Germany: Court Rules Costs for In Vitro Fertilization of Infertile Woman in Same-Sex Partnership Are Tax-Deductible

(Jan. 25, 2018) In a decision published on January 3, 2018, the German Federal Fiscal Court (Bundesfinanzhof, BFH), the supreme court in tax and customs matters, held that costs for in vitro fertilization (IVF) incurred by an infertile woman in a same-sex partnership are tax-deductible, reversing a lower court ruling. (BFH, Oct. 5, 2017, Docket No. VI R 47/15, BFH website (in German); Einkommensteuergesetz [EStG] [German Income Tax Act], Oct.8, 2009, BUNDESGESETZBLATT [BGBl.] [FEDERAL LAW GAZETTE] I at 3366, 3862, as amended, § 33, ¶ 1, German Laws Online website.)

Facts of the Case

In 2011, the petitioner, an infertile woman in a same-sex partnership, had an IVF treatment using sperm cells from an anonymous sperm donor. She tried to deduct the costs of approximately €8,500 (about US$10,403) as extraordinary expenses on her tax return, but the claim was rejected by the tax authorities and the fiscal court of first instance. (BFH, Docket No. VI R 47/15, at 1 & 2.)

Section 33, paragraph 1 of the German Income Tax Act provides that expenses are deductible if they qualify as extraordinary and inevitable. Expenses are extraordinary if they are higher than the expenses of the majority of taxpayers with the same income level, assets, and marital status. Expenses are inevitable if the taxpayer cannot avoid them for legal, factual, or moral reasons; they are necessary given the circumstances; and do not exceed an appropriate amount. (German Income Tax Act § 33, ¶ 2.)

The tax authority determined that the petitioner’s IVF treatment was not in compliance with the (Model) Professional Code of Conduct for Physicians and consequently denied her claim. (BFH, Docket No. VI R 47/15, at 3.) The Professional Code of Conduct for Physicians contains rules set forth by the German Medical Association on ethical and professional standards physicians must comply with. The rules of the (Model) Professional Code and the non-legally binding commentary must be taken into account in cases of IVF. (Id. at 20; (Model) Professional Code for Physicians in Germany [MBO-Ä 1997], 2011, as amended by the 114th German Medical Assembly 2015 in Frankfurt am Main.)

The fiscal court of first instance rejected the petitioner’s tax-deduction claim and held that the costs were not inevitable because her childlessness was due not only to her infertility but also to her decision to be in a same-sex partnership, in which natural procreation is not possible. (BFH, Docket no. VI R 47/15, at 4.) The petitioner appealed the ruling of the lower court to the Federal Fiscal Court.

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