If you have one or more dependants, you get a tax advantage. This is because your tax-free minimum (= the sum exempt from tax anyway) is increased according to the number of dependent children.
An example to clarify:
For the assessment year 2024, income 2023, each taxpayer had a tax-free sum of EUR 10,160.00. This amount is increased according to the number of children. If Mr Peeters had three dependent children in 2023, his tax-free allowance was increased by EUR 10,660.00.
For the assessment year 2025, income 2024, each taxpayer has a tax-free sum of EUR 10,570.00. This amount is increased according to the number of children. If Mr Peeters has three dependent children in 2024, his tax-free allowance is increased by EUR 11,090.00.
A disabled child counts for two children. In addition, one will be able to enjoy an additional increase in the tax-free allowance if one is considered single. This means that one was not married or not legally cohabiting during the entire taxable period. For assessment year 2024, this additional exemption is EUR 1,850.00 and for assessment year 2025 it is EUR 1,920.00.
When is a child a dependent for tax purposes?
First, the child must be part of your family on January 1st of the assessment year. This does not mean that the child must have their main residence with you. The child must simply live with you in a permanent manner.
Secondly, the child itself cannot have net means of existence that exceed a certain amount. This maximum amount differs depending on whether the child is a dependent of a parent taxed jointly or a parent taxed as a single person. However, for assessment years 2024 and 2025, this will be deviated from and the largest limit will be applied to all children. For assessment year 2024, this amount is EUR 7,010.00 and for assessment year 2025 it is EUR 7,290.00.
Beware: you may therefore lose your child, as a dependent, if he/she has earned more than the maximum amount of net means of existence!
Thirdly, the child may not receive any remuneration that you contribute as professional expenses. For example: you own a restaurant and during school holidays, your daughter helps out in the venue. If you deduct her wages from your income as professional expenses, your daughter will then no longer be a dependent regardless of how much she earns.
A child you had as a dependent before 31.12.2023 will be a dependent in 2024.
Is child benefit or a scholarship taken into account as being the child's means of subsistence?
No, section 143 of the Income Tax Code 1992 contains a list of income that does not qualify for the calculation of the child's maximum net means of subsistence anyway.
This list includes:
- Statutory child benefits;
- Scholarships;
- Premiums for premarital savings;
- Etc.
Is it interesting to ‘tax-share’ a child with my ex?
Sharing a child fiscally means splitting the child fiscally between the two parents. This splitting is also known as tax co-parenting. To benefit from this arrangement, four cumulative conditions must be met.
First, the parents must not be part of the same family. Thus, they must live separately and each must have their own housing.
Secondly, both parents must fulfil the maintenance obligation, arising from the Civil Code, towards their common children. This way, the tax benefit can also be shared for adult student children. The joint maintenance obligation is therefore decisive and not the exercise of parental authority.
Thirdly, the children's housing must be equally divided between both parents. In other words, there must be so-called co-parenting or evenly divided residence. Here, it is irrelevant where the child is registered in the civil status registers as having his/her main residence. This was also confirmed by the Court of Cassation (Cass. 19 November 2001, Arr.Cass. 2001, afl. 9, 1959).
For example:
In order to share a child for tax purposes from assessment year 2024, a court order must be available by 01.01.2024 expressly stating that there is an evenly divided residence of the child.
Through agreement, parents can also agree that the child will reside equally with both of them and that they are willing to share the tax benefits. This can be done either by private or notarial deed. This agreement must then be registered with the competent registration office on 01.01.2024, or homologated by the court, for the child to be split for tax purposes in assessment year 2024.
Fourth, neither parent may deduct maintenance payments for the joint children. This is because when dividing a child's tax burden, the tax authorities assume that the child is part of both families. Thus, the taxman will not allow any maintenance payments to be tax deductible if one also takes the child as a tax dependent. Indeed, the maintenance contribution will only be deductible if it is paid by the parent to whose family the child does not belong. So one will not be able to take the child as a dependent and deduct the maintenance paid for tax purposes. A parent claiming the deduction of the maintenance fees paid by him in case of evenly divided residence should be aware that he is thus excluding the application of tax co-parenting.