Care Costs – Tax Deductible in Germany

There may come a time in every person’s life when we need some form of care. Whether outpatient or in a nursing home, costs arise. It is good to know that under certain circumstances you can expect a tax refund for care costs, as you can declare care costs on your tax return. In our article today, we explain how it works.

How can care costs be deducted in the tax return? Which expenses are deductible? What amounts are involved? You will find the answers below – enjoy reading!

Which care costs are tax-deductible in Germany?

Before we write about how care costs in Germany can be deducted from taxes, let’s take a moment to write about what such expenses include.

The tax-deductible care costs include costs such as:

• Accommodation in a nursing home,
• Short-term care in case of temporary incapacity, e.g., due to illness,
• 24-hour care,
•     outpatient or nursing care,
• Purchase of special equipment such as care beds or prostheses,
• Expenditures for food and clothing needed for care,
• the need to carry out renovations for care,
• Medications,
• Installation of a stair lift,
• Travel expenses, e.g., for a doctor’s visit

Care costs and travel expenses

If you want to claim travel expenses, you must remember that thejourneys must be directly related to your care. Examples are trips to the doctor or pharmacy. You cannot deduct the cost of care if it is a trip, for example, to shopping at a supermarket.

Care cost allowance, extraordinary burdens, or household-related services – 3 ways of deducting expenses

You already know which care costs are tax-deductible in Germany – now let’s move on to the next important information, namely how they can be treated in your annual tax return. It is important to know thatthe German tax system provides three options in this case– expenses such as extraordinary burdens, a flat-rate allowance for care, or expenses relating to domestic services.

Deducting care costs as extraordinary burdens

Care costs are among the extraordinaryburdens and are therefore also referred to as extraordinary care costs. According to the Income Tax Act (EStG), these are unavoidable costs that are higher than for taxpayers with comparable family and financial circumstances. Examples include:

• Costs related to the accommodation in a nursing home,
• Maintenance payments.

A prerequisite for deductibility of care costs is that the person in need of care has aconfirmed need for care,i.e., among other things, a diagnosed illness.

It is important thatonly the costs for care and supervisioncan be counted as extraordinary burdens in Germany. Costs for help with cooking, washing, or cleaning are not deductible. However, these services can be partially. Kosten für Hilfe beim Kochen, Waschen oder Putzen sind dagegen nicht absetzbar. Diese Dienstleistungen können jedoch anteilig deducted under a different category of the German tax return(household-related services).

Flat rate for care (care flat rate)

According to the aforementioned Income Tax Act (EStG), the taxpayer is entitled, instead of a reduction in tax liability,to a flat rate of 1800€(for care levels 4 and 5), 600 € (for care level 2),

and 1,100 € (for care level 3)to be deducted from income.

When is it worth using this solution? It is possible if thetax-deductible care costs are less than 1,800 €.

To be able to claim the care flat rate in Germany, several conditions must be met:

• a person in need of care must have a disability ID with the symbol “H” or be classified in care level 4 or 5,
• the care is provided in the home of the person in need of care,
• the caregiver must not receive income from the care and the care must be provided personally.

Deduction of household expenses – properly deducting home costs

Certain care costs that cannot be counted as extraordinary burdens are deductible as household-related services. These include:

• the costs for help with bathing, shopping, cooking, ironing, or gardening, which are covered by outpatient care or household help,
• the cost of a home alarm system,
• expenses related to renovating the bathroom.

Reimbursement of care costs via the tax return and proof of expenses

Care costs must be proven. Although the receipts do not have to be submitted with the tax return, it is advisable to keep them at least until the submission of the tax return. These documents include:

• Receipts for medications,
• Receipts for care aids,
• Invoices from the care service,
• Notes on mental illness, dementia, or disability,
• Insurance notifications,
• Notification of the granted care level.

The costs for nursing home and more in the tax return – where are they to be entered?

Depending on which method is suitable for your situation, you must declare the expenses elsewhere in your annual tax return. Below is a short summary:

• Line 67– Type of submission and total costs to be deducted from the total expenses,
• Lines 68-70– Costs related to the household (including the costs also included in line 67),
• Lines 65-66– Flat rate for care.

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