Tax-free employer subsidies for childcare costs

Childcare costs cannot be deducted as special expenses to the extent of tax-free subsidies by the employer.

The deduction of special expenses requires expenses through which the taxpayer is actually and finally economically burdened. For this reason, the Federal Fiscal Court has also approved the reduction of the special expenses deduction for childcare costs by tax-free subsidies from the employer. Contrary to the plaintiffs' view, the subsidies are not tax-free wages, but an earmarked subsidy that serves to reimburse special expenses on a pro rata basis.