expenses must be reduced by these amounts, as the taxpayer is only financially burdened for expenses actually incurred (BFH ruling of 1.9.2021, III R 54/20).
How much childcare costs can I deduct?
When can I deduct childcare costs?
You can only claim childcare costs if there is a parental relationship. This applies to biological children, as well as adopted and foster children. You cannot claim childcare costs for stepchildren and grandchildren.
Furthermore, the child must belong to your household. This is also the case if, for example, they are in a boarding school and regularly come home. It is important that there is a family home used by the child and that you are responsible for the child's welfare.
In general, you can only claim childcare costs for children under 14 years of age. This age limit is waived only for disabled children.
Note: If the employer provides tax-free benefits for pre-school childcare, the deduction for special expenses must be reduced by the amount of these benefits, as the deduction for special expenses requires expenses that actually and definitively burden the taxpayer financially (BFH ruling of 1.9.2021, III R 54/20).
When can I deduct childcare costs?
Which expenses are eligible?
Eligible expenses include gross wages or salary (for "mini-jobs") and the social security contributions paid by the employer, wage tax including the solidarity surcharge and church tax, accident insurance contributions, and levies under the Expense Reimbursement Act (U 1 and U 2).
Which expenses are eligible?
What is the difference between employment and services?
A household employment exists if you or the homeowners' association have employed someone to perform household tasks for the homeowners' association. The homeowners' association is the employer of this person.
A household service exists if household tasks are carried out by a company. The homeowners' association is the client of the service.
What is the difference between employment and services?
For whom do I enter the childcare costs?
The maximum amount of 4,000 Euro applies per child, not per parent. If you are jointly assessed as a married couple, it does not matter who paid the childcare costs. In the case of individual assessment, the parent who incurred the costs can deduct them. If both parents share the costs, each can claim their share up to 2,000 Euro. Alternatively, you can agree on a different allocation.
Example:
Childcare costs amount to 5,500 Euro per year. The mother pays 4,000 Euro, the father 1,500 Euro. Without a special agreement, the following applies:
- Mother: 2/3 of 4,000 Euro = 2,667 Euro
- Father: 2/3 of 1,500 Euro = 1,000 Euro
Together, they can deduct a maximum of 3,000 Euro. However, if they agree that the mother can deduct 3,000 Euro and the father 1,000 Euro, they can claim a total of 1,000 Euro more.
Unmarried parents:
If the parents are unmarried and live separately, the parent with whom the child lives can deduct the costs. Single parents can deduct up to 6,000 Euro. However, if unmarried parents live together, they can split the childcare costs – particularly beneficial if one partner has a low income and benefits less from tax deductions.
Important note:
The tax office only recognises the costs of the parent who signed the contract with the childcare facility. If both parents wish to deduct the childcare costs, both must sign the contract.
The Federal Fiscal Court has confirmed that for parents living separately, the child's household affiliation is decisive (§ 10 para. 1 no. 5 EStG). If the childcare expenses of the parent with whom the child does not live are covered by the BEA allowance, this does not violate the Basic Law (BFH ruling of 11.5.2023, III R 9/22).
Shared custody model:
For parents practising the shared custody model (child lives alternately with mother and father), childcare costs can only be deducted by the parent who actually made the payments (Thuringia Fiscal Court, ruling of 23.11.2021, 3 K 799/18; BFH ruling of 10.7.2024, III R 1/22).
Tax-free employer benefits:
If the employer provides tax-free benefits for pre-school childcare, the deduction for special expenses must be reduced by these amounts, as only expenses that actually financially burden the taxpayer can be deducted (BFH ruling of 1.9.2021, III R 54/20).
For whom do I enter the childcare costs?
What are tax-free payments under section 3 no. 33 EStG?
Employers can make tax and social security-free contributions to childcare in addition to wages. These can be benefits in kind, such as accommodation in a company kindergarten, or cash benefits, such as subsidies for a nursery or childminder. The condition is that the child is not yet of school age. In addition, the care must not take place in your own home.
If you pay the childcare costs yourself, you can only deduct two-thirds of the costs, up to a maximum of 4.000 Euro per child, as special expenses from tax. There is currently no cap on the employer's contribution. This means that the employer can also fully reimburse expensive childcare facilities tax-free.
What are tax-free payments under section 3 no. 33 EStG?
What evidence is required for tax reduction under section 35a of the Income Tax Act?
To claim the tax reduction under § 35a EStG (household services, craftsmen's services and care expenses), certain conditions and evidence must be met.
1. Invoices and proof of payment
The service provider must issue a proper invoice, with labour and material costs listed separately. Only labour, machine and travel costs, and the VAT on these, are eligible. Payment must be made by bank transfer; cash payments are not recognised.
2. Household services and care expenses
Household services include not only traditional tasks such as cleaning or gardening but also home care for people in need of care. Since 2009, no proof of the care level is required.
3. Missing service charge statement
If you have not yet received the service charge statement for the current tax year, you can submit the previous year's statement. The year the statement is received counts.
4. Court rulings on care costs
BFH ruling of 3 April 2019 (residential care not deductible, ref.: VI R 19/17)
The Federal Fiscal Court ruled in 2019 that only costs for one's own care or accommodation in a home are deductible. If children cover the costs for their parents' residential care, this is not tax-deductible.
Ruling of the Berlin-Brandenburg Fiscal Court of 11 December 2019 (outpatient care deductible, ref.: 3 K 3210/19)
The Berlin-Brandenburg Fiscal Court ruled that costs for outpatient care of relatives are deductible if the care takes place in the taxpayer's household.
BFH ruling of 12 April 2022 (outpatient care deductible, residential care still not deductible, ref.: VI R 2/20)
The BFH ruled in 2022 that outpatient care in the parents' household is also deductible if the child is contractually obliged. Costs for residential care remain non-deductible for tax purposes.
What evidence is required for tax reduction under section 35a of the Income Tax Act?
Requirements for all tax reductions
The service must have been performed in the taxpayer's household. This condition is not met, for example, in the case of
- care and support for sick, elderly, and dependent persons in a day care facility,
- repair of household items at the repair company's premises,
- waste collection (the processing or disposal of waste takes place outside the household)
The household must be located in the European Union or the European Economic Area. If the taxpayer's expenses relate to several households (e.g. main residence and holiday home), the maximum amount is deductible only once in total.
Not eligible are expenses that have already been taken into account for tax reduction under other provisions of the Income Tax Act as business expenses, income-related expenses, special expenses, or extraordinary burdens.
Special feature for homeowners: Homeowners who use their own property receive the tax reduction even if the community or the administrator is the employer or client. This is done proportionally according to their co-ownership share.
The costs for waste collection cannot currently be considered as a household-related service in your tax return. This is based on a ruling by the Cologne Fiscal Court on 26 January 2011 (4 K 1483/10, EFG 2011 p. 978 no. 11).
The reason for this is that the main service is not provided within your property boundaries. The actual service is not the collection of the waste, but its subsequent disposal and processing. The emptying and transport of the waste are considered supporting activities. The Münster Fiscal Court recently confirmed this view (ruling of 24 February 2022, 6 K 1946/21 E). However, an appeal was rejected for procedural reasons, not on substantive grounds. This means that the issue has not yet been definitively clarified.
Requirements for all tax reductions
When is it a mini-job in a private household?
A part-time employment (Mini-Job) in a private household is defined as employment where the monthly wage does not exceed 538 Euro, regardless of the working hours.
You can deduct 20 percent of the expenses for a part-time household help, up to a maximum of 510 Euro per year, directly from your tax liability. Since 2009, this maximum amount has been granted in full even if the employment does not last the entire year.
The employer (i.e., the private household) pays flat-rate contributions for the household help to the Minijob-Zentrale: 5 percent for pension and health insurance and 2 percent for tax. The tax benefit is only available if the employer uses the household cheque procedure.
Example: If you pay your household help 100 Euro per month, this amounts to 1.200 Euro per year. The tax office deducts 20 percent of this, i.e., 240 Euro, which is directly deducted from your tax liability.
When is it a mini-job in a private household?
What childcare costs cannot be deducted?
You cannot claim costs for any type of tuition as childcare costs. This includes tutoring, but not basic homework supervision.
Expenses for “teaching special skills” (such as music lessons or computer courses) are also not considered childcare costs for tax purposes.
The following items are also not deductible:
- Payments for sporting activities, e.g. membership fees for a sports club
- Expenses for school trips
- Material costs for books, toys or similar items
- Your travel expenses if you take your child to a carer or after-school club and pick them up
- Expenses for your child's meals
What childcare costs cannot be deducted?
What is the tax reduction?
If the household help is employed as part of a mini-job with a monthly wage of up to 538 Euro, the expenses are also tax-advantaged:
The expenses are eligible for a 20 percent deduction, up to a maximum of 510 Euro per year, directly from the tax liability.
The maximum deductible amount of 510 Euro is not reduced on a pro rata basis if the employment does not last the entire year.
What is the tax reduction?
