It is now official: Since 1 August 2013, parents in Germany have had a legal entitlement to a childcare place for children between two and three years of age.
All parents who do not make use of a childcare place for children born on or after 1 August 2012 will receive EUR 100 per month from 1 August 2013. This amount will be increased to EUR 150 per month from 1 August 2014. Parents who have their child cared for privately/at their own expense at home will also receive the childcare allowance (Betreuungsgeld).
Parental allowance (Elterngeld) and childcare allowance (Betreuungsgeld) can only be granted simultaneously if the parental allowance is paid out over a period of two years. Otherwise, the childcare allowance can generally only be paid after the parental allowance.
The childcare allowance is exempt from tax and social security contributions. It is also not subject to the progression clause (Progressionsvorbehalt) — the parental allowance is treated differently: it must be taken into account under the progression clause as a wage replacement benefit — which means that the childcare allowance is also not considered when determining the tax rate.
The costs that parents incur for the care of their children are deductible from tax as special expenses (Sonderausgaben). This applies to children up to the age of 14. Whether the parents are gainfully employed or not is irrelevant. They can claim two-thirds of the documented expenses for costs such as kindergarten, day-care centres, child-minders, homework supervision, babysitters, etc., up to a maximum of EUR 4,000 per child per year as special expenses. Please ensure that the expenses are not paid in cash but by bank transfer or direct debit, otherwise the expenses will not be recognised.
Frequently asked questions
Frequently asked questions
Who is entitled to the childcare allowance (Betreuungsgeld) and in what amount?
Parents of children born on or after 1 August 2012 who do not use a public childcare facility have been receiving a monthly Betreuungsgeld of 100 euros since 1 August 2013. As of 1 August 2014, the amount was increased to 150 euros per month. Parents who have their child cared for privately or at home are also eligible.
Can Elterngeld and Betreuungsgeld be received at the same time?
Simultaneous receipt is only possible if the Elterngeld payments are spread over a two-year period. Otherwise, Betreuungsgeld can generally only be paid after the Elterngeld entitlement has ended.
Is the childcare allowance (Betreuungsgeld) taxable or subject to the progression clause?
The childcare allowance (Betreuungsgeld) is exempt from both income tax and social security contributions. Unlike the parental allowance (Elterngeld), it is not subject to the progression clause and is therefore not taken into account when determining your personal tax rate.
To what extent are childcare costs deductible as special expenses?
Parents can claim two-thirds of documented childcare costs, up to a maximum of EUR 4,000 per child per year, as special expenses (Sonderausgaben). This applies to children up to the age of 14, regardless of whether the parents are employed. Deductible expenses include, for example, costs for kindergarten, daycare, childminders, homework assistance, or babysitters.
Which payment method must be observed for childcare costs?
The expenses must be paid by bank transfer or direct debit. Cash payments are not recognized by the tax office, meaning the special expense deduction is forfeited in such cases.