When Grandparents Help Out—and the Tax Office Chips In

During school holidays, many working parents turn to grandparents for childcare—and it often works out as a financial gift in more ways than one. Even when Oma and Opa look after the children for free, parents can claim a tax deduction for the travel costs they reimburse, according to Jana Bauer, managing director of the Federal Association of Wage Tax Assistance Associations (BVL).

Childcare costs for children up to their 14th birthday are generally deductible as special expenses at 80 percent, capped at €4,800 per child per year. The crucial requirement is that any reimbursement must be backed by a written agreement, an invoice or similar documentation, and the payment must not be made in cash.

While grandparents rarely charge for their time, many families cover the fuel or ticket costs when they drive the child to activities or to the parents' home. If the parents record each trip, reimburse based on a fixed rate per kilometre or actual ticket prices, and transfer the money by bank, the amount becomes a deductible special expense—reducing the household tax bill while keeping the grandparents' help affordable.

The arrangement creates what Bauer calls a "win-win" situation: parents lower their tax liability, grandparents are not out of pocket for travel, and children often enjoy the time with their grandparents.

Advertisement

What Qualifies and How to Calculate the Deduction

The Fine Print on Travel Expenses

Parents can only deduct travel costs paid to grandparents if the child and the grandparents do not live in the same household. The deduction covers expenses incurred by the grandparents—for example, driving to collect the child from school, holiday programmes or sports clubs and returning home. Travel by the parents to drop off the child or by the child alone is not eligible.

Reimbursement can be based on actual public transport tickets or, for car journeys, a flat rate of €0.30 per kilometre driven. To meet tax office requirements, families need a written agreement on the travel cost reimbursement, a log listing each trip (date, purpose, kilometres), and proof that the payment was made via bank transfer—not cash.

Calculating the Benefit: A Worked Example

Imagine a grandmother makes 160 round trips of 30 km (15 km each way) in a year to pick up her seven-year-old grandchild from holiday care and watch them until the parents return from work. The reimbursable travel cost is €1,440 (160 trips × 30 km × €0.30). Because childcare expenses are 80 percent deductible, the parents can enter €1,152 as a special expense on their income tax return—directly lowering their taxable income. If additional supervision is paid under a formal contract, those costs can also be claimed, further boosting the tax saving.

Steps to Claim Your Travel Reimbursement Deduction

  • Put it in writing: Draft a simple agreement with the grandparents that states you will reimburse their travel expenses for childcare. Keep a copy.
  • Log every trip: Record the date, purpose (e.g. "collect child from holiday programme"), kilometres driven or ticket used, and the reimbursement amount.
  • Never use cash: Transfer the reimbursement via bank transfer so there is a traceable paper trail. Cash payments are not accepted by the tax office.
  • Save all documents: Keep the trip log, bank statements, tickets and the written agreement for your tax records.
  • Apply the right rate: Use €0.30 per car kilometre or actual ticket cost for public transport. Multiply the total reimbursed amount by 80 percent to find the deductible portion.
  • Watch the cap: The deduction is limited to €4,800 per child per year at 80 percent, so calculate where you stand before claiming.
  • Check the age: The child must be under 14 years old for the costs to qualify.