Skip to main content
Practical manual for Income Tax 2020.

Example. Deduction for maternity and increase for custody expenses in daycare centers or authorized early childhood education centers

Mrs. PCA has been registered with the General Social Security Regime throughout 2020, amounting to 1,800 euros (150/month) the full amounts of the annual contributions and fees accrued to the aforementioned Regime.

Mrs. PCA has two children: the eldest, born on January 31, 2018, and the youngest, born on August 13, 2020.

The eldest son has been enrolled during the year in the authorized early childhood education center "ZZ" and the expenses paid for the services provided by it are the following:

  • 300 euros for registration
  • 4,250 euros [amount corresponding to the full months from January to June, both inclusive, October and November (500 euros/month) and 15 days of July (250 euros)].

In relation to these expenses, a grant for the 2020 financial year from the Autonomous Community for a nursery voucher amounting to 1,000 euros was requested and obtained, an amount that was paid directly to the nursery by the Department of Education.

The company where Dona PCA works has also paid the nursery the sum of 1,500 euros directly, as an exempt remuneration in kind for its employee.

The remainder of the amount has been paid 50% by each parent.

Determine the amount of the maternity deduction and the additional increase for childcare expenses corresponding to the 2020 financial year and calculate the result of your declaration, knowing that the differential rate of the same amounts to 1,500 euros and that the taxpayer has not requested the advance payment of the maternity deduction.

Solution:

1. Maternity deduction amount

Deduction for the eldest son:

  • Number of months of compliance with requirements: 12 months
  • Deduction amount (12 months x 100 euros) = 1,200

  • Limit on deduction per child (1,200 euros)

    Note: The amount of 1,200 euros per year for the first child prevails as the amount of contributions and fees accrued to Social Security in the 2020 financial year is higher (1,800 euros).

Deduction for the minor child:

  • Number of months of compliance with requirements: 5 months
  • Deduction amount (5 months x 100 euros) = 500

  • Limit on deduction per child (500 euros)

    Note: The amount of 500 euros for the second child prevails, as the amount of contributions and fees accrued in the 2020 financial year to Social Security after birth is higher (750 euros taking into account 5 months).

Total amount (1,200 + 500) = 1,700.00

2. Additional increase for custody expenses

Additional increase for the eldest child:

  • Number of months of compliance with requirements: 8 months

  • Amount of the increase (1,000 euros ÷ 12 months x 8 months) = 666.64

    Note: In this case, the additional increase for the costs of custody of a child under three years of age in authorized nurseries or early childhood education centers can reach up to 1,000 euros per year and will be calculated proportionally to the number of months in which the requirements set forth in article 81.1 and 2 of the Tax Law are met simultaneously. The months to be taken into consideration are exclusively those in which the expenses paid are made for a full month. Therefore, in this case only the 8 full months are taken into account, excluding the 15 days of July, so the calculation will be: 1,000 euros.12 months x 8 months = 666.64 euros

  • Increase limit: 666.64 euros

    The increase of 666.64 euros does not exceed any of the limits indicated below.

    a) Amount of contributions and fees accrued to Social Security: 1,800 euros

    b) Total amount of actual non-subsidized expenditure on custody costs: 2.050 euros

    Note: in accordance with article 81 of the Personal Income Tax Law and article 60 of the Personal Income Tax Regulations , the total non-subsidized expense corresponding to the total annual amounts (for full or incomplete months) paid to authorized daycare centers or early childhood education centers for the pre-registration and enrollment of said minors, attendance, in general and extended hours, and food, will be reduced by the amounts of said expenses that have been paid by the employers of the beneficiaries that are considered exempt income in kind by application of the provisions of letters b) or d) of section 3 of article 42 of the Personal Income Tax Law .

    Therefore, in the present case the custody costs will be: 300 (registration) + 4,000 (8 full months) + 250 (incomplete month) – 1,000 (subsidized amount) – 1,500 (exempt remuneration in kind) = 2,050 euros

    Precision : although it has been paid by both parents at 50 percent, both the amount paid by the mother or the taxpayer entitled to the aforementioned increase, as well as the amount paid by the other parent, will be considered .

3. Tax return result

Differential rate : 1,500.00

Deduction for maternity

  • Deduction amount (1,200.00 + 500.00) = 1,700.00
  • Increase for daycare expenses (666.64) = 666.64

Result of the declaration (1,500 − 1,700 − 666.64): −866.64