Child benefits in Germany
von Peter Scheller
In Germany there is a wide range of tax incentives for parents and other persons who provide a home for children. However, the complex network of regulations makes it hard for Germans and especially expatriates to keep a sufficient overview. The following guideline shall support parents and other persons who are responsible for the maintenance of children.
The following persons are entitled to child benefits
- adoptive parents
- spouses who provide a home to stepchildren
- grandparents who provide a home to grandchildren
- other persons who provide a permanent home to foster children
Tax advantages may not only be claimed by German citizens. The following individuals can claim for child benefits:
- Germans with tax residence in Germany
- Germans living abroad but deemed to be tax resident in Germany
- Citizens of the European Union (EU) or the European Economic Area (EEA) who are tax resident or deemed to be tax resident in Germany
- Citizens from other countries if they have a settlement permit
- recognized refugees and asylum-seekers
There are special rules for special professional groups, such as development workers and missionaries, and for citizens of certain non-EU/EEA-countries (for example Turkey).
The following children are entitled to child benefits and tax allowances:
- children reaching an age of 18
- children over 18 reaching an age of 25 who are in the process of education
- older children in special circumstances (for example, if they suffer from a significant impediment)
The process of education ends if the education is finalised or the child starts employment.
Special rules and regulations have to be observed. For example employment or own income of the child disqualifie for child benefits?
Payment of child benefits
The backbone of child support is the payment of child benefits (Kindergeld). The payments per month are:
- for the first and second child € 184
- for the third child € 190
- for every other child € 215
Children living abroad are also entitled to payments of child benefits under certain restrictions. There might be reductions applicable for certain countries with lower price levels. Foreign child benefits will be credited against German payments.
Notice: Parents moving to Germany for the first time very often do not realise that they are entitled to child benefits. This applies especially for citizens of non EU/EEA-countries(for example from the USA, China, Japan, Russia, Kanada, Australia, Switzerland and others). As soon as they are in the possession of a resident and a work permit, every individual being tax resident in Germany has the same rights as EU/EEA-citizens. Individuals can apply for child benefits, retrospectively.
The child allowance can be claimed in the yearly income tax return. Criteria for claiming the child allowance is the same as those for child benefits. Under certain conditions, the claim for child allowance is adventurous to payments of child benefits. Therefore, tax authorities perform a test on the preferable tax situation in the income tax assessment.
Notice: The test only compares the entitlement of child benefits with the tax benefit of the child allowance. Whether child benefits have been claimed or paid out is insignificant. If parents missed to claim on child benefits and consequently these payments have not been made, it cannot be rectified through the income tax assessment.
Health and care insurance schemes
Parents and other entitled persons can reduce their taxable income through payments to health and care insurance schemes favouring children. Whether entitled persons or children are the insured person does not matter. If, for example, parents or other entitled persons pay premiums to student health or care insurance schemes of children, they can reduce these premiums up to certain amounts from their taxable income.
Allowance for single parents
Single parents can deduct an amount of € 1,308 per year as an allowance from their taxable income. But this does not apply if a single parent lives together with another adult in the same household.
Allowance for the education of an adult child
Parents or other entitle persons can claim an amount of € 924 per year if children over 18 are in the process of education.
Fees for regular costs of a private school can be claimed as follows:
- 30% of school fees
- maximum of a yearly amount of € 5,000 per child and couple
The following costs or expenses are non-deductable.
- support and care
- food and drink
- school books or learning material
Parents must be the contractual partner of the school or legally obliged to maintain the child.
Private schools qualify for this allowance if their education is subject to an accepted graduation or school degree. This applies to schools in Germany and the EU or EEA. It applies to German schools abroad. However, it does not apply to foreign schools outside of the EU or EEA.
Costs of child care
Costs for the care of children up to an age of 14 years can be deducted as follows:
- 2/3 of necessary costs of child care
- Maximum of a yearly amount of € 4,000 per child
Fees to caring personal and expenses for their accommodation, food and drink and other related expenses can be claimed.
Education fees are non-deductable (for example music teaching) or expenses for sports or other leisure activities.
Notice: If the criteria for this allowance is not met, you should check whether the allowance for household services is applicable.
|Health and care insurance||Kranken- und Pfegeversicherung|
|Allowance for single parents||Freibetrag für Alleinerziehende|
|Allowance for the education of an adult child||Ausbildungsfreibetrag|
Author: Peter Scheller, German Tax Adviser – Master of International Taxation
- child allowance
- child benefit
- child care
- health insurance
- school fees