Family day care centres and tax

A family day care centre is a day care centre where small groups of children are cared for in a private home. The children are cared for on a daily basis by a family day care centre assistant. The assistant receives guidance and is monitored by a pre-school teacher, who is also the educational supervisor at the day care centre. A family day care centre normally consists of two or more homes. Each assistant may be responsible for up to five children, depending on the age of the children. The municipality is responsible for approving and supervising family day care centres. The municipality may provide more information. 

Family day care centres receive public subsidies in the same way as other day care centres. Fees paid by parents also make up a significant proportion of the income. Usually, the fees are about the same as those charged by ordinary private and municipal day care centres. 

It’s important not to confuse family day care centres with private childminding businesses.

Although childcare is involved in both cases, there are major differences. The family day care centre scheme and the home must be approved by the municipality, and they receive educational guidance and public subsidies. Private childminders running a childminding business from their own home are not subject to municipal control and do not receive public support.

Learn more about tax regulations for private childminders for parents, childminders and nannies/au pairs on our pages childcare in a private home.

• Fees paid by parents for having their children at a family day care centre. If you pay to have your own children at a day care centre that you run, this also constitutes taxable income for the day care centre.
• Public subsidies for running expenses.

Deduction rules

If you run a family day care centre in your own home, you can choose whether you wish to claim a deduction for your actual operating expenses that you must document (accounts-based assessment) or whether you wish to receive a standard deduction per child in addition to the deduction for any personnel expenses, such as salary expenses, holiday pay and employer's national insurance contributions.

Standard deduction for day care centre running expenses (excluding salary expenses, etc.)

If you run a family day care centre in your own home and care for the children yourself, you can receive a standard deduction per child to cover your ordinary expenses linked to your childminding business in your home. The standard deduction is intended to cover all expenses attributable to food, toys, trips, cleaning, lighting, heating, wear and tear on fixtures and fittings and home contents, etc. The standard deduction must amount to 50 percent of the childminding fee (i.e. the fee paid by parents plus the public subsidy), but cannot exceed the applicable rate per month per child. The maximum rate for the standard deduction corresponds to the compensation rate for board, wear and tear, etc. as set out in the special agreement between the Norwegian Association of Local and Regional Authorities and the trade unions. You’ll receive the standard deduction for all the children at your day care centre, even for your own child if you pay the same amount as the other parents for having your child at the day care centre. The payment for your own child must also be declared as business income for the day care centre.

You can receive the standard deduction even if the children are cared for by others (an employed assistant), as long as you’re in charge of administration, employer's responsibilities, etc. However, you'll not be entitled to the standard deduction if you’re not responsible for running the day care centre yourself, but simply make your home available as premises for childminding (host home).

If you choose the standard deduction per child instead of a deduction for your actual expenses, you’ll not be able to change your mind in subsequent income years if your circumstances do not change significantly, and for at least five years, if the family day care centre remains open for that long. 

In addition to the standard deduction, you’ll receive a deduction for expenses relating to salaries and holiday pay for an employed day care centre assistant and/or nursery nurse/preschool teacher and for employer's national insurance contributions.

Deduction for actual operational expenses (Accounts-based assessment)

You must complete and submit the income statement together with the tax return for businesses. You’ll find the tax return on My page. Alternatively, you can submit the tax return through your accounting system. 

You’ll find the tax return with pre-filled information on My page at skatteetaten.no. Alternatively, you can submit the tax return through your accounting system. The deadline for submitting the tax return is 31 May in the year after the income year.  

Online submission of the tax return for wealth and income tax for self-employed persons, etc. is mandatory for all businesses, including self-employed persons. You cannot deliver the tax return on paper, and it’s not available for downloading.

The tax return is partially pre-completed with the information that the Norwegian Tax Administration has about you. The information is either from internal databases or from banks, insurance companies, any clients/employers and other public agencies. The pre-completed information largely concerns your personal circumstances. You must add information concerning your business circumstances yourself.

You’ll be entitled to a deduction for salary expenses that have accrued during the income year for day care centre assistants, pre-school teachers, etc. You’ll also be entitled to a deduction for accrued expenses for holiday pay during the income year and employer's national insurance contributions.

Otherwise, you’ll receive a deduction for all other expenses that are attributable to running the day care centre, e.g. expenses for toys, food, trips, drawing paper, telephone expenses and added costs for lighting, heating and cleaning of the premises. As regards expenses for telephone, lighting, heating and cleaning, you must substantiate to the tax office that these expenses are directly attributable to the running of the day care centre and not private consumption.

If you run a family day care centre in your own home that is subject to tax-exempt assessment (i.e. where any rental income is not taxable), there are limits to what you're entitled to deduct for as regards your home.

If you incur expenses linked to areas that you use both for private purposes and for running the day care centre, there is no deduction entitlement for these expenses in the accounts. You’ll not be entitled to direct deductions for safety measures around the home or outdoors, even if they are mandatory, e.g. smoke alarms or garden fencing. The same applies to improvements to or maintenance of outdoor areas because such expenses are linked to the residential property. However, you can add these expenses to the cost price of the home (capitalised) if you subsequently sell the property.

You can claim a deduction under the rules concerning "home office" if the expenses are linked to rooms that are exclusively used for the day care centre business, e.g. expenses for lighting, heating and cleaning. Instead of a deduction for your actual expenses attributable to the day care centre rooms, you can claim a standard deduction with a fixed rate each year (see applicable rate). The rules concerning home offices do not apply if the children can use most of the home and you also use the rooms privately. You can claim a proportional deduction for expenses that cannot be attributed to specific parts of the property, such as external maintenance, insurance and municipal taxes. The proportional deduction is calculated based on the rental value for the child day care centre part and the residential part. 

In connection with the purchase of miscellaneous equipment and furniture, the deduction entitlement is dependent on whether the objects were primarily purchased for the day care centre, e.g. children's chairs or nappy changing tables. If the equipment was primarily purchased for private use, you may be entitled to a discretionary deduction for any extra wear and tear associated with use in the day care centre.

Expenses for fixtures and fittings such as kitchen equipment, wardrobes, carpets and curtains are not deductible because they're considered attributable to the home rather than the running of the day care centre.

You’ll find the tax return with pre-completed information You’ll find the tax return with pre-filled information on My page at skatteetaten.no. Alternatively, you can submit the tax return through your accounting system. The deadline for electronic submission of the tax return is 31 May in the year after the income year. 

Minimum standard deduction

Normally, only income recipients can claim the standard minimum deduction from their employment income, while self-employed persons do not receive a corresponding standard minimum deduction from their business income. A self-employed person who minds children under 12 years of age in their own home may still be entitled to the standard minimum deduction from their business income. This also applies if you run a family day care centre in your own home. You’ll receive a standard minimum deduction regardless of whether you opt for the standard deduction for childminding or a deduction for your actual expenses (accounts-based assessment).

The basis for calculating the standard minimum deduction is the net operating income of the family day care centre, i.e. the centre's total income minus its actual expenses (according to the accounts) or the total income after deduction of the standard rate per child and salary expenses.

Accounting obligation

As a self-employed person, you must keep accounts in accordance with the Bookkeeping Act. You must complete Income statement 1, which is for self-employed persons with a limited obligation to keep accounts. This also applies when you opt for the standard deduction per child. Income Statement 1 is a part of the tax return for wealth and income tax – self-employed persons. This means you must log on to your tax return at skatteetaten.no or through your accounting system.

Completion of the income statement

You only need to fill in a few items in the income statement. You enter the childminding fees paid by parents under item 3200. You enter public subsidies under item 3400. You enter the total of these two amounts under item 9900. You enter salaries and holiday pay under item 5000. You enter employer's national insurance contributions under item 5400. You enter the standard deduction under item 7700. You enter the total of these expenses under item 9910. In a separate attachment to the income statement, you must explain that it concerns the standard deduction for childminding in your own home, and you must also state the number of children and months concerned. Business income will be transferred to your tax return.

Taxable or tax-free organisation

Family day care centres that have a commercial objective are taxable organisations. In special cases where the organisation/institution that runs the family day care centre does not have the object of generating a profit, but is run on a non-profit-making basis, the organisation may be considered a tax-exempt organisation following a specific individual assessment. Such day care centres will not be tax liable for any income they generate linked to the running of the day care centre. Read more about tax for non-profit organisations.

Accounts-based assessment

For family day care centres that are owned by a private organisation, a parent group or similar, the accounting figures must be the basis of the accounts-based assessment if the conditions for being considered a tax-exempt organisation are not met. This means that a deduction will be given for actual documented expenses, and the standard deduction may not be chosen. Family day care centres must keep accounts in accordance with the Bookkeeping Act and retain receipts for the expenses they incur. The day care centre must submit the income statement together with the tax return for wealth and income tax - self-employed persons. Alternatively, you can submit the tax return through your accounting system.

The deadline for submitting the tax return is 31 May the year after the income year. 

Deduction for expenses

Family day care centres receive a deduction for all the expenses they incur linked to the running of the centre, e.g. salary expenses, holiday pay, employer's national insurance contributions, compensation to the host home or rent, toys, food, museum visits, drawing paper, etc.

Family day care centres are not entitled to a deduction for wear and tear on assets, e.g. furniture and toys that belong to the family from which the day care centre rents premises. If the family day care centre owns objects that are primarily used in the running of the centre, the centre will be entitled to a deduction under the ordinary rules concerning deductions. If an object costs NOK 15,000 or more and has a useful life of at least three years, a deduction will be given in accordance with the rules concerning depreciation. If the object costs less or has a shorter useful life, the family day care centre may deduct the cost price in the year in which the object is purchased.

Compensation to the host home 

If no one from the host home actively participates in the running of the family day care centre, i.e. does not carry out work linked to the day care centre such as administration or employer's responsibilities, the compensation paid to the host home will be treated as rental income for the homeowner.

Personal income forms the basis for calculating pension credits, national insurance contributions and bracket tax. Personal income must be calculated for the owner of a sole proprietorship, regardless of whether or not the owner is actively involved in the running of the business. This is particularly relevant if you run a family day care centre as a self-employed person in your own home. The personal income is calculated from the general income from the enterprise.

The card «Allocated calculated personal income» is shown automatically when you fill in information about income and/or expenses in the business information. If the enterprise runs a business within more than one industry, you must manually create more cards and calculate personal income for each of them. You submit the business information with your tax return for wealth and income tax – self-employed persons, etc. within 31 May in the year following the income year.  

If you run a family day care centre in your own home, you must enter the calculated personal income under the item for personal income from self-employment in your tax return. This is important in order to ensure that your national insurance contributions is calculated at the intermediate rate – rather than the high rate, which otherwise applies to self-employed persons.

National insurance entitlements

You’ll normally be entitled to sickness benefits if you fall ill. NAV will be able to provide more information on the rules that apply.

Income you receive as a self-employed person in a sole proprietorship is not subject to advance payment of tax. The public authorities and parents therefore do not make any advance deductions in connection with the payment of subsidies or personal contributions. You must therefore make sure you pay advance tax for personal taxpayers. The tax office levies your advance tax. It must be paid in four instalments during the income year: 15 March, 15 May, 15 September and 15 November. Contact us if you think no advance tax has been levied or you think the advance tax is wrong.

Family day care centres that are run by limited liability companies, private organisations, parent groups or similar and that are tax liable must pay advance tax for non-personal taxpayers. The tax office levies advance tax. It must be paid in two instalments in the year after the income year: 15 February and 15 April.

Advance tax need not be paid if the family day care centre is a tax-free organisation.

If the family day care centre has employed a part-time pre-school teacher or one or more assistants to look after the children on a daily basis, the day care centre will be subject to certain obligations as an employer. Read more about your obligations as an employer. 

Parents

Parents who have children at a family day care centre must not submit a-meldings concerning payments made to the family day care centre for childminding.

Parents are entitled to a deduction from their taxable income for expenses relating to the minding of children under 12 years of age (child-care deduction).

Family day care centres are obliged to submit information to the Tax Administration concerning the expenses accrued by the individual parent relating to day care centre places during the income year. The amount (personal contribution) that the day care centre reports will then be pre-completed under the item for child-care deduction in the parents' tax returns. If you need help to complete and report, read more about minding and care of children under Third party data.