The Third Chamber of the Supreme Court issued a ruling on a topic that has sparked heated debate in fiscal policy: the right to a tax deduction for maternity costs, specifically extending the deduction for child care expenses paid to nurseries for children under the age of three. The decision clarifies how working parents may claim this benefit under personal income tax rules that apply in the jurisdiction, and it signals a shift in how nursery-related expenses are treated for the purpose of the deduction.
In its judgment, the Contested Chamber overturned a prior stance by the State Tax Administration Agency (AEAT) that denied a working mother a higher maternity deduction. The case concerned a request to increase the maternity deduction in personal income tax by up to an additional amount for custody expenses at a nursery for children younger than three. The court’s analysis centers on whether these nursery expenses qualify for the enhanced deduction and how the law should be interpreted in practice, particularly in relation to where the care is provided and how it is funded.
The AEAT had previously relied on a criterion that limited deduction eligibility to guardianship expenses that are paid to centers with specific operating permits and authorization as training centers. This criterion effectively tied the deduction to nurseries that hold formal authorization from the competent educational authority. As a result, many day care centers, which do not possess such authorization to provide formal early childhood education, were deemed ineligible to participate in the tax relief, limiting the deduction’s reach for families relying on these services.
The Supreme Court rejected this restriction on the basis of the Personal Income Tax Act, which does not explicitly condition the maternity deduction on the center holding a particular type of education authorization. The ruling underscores that the tax law does not mandate a specific form of center for custody services to be eligible for the deduction. Instead, it places the emphasis on the actual fact of guardianship and the financial outlay incurred by the taxpayer, within the legal limits set by the act. In other words, whether the custody services are provided by a nursery or by an early childhood education center, those eligible expenses can qualify for the deduction when they meet the statutory criteria. The decision also stresses the obligation for nursery facilities to be properly authorized for the opening and ongoing operation of custody activities, including care and nutrition of minors, but this requirement is framed as a general regulatory condition rather than a coercive link to the tax deduction itself. The takeaway is that taxpayers should not face a blanket exclusion simply because the care provider lacks certain education-centered authorizations, provided the services fall within the law’s scope for the deduction and all other conditions are satisfied. This interpretation aligns the deduction with the intent of supporting working parents rather than restricting them through administrative formalities. [Attribution: Supreme Court judgment on maternity deduction and nursery care]
In a contemporaneous decision on the same day, another related ruling (appeal application 4995/2023) addressed the Tax Office’s appeal and arrived at a similar corrective stance. Taken together, these rulings reflect a harmonization of the court’s approach across cases and sectors, guiding lower tribunals and tax authorities toward a more expansive, and arguably more user-friendly, understanding of the deduction. The Supreme Court’s jurisprudence now signals a move away from rigid interpretations and toward a framework that emphasizes the actual services received by the family and the expenses incurred, rather than the administrative labels attached to the care provider. This shift benefits families who rely on a variety of caregiver arrangements, including nurseries and other early childhood care centers, as long as the expenses meet the statutory limits and other requirements of the Personal Income Tax Act. [Attribution: appellate court decisions and consolidated jurisprudence on maternity deductions]
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