Can I deduct the costs of childcare for my employees as an employer?
July 9, 2023 | 40,00 EUR | answered by Claudia Köhler
Dear tax advisor,
My name is Hilde Köhler and I am the managing director of a small business. As an employer, I am interested in whether it is possible to deduct the costs of childcare for my employees from taxes.
The background information for my question is as follows: In our company, some parents work and need regular childcare due to their professional obligations. As an employer, I have the well-being of my employees in mind and would like to accommodate them. I am looking for ways to support them. Covering the costs of childcare would be a significant financial relief for many of my employees and would allow them to focus better on their job.
My concerns in this regard are that I am not sure whether and to what extent the costs of childcare are tax deductible. I want to ensure that as an employer, I am maximizing all legal possibilities to support my employees to the best of my ability.
Therefore, my specific question to you is: Can I, as an employer, deduct the costs of childcare for my employees from taxes? If so, what are the requirements that need to be met and how does the tax deduction work in this case? Are there any other ways in which I can support my employees in terms of childcare?
I look forward to your expert advice and thank you in advance for your support.
Sincerely,
Hilde Köhler
Dear Mrs. Köhler,
Thank you for your inquiry regarding the tax deductibility of childcare costs for your employees. It is commendable that as an employer, you have the well-being of your employees in mind and are looking for ways to support them as best as possible.
In principle, it is possible to deduct the costs of childcare for your employees for tax purposes. However, there are certain requirements that must be met. First, it must involve children who have not yet reached the age of 14 or who, due to a physical, mental, or emotional disability that occurred before the age of 25, are unable to support themselves.
The employer's assumption of childcare costs is generally tax-exempt as long as the benefits are provided in addition to the regular salary owed. This means that the benefits must not be part of the contractually agreed upon salary.
There are certain maximum limits for the tax deductibility of childcare costs. Up to 4,000 euros per child can be taken over tax-free annually. This amount can be claimed by you as the employer as a business expense. However, please note that the tax exemption only applies to costs that are actually incurred for childcare and not for other services.
There are other ways in which you can support your employees in terms of childcare. For example, you can offer flexible working hours or home office solutions to make it easier for parents to balance family and work. Providing company daycare centers or facilitating other childcare options can also be a useful measure.
I hope that this information has been helpful to you. If you have any further questions or would like more detailed advice, I am at your disposal.
Best regards,
Claudia Köhler
