Childcare allowance

What it means

The childcare allowance is a state benefit for a parent who works or studies while a nursery, kindergarten or another person looks after the child. It covers childcare costs up to a statutory limit and helps parents return to work sooner.

It is paid by the Office of Labour, Social Affairs and Family, and entitlement depends on the child's age and on the parent working or studying. The care must be provided by a facility or a person who does it for payment, not, for example, by the other parent.

It cannot be drawn at the same time as the parental allowance for the same child, so the family must choose the more advantageous benefit. It is separate from child benefit and the child tax bonus, which can be received alongside it.

How it works in practice

The parent applies at the labour office and supplies proof of work or study and of who looks after the child and at what cost, for example a contract with a private kindergarten. The allowance covers the documented costs up to the statutory cap.

When comparing the parental allowance with the childcare allowance, take into account the pay the parent will earn after returning to work. Often the combination of pay and childcare allowance leaves the family better off than the parental allowance.

Employers can support a parent's return with their own benefits, such as a kindergarten contribution or flexible hours. The tax and contribution treatment of such benefits must be assessed, as it can differ depending on their form.

What to watch out for

Changes in circumstances, such as leaving a job or a change in the facility or its fees, must be reported to the office. Otherwise amounts paid without entitlement must be returned and, in worse cases, administrative proceedings may follow.

The cap and conditions change and differ by type of facility. Before deciding to return to work, it is sensible to check the current rules with the labour office and compare the family budget under each option.