Facts of the case:
The plaintiff was a lady in need of care who received care allowance for self-procured care services in the amount of EUR 5,280 in 2014. She engaged a Polish care service for in-home care, with which a contract was also concluded covering services such as washing dishes, cooking, shopping, changing laundry and clothes, etc. The caregivers deployed worked a total of 40 hours per week. For this, the plaintiff claimed costs of EUR 28,500 plus accommodation and insurance costs for the caregivers of EUR 2,712 as extraordinary expenses.
The tax office denied the deduction on the grounds that the caregivers deployed were not trained nursing staff and the care service was not recognised under social law. The tax office therefore allowed the expenses only up to a maximum of EUR 4,000 within the framework of so-called "household-related services".
Decision of the Tax Court (Finanzgericht, FG):
The Tax Court of Baden-Württemberg granted the action and recognised the costs in principle as extraordinary expenses. However, the costs were reduced to a portion considered appropriate by the FG, as it argued that only approximately 27 weekly hours had been medically substantiated as necessary care time. Accordingly, total costs of EUR 28,500 plus accommodation of EUR 2,712 = EUR 31,212, two-thirds thereof = EUR 20,732, less reimbursement of care allowance ./. EUR 5,280 = EUR 15,452 were recognised.
The FG took the view that the costs for basic care and household support for the plaintiff served to make her illness more bearable, and the care expenses therefore qualified in principle as medical expenses deductible as extraordinary expenses.
Conclusion:
In-home care provided by a foreign (in this case: Polish) care service is to be taken into account as an extraordinary expense for income tax purposes even if the caregivers deployed are not trained nursing specialists; nor does the engaged care service need to be recognised under social law in Germany.
Source: FG Baden-Württemberg of 21 June 2016, Az. 5 K 2714/15
Frequently asked questions
Frequently asked questions
Are costs for a Polish care service deductible as extraordinary expenses?
Yes, costs for in-home care provided by a foreign care service can be claimed as extraordinary expenses under § 33 EStG. According to the ruling of the FG Baden-Württemberg (21.06.2016, 5 K 2714/15), this applies even if the staff are not trained nursing professionals and the service is not officially recognized under German social law. The prerequisite is that the care serves to alleviate the illness.
Do care workers need to be trained nursing professionals for the costs to be tax-deductible?
No, formal training as a nursing professional is not strictly required. Expenses for caregivers without nursing qualifications can also be deducted as außergewöhnliche Belastung (extraordinary expenses) if they perform typical care and household tasks such as cooking, shopping, or laundry, thereby making the illness more bearable.
How are care allowances and accommodation costs accounted for when calculating extraordinary expenses?
Any care allowance received must be deducted from the deductible care costs, as it constitutes a reimbursement. Accommodation and insurance costs for the engaged care workers qualify as deductible expenses. However, the tax court limits these costs to the medically necessary scope of care, which must be substantiated by specialist medical evidence.
What happens if the care services are not recognized as extraordinary expenses?
If the costs are not recognized as extraordinary expenses, a deduction is only possible as a household-related service under § 35a EStG. In this case, a maximum of 20% of the expenses, but no more than EUR 4,000 per year, can be deducted directly from the tax liability – considerably less favorable than treatment as extraordinary expenses.
What documentation is required to deduct nursing care costs?
You should have a written contract with the care service that specifies the tasks performed and the time involved. In addition, a qualified medical assessment confirming the necessary care hours is required, as the tax office and courts may limit the deduction to what is medically necessary.