Basics of the “Daycare Subsidy” Benefit

The daycare subsidy is a voluntary benefit provided by your employer to help reduce the cost of childcare for your non-school-age child.

Eligible expenses include childcare at:

• Daycare centers (Kita)

• Nurseries

• Day nurseries

• Comparable facilities

The aim is to support working parents and promote a better work-life balance. For you, this means: less financial burden - without having to pay taxes or social security contributions on the subsidy (as long as the legal requirements are met).

How it works

If your employer has enabled the daycare subsidy, you'll find the “Daycare Subsidy” tile in your app.

In the tile, click the info icon in the top right corner to access all important information about the daycare subsidy.

The monthly subsidy amount set by your employer is also displayed here.

You can upload proof of childcare costs directly using the "+" icon.

Afterwards, you can enter your actual childcare costs and confirm them.

By entering the amount, you confirm that you will manually update it if your actual childcare costs change.

The daycare subsidy is now active for you.

At the top of the page, you’ll see the amount you've entered as your monthly childcare costs.

Below that, you’ll find the pencil icon - click it to adjust the amount at any time.

On the same page, you can also deactivate the daycare subsidy at any time.

You’ll also find a button to upload documents to verify the stated costs.

Documents can either be uploaded by you directly in the app or by your employer via the employer portal - both parties will have access to them.

Click the icon next to “Documents” to upload a file (PNG or PDF) and assign it a suitable name.

Then, select the appropriate document type.

All submitted documents - whether uploaded by you or your employer - will appear under the “Documents” section of the benefit.

Important Rules – What You Need to Know

To ensure the daycare subsidy remains tax- and social security-free, certain requirements must be met:

Requirements for Tax Exemption

• In addition to salary: The subsidy must be paid on top of your regular salary – salary conversion is not allowed.

• Proof of childcare costs: You must provide proof that you actually incur childcare costs (e.g., through contracts or invoices).

• External childcare only: The subsidy only applies to care in external facilities – not in your own household.

• Child must not be school-age: The subsidy is only for children who have not yet started school.

• Designated purpose: The subsidy must be used exclusively for childcare – this must be clearly stated in the submitted documents.

Important

• You can either receive the tax-free subsidy or claim the childcare costs as special expenses in your tax return - both are not allowed simultaneously.

• If your childcare situation changes (new facility, different costs, etc.), you must report it immediately and submit updated proof.

*Note: This information does not constitute tax advice. For individual questions, please consult a qualified tax professional or your local tax office.

Translation Note: This article has been translated using automatic translation software to provide the reader with a basic understanding of the content. Despite reasonable efforts to provide an accurate translation, we cannot guarantee its accuracy.

If there are any questions regarding the accuracy of the information in the translated article, please refer to the German version of the article, which is the official version.