Deductions for third-party care costs

On 13 June 2019, the Swiss Parliament approved the increase of the tax deductibility of third-party care costs.

Working parents of children are dependent on care by third parties. This third-party care can be very expensive and often burdens the parents' finances. This burden is further enhanced if these costs are not fully deductable from taxes. In the end it is not "worth it" for both parents to go to work due to the increased tax burden. As a result, one parent (often the woman) is giving up work in order to take care of the children at home. This tax restriction on the free choice between work and family life contradicts the postulate of equality between men and women and restricts young families in the free arrangement of their family structure.  

Objectives of the new proposal of 13 June 2019

The aim of the proposal is that well-trained parents (often mothers) are not deterred by high taxes due to a second income combined with the limitation of deductibility for third-party care, therefore foregoing employment. As a side effect, it is hoped that this will counteract the lack of skilled workers on the labour market. All these objectives are to be achieved by increasing the deduction from CHF 10,100 per year and child to a maximum of CHF 25,000 per year and child for the direct federal tax.  

Previous deduction amount and the effects of the increase in deductions

The previous amount of CHF 10,100 per year and child was often insufficient to cover the actual costs that would arise from third-pary care. This resulted in a de facto increase in net taxable income by the non-deductible difference between the effective and deductible third-party care costs. Thus creating the risk that the income of one parent would be effectively used up by the additional taxes and the share of third-party care costs. The new proposal is intended to prevent the caring parent from being partially or totally restricted in the exercise of a professional activity. However, the Federal Council's proposal that the cantons should also be required to allow at least CHF 10'000 to be deducted was rejected in the consultation process.  

As always, proposals that increase tax deductions result in tax losses.
The Federal Tax Administration estimates the losses for this proposal at up to 370 million francs. However, the public sector is hoping that the new bill will have a positive effect on employment, which should lead to increased additional wage income and therefore higher tax revenue. Ultimately, the proposal should therefore have a positive impact on revenue.  

How do the cantons handle this?

The question of increasing deductions for third-party care costs will certainly also arise at cantonal level. How the cantons will handle this issue is not foreseeable at the moment.

On 26 September 2019, the Swiss Parliament decided to increase the general tax deduction for children

On 26 September 2019, the Swiss Parliament decided to increase the general tax deduction for children from CHF 6'500 to CHF 10'000. The SP held an opposing referendum on 27 September 2019, advocating the view that this decision is a 'subsidy for the rich'.


With the increase in deductions for outside childcare, an important postulate for the equality of men and women is implemented and the previous restriction on the free division of work and family for young families is lifted. As is almost always the case with tax policy proposals, there are also critical voices that criticise the fact that this bill puts the voluntary renunciation of gainful employment, combined with the care of children by one parent, at a tax disadvantage. The SP wanted to refer the bill back to the Federal Council because it considered it useless. In response to this criticism, parliament decided on 26 September 2019 to increase the general child deduction for self-care of children from CHF 6,500 to CHF 10,000. It remains to be seen whether this ends the discussion on this topic for the time being. At 17 May 2020 the Swiss electorate would have had the opportunity to vote on this issue in connection with family taxation. This vote will take place on 27 September 2020.