On May 9, 2018, the Federal Council decided that tax deductions for external childcare should be increased. The dispatch was submitted to Parliament.
The text of the law provides that parents will in future be able to deduct the costs of third party childcare from their income for direct federal tax purposes up to a maximum of CHF 25,000 per year and child. The amount is currently CHF 10,100 (Art. 33 para. 3 DBG).
In the consultation procedure, the Federal Council had also proposed that the cantons must grant a deduction of at least CHF 10,000. There was resistance to this in the consultation process (report on the results of the consultation procedure on the tax treatment of third-party childcare costs), which is why the Federal Council is now waiving this (see our contribution of 5 April 2017 on the consultation draft).
In the short term, this change will lead to a reduction in direct federal tax revenue of around CHF 10 million, of which the cantons would have to bear CHF 1.7 million (17%).
The submission is part of the Skilled Workers Initiative, which aims to reduce negative incentives to work in the tax system. Employment incentives will be strengthened, especially for well qualified mothers. In the short to medium term, an increase of an estimated 2,500 full-time jobs is expected. In the longer term it can be assumed that this measure will be self-financing due to the positive employment impulses.
The following documents have been published:
The press release and the corresponding documents are available here.
