Do I only have a child benefit entitlement for my biological children?
No. Child benefit entitlement exists for the applicant's biological children and also for their adopted children. You can apply for child benefit for foster children if they live in your family and there is a permanent relationship of supervision, care, and upbringing. Furthermore, the custody and care relationship with the biological parents must no longer exist. Occasional visits from the biological parents are harmless. If you have taken siblings into your household, you are entitled to child benefit if they can be equated with foster children.
Child benefit is also paid if a stepchild or grandchild lives in your household. In these cases, however, there is no child relationship in the sense of tax law. Therefore, step- or grandparents are not automatically entitled to a child allowance, but only when the biological parents transfer the child allowances to the new guardians in Form K. If orphans or children who do not know where their parents are have no other person entitled to receive it, the children themselves can receive the child benefit. They then receive the amount that would be due to them for their own first child.
If you as parents have given a child up for adoption, the child relationship between you and the child ends at that time. Your entitlement to child benefit and tax allowances also ends at the same time.
For a child you have taken into your household with the intention of adopting, you can receive child benefit even before the adoption, as there is usually a foster relationship.
Do I only have a child benefit entitlement for my biological children?
What relationship must exist with the child for them to be considered for tax purposes?
For tax purposes, a child relationship must exist. This applies to children who are directly related to you or your foster children.
A direct relationship exists with legitimate and illegitimate biological children as well as adopted children. When a minor child is adopted, the child loses their child relationship with their biological parents.
Foster children are considered if they live in your household and have been integrated into your family. Additionally, there must be no custody and care relationship between the foster child and their biological parents.
Grandchildren and stepchildren are not considered for the child allowance, education allowance, and allowance for care, education, or training (BEA allowance). However, this can be circumvented by transferring the allowance. For this, the biological parents must give their consent.
What relationship must exist with the child for them to be considered for tax purposes?
Are adoption costs tax-deductible?
No. Adoption costs are not considered extraordinary expenses under section 33 of the Income Tax Act and are therefore not tax-deductible. This is confirmed by the consistent case law of the Federal Fiscal Court (BFH).
Overview of Case Law
- Landmark Ruling (1987): The BFH ruled that adoption costs are based on a voluntary decision and therefore do not arise out of necessity (BFH, judgement of 13.03.1987, III R 301/84).
- Renewed Attempt (2012–2013): An attempt to change this view failed due to resistance within the BFH. A decision by the Grand Senate did not occur.
- Confirmation by the BFH (2015): Even in cases of organic sterility, adoption costs remain non-deductible (BFH, judgement of 10.03.2015, VI R 60/11).
- Constitutional Complaint (2016): A complaint to the Federal Constitutional Court was not accepted for a decision (BVerfG, decision of 13.06.2016, 2 BvR 1208/15).
Current Ruling
The Münster Finance Court dismissed a lawsuit in which adoptive parents wanted to claim adoption costs as extraordinary expenses after unsuccessful fertility treatment (FG Münster, judgement of 25.06.2024, 14 K 1085/23 E).
Reason: The decision to adopt was also voluntary in this case and not medically necessary.
Reason for Rejection
- Not a Medical Measure: Adoption does not replace medical treatment and is not part of a medical therapy.
- Voluntariness: Even after involuntary childlessness, the decision to adopt remains a voluntary action and is therefore not tax-deductible.
Conclusion: Adoption costs are not tax-deductible under current law and established case law – not even in cases of medically induced infertility.
Are adoption costs tax-deductible?
