Deducting Child Care Expenses: 80% up to €4,800 per child

What counts as child care?

The law refers to “childcare services” (§ 10(1)(5) EStG). This refers to protective or supervisory care: The service must be clearly based on the personal care of the child. The tax authorities cite as examples placement in kindergartens, daycare centers, after-school care centers, children’s homes, and nurseries, as well as with child care providers, weekly caregivers, and full-day care centers; the employment of childcare workers and educators; the employment of household helpers, provided they care for a child; and the supervision of the child while doing homework at home. A babysitter also provides care for the child in this sense. The deduction is not contingent on the parents being employed or pursuing an education.

Three categories are excluded: educational expenses, such as school tuition, private tutoring, or foreign language lessons; the teaching of special skills, such as music lessons or computer courses; and sports and other recreational activities, such as membership in a sports or other club, or tennis and horseback riding lessons. Supervision while the child does homework counts, but tutoring does not. Meals provided to the child also do not count.

In the case of an au pair, 50 percent of the total expenses may be considered child care costs if the scope of the child care is not documented—for example, by specifying the duties in the contract and allocating the compensation accordingly.

How much is the deduction: 80 percent up to 4,800 euros?

80% of the expenses are tax-deductible, up to a maximum of €4,800 per child. The cap is reached when childcare costs €6,000 per year (4,800 ÷ 0.8). Up to that point, 80% of each euro counts toward the deduction; beyond that, nothing counts.

Until 2024, the rule was two-thirds of the expenses, up to a maximum of €4,000 per child. The increase has been in effect since January 1, 2025. The threshold of €6,000, at which the maximum amount applies, has remained the same: the rate and the maximum amount were raised, but not the threshold.

The maximum amount is an annual amount. It is not prorated if childcare costs are incurred for only part of the year—for example, for kindergarten through June and for after-school care only starting in September when the child begins school.

Up to what age are child care costs deductible?

The child must be a member of the taxpayer’s household and must not yet have reached the age of 14. In the year of the child’s 14th birthday, expenses are counted up to that date, and are deducted against the full maximum amount. The child may be older if, due to a physical, mental, or psychological disability that arose before the child turned 25, the child is unable to support himself or herself.

Household affiliation is the second hurdle. A child is considered part of the household of the parent in whose home the child lives permanently or with whose consent the child is temporarily living elsewhere, even if that parent lives with the child at the home of his or her parents or in-laws or in a shared living arrangement. This includes responsibility for the child’s material and non-material well-being—that is, for their provision and support as well as for their care and supervision.

If the parents do not live together, the child’s registered address is generally the determining factor. However, this is not the end of the assessment: In exceptional cases, a child may also be considered part of the household of the parent with whom the child is not registered, provided that parent can prove or credibly demonstrate this. Child benefit payments serve as an indication of this, and in exceptional cases, a child may be considered part of both parents’ households.

If the child does not live in Germany, the maximum amount may be reduced to the extent that this is necessary and appropriate given the circumstances in the child’s country of residence.

Invoices and Non-Cash Payments: What Are the Requirements for Documentation?

The deduction requires that the taxpayer has received an invoice and that payment has been made to the service provider’s account (Section 10(1)(5), fourth sentence, of the Income Tax Act (EStG)). It does not have to be an invoice as defined by the German VAT Act. The following are considered equivalent to an invoice: for daycare or after-school care, the notice from the provider regarding the fees to be paid; for an employment relationship or a “minijob,” the written employment contract; for an au pair, the au pair contract; and a receipt for incidental expenses, provided it contains precise details regarding the type and amount.

The following payment methods are accepted: bank transfer, standing order, direct debit authorization, online banking, clearing check, as well as electronic cash and electronic direct debit, each accompanied by a bank statement. Cash payments are not accepted under any circumstances, not even as a down payment, partial payment, or by cashier’s check. This issue is not resolved even if you later make a payment to the account. If someone else pays from their account—for example, if your grandmother pays the daycare bill—you are still responsible for the payment if you received the bill.

You are only required to submit the invoice and proof of payment if the tax office requests them.

Can grandparents be paid to serve as caregivers?

Yes, but only under certain conditions. Childcare provided by family members counts only if it is based on a clear and unambiguous agreement that was validly entered into under civil law, corresponds in substance to what is customary between strangers, and is actually carried out in that manner. Furthermore, the service must not typically be provided free of charge under family law. An invoice and payment to the caregiver’s bank account are also required in this case.

The deduction is excluded in three cases: if the caregiver lives in your household with your child, if you live with the caregiver in a marriage-like relationship or civil partnership, and if the caregiver is personally entitled to child benefit or a tax credit for the child in question.

If the grandmother provides care free of charge and is reimbursed only for her travel expenses, those travel expenses are tax-deductible if an invoice is issued for them. An employment contract with the grandmother is not required for this. However, the child’s trips to the caregiver are not deductible. If a parent reduces their own working hours to care for the child, the resulting lower salary is not considered a child care expense.

It doesn't work the other way around: Grandparents cannot claim a tax deduction for the cost of caring for their grandchildren. The same applies to the care of stepchildren.

What difference does an employer subsidy make?

Employer contributions toward the care and supervision of children not of school age in kindergartens or similar facilities are tax-exempt under Section 3, No. 33 of the Income Tax Act (EStG) if they are provided in addition to the wages otherwise owed.

Only expenses that the parent has incurred personally are deductible. In this regard, any amounts paid by the employer do not constitute the parent’s own expenses.