BFH: No tax deduction for kindergarten contributions in the amount of tax-free employer subsidies paid

The Federal Fiscal Court (Bundesfinanzhof, BFH) has ruled that kindergarten contributions deductible as special private expenses must be reduced by the amount of tax-free employer subsidies paid for the kindergarten contributions.

The married plaintiffs paid a kindergarten contribution of €926 for the care of their minor daughter. At the same time, the plaintiffs received a tax-free kindergarten allowance of €600 from their employer.

The tax office reduced the special private expenses claimed by the plaintiffs in their income tax return in full (€926) by the tax-free employer’s allowance.An appeal against the tax assessment and a lawsuit were unsuccessful.

The BFH confirmed the ruling of the fiscal court.

Pursuant to Section 10 (1) No. 5 Sentence 1 EStG, childcare costs and thus also kindergarten contributions can be claimed as special expenses under certain conditions. However, special expenses require expenses according to the statutory regulation.

The BFH ruled that only expenses by which the taxpayer is actually and finally economically burdened may therefore be taken into account as special expenses. If the employer grants a tax-free employer contribution to childcare costs (Section 3 No. 33 EStG), the taxpayer’s economic burden is reduced to this extent. This would also avoid unjustified double tax relief. The reduction of the special expenses by the tax-exempt employer’s allowance takes place equally for married and unmarried parents.

Press release of the Federal Fiscal Court (BFH) July 22, 2021 – Number 024/21 – Decision of April 14, 2021.
III R 30/20 (non official own translation)

Über Sibille Decker

Steuerberaterin
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