Tax liability for respite care
July 22, 2021 | 30,00 EUR | answered by Steuerberater Knut Christiansen
Good day, my mother is an employee. In her tax return, she also declared income from the care insurance for her grandson. She receives this respite care of just over 1,000€ (accumulated over the year) because she occasionally cares for her grandson, who has a care level, as a substitute on an hourly basis.
After reviewing the tax return, the tax office has now requested her to fill out a questionnaire for tax registration - entry into a commercial, self-employed, or agricultural activity, as she allegedly started an entrepreneurial activity. But providing care for relatives is not an entrepreneurial activity. What should be done in this case?
Good day and thank you for using Ask-an-Expert!
Regarding your question, I would like to provide the following information.
I would suggest initiating a conversation with the tax office to clarify the situation. As you mentioned, this is not about generating income, but about caring for your own grandchild. These earnings are actually tax-free according to § 3 No. 36 Income Tax Act, as the care is being provided to a family member. Therefore, I assume that the tax office is not fully aware of the background of this income and is mistakenly assuming that a business is being operated.
If you explain that this is simply the care of a family member and no other care services are being provided (to other individuals), the tax office should waive the need for submitting this questionnaire.
I hope this answers your question, but feel free to ask any follow-up questions at no cost.
I would like to point out that this forum cannot replace a detailed and personalized tax consultation, but is mainly intended to provide an initial tax assessment. By adding or omitting relevant information, the legal assessment of your issue could change.
Best regards,
Knut Christiansen
Tax Advisor
