Income-based allowance, sibling allowance, and other allowances

Household income below a certain threshold may entitle you to an income-based daycare allowance

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If your family’s total household income is below a certain threshold, you can apply to the municipality for an extra allowance so that it will be cheaper or completely free to have your child in daycare. This is called an income-based allowance.

When you apply for an income-based allowance, the starting point is your monthly household income. Your monthly household income is used to calculate your annual income (multiplied by 12) to find your family’s income-based allowance percentage on the scale.

The income thresholds for 2021 are as follows:

  • up to DKK 185 701 – income-based allowance corresponding to all out-of-pocket fees that are eligible for allowance
  • DKK 185 701 to 576 799 – partial income-based allowance
  • DKK 576 800 and over – no income-based allowance

The income thresholds are increased by:

  • DKK 7 000 for each resident child under the age of 18 in addition to the first resident child
  • DKK 64 967 when the parent who is entitled to the place and the income-based allowance is a single parent (2021)

Recalculation of the income-based allowance

When the municipality is to calculate and later recalculate your income-based allowance for a specific month, the municipality bases it on the household’s monthly income. When calculating the income-based allowance for an individual month, the municipality uses the information that you provided when applying. For the purpose of recalculating your monthly income-based allowance, the information on your monthly income is pulled from the Danish Tax Agency’s so-called income register. There are special rules for, among other things, income from self-employment and income that is not taxable in Denmark.

More information on the rules, and the current income thresholds, are available on the Ministry of Children and Education website.

The municipality recalculates your income-based allowance if the income comparison shows a deviation of at least 5 steps on the scale of income thresholds. This is done using information from the Danish Tax Agency’s income register. Too high or too low of an allocated income-based allowance is generally deducted from or added to the subsequent collection of out-of-pocket fees for the daycare place. For parents with children in private institutions, too high or too low of an allocated income-based allowance shall be paid back or paid out to them as an additional payment, respectively.

It is possible for parents to have their income-based allowance recalculated when the conditions for doing so are met.

For use in the recalculation, the parents shall inform the municipality of all circumstances of significance to the amount of the income-based allowance, including changes in the household composition. However, the parents are not obligated to provide information on changes in income, unless it concerns income from self-employment or income that is not taxable in Denmark.

In making the annual adjustments, a final statement is produced for household income in the individual months and on that basis a final calculation is made of the income-based allowance for the individual months.

Parents have a duty to inform the municipality of changes in household composition, marital status, or other changes that may entail changes in the income-based allowance.

You are entitled to an allowance if your child has a significant and permanent impairment of physical or mental functioning and for therapeutic reasons goes to daycare. This is called a therapeutic allowance and it reduces by half the out-of-pocket fees for the daycare place.

It is the municipality that assesses whether the child is entitled to a therapeutic allowance and it is therefore the municipality that assesses whether you are entitled to the allowance. A therapeutic allowance can only ever be granted after a concrete and individual assessment of the child.

The municipality can also grant a socio-pedagogical allowance when:

  • the municipal council assesses the child’s time in daycare to be particularly necessary for social or pedagogical reasons, and
  • the issue of fees makes it difficult for the child to go to or remain enrolled in daycare.

Both conditions must be met, and the allocation of a socio-pedagogical allowance always takes place after a concrete and individual situational assessment of the family and the child. It is up to the individual municipality to make the assessment, including a determination of which criteria to emphasize.

An income-based allowance is calculated before any therapeutic, socio-pedagogical, or sibling allowance.

If you, as the parent(s), meet the conditions to receive a sibling allowance, then it amounts to half of the out-of-pocket fees for the cheapest place that you have. The cheapest place is determined by comparing the net operating costs of the place(s) for which the parents already pay.

Thus, parents pay full fees for the most expensive place that they have. The term “sibling” includes biological siblings, adopted siblings, and step-siblings who live at the same address.

If you, as the parent(s), have a place at a daycare centre with a healthy lunch, and you as the parent(s) are entitled to sibling allowance there, then you as the parent(s) are also entitled to a sibling allowance for the lunch. This means that the municipality does not have to make a new assessment of whether a sibling allowance shall be provided for the lunch. The sibling allowance is therefore calculated in relation to the child who receives the sibling allowance there.

Sibling allowances for private childcare according to § 80 of the Daycare Act are set at an amount that corresponds to at least 85 % of the sibling allowance for the cheapest age-appropriate daycare in the municipality.

The sibling allowance is independent from any other allowances that the municipality has chosen to provide for private childcare. The basic allowance for private childcare and the sibling allowance shall be used for the parents’ payments for such.

You will automatically receive sibling allowance, so you do not have to apply for it.

If you want a place in a private institution according to § 19, paragraph 5 of the Daycare Act, you must contact the institution directly. The municipality cannot assign children places in private institutions, and private institutions themselves determine the parental out-of-pocket fees.

Municipalities provide financial subsidies to approved private institutions. However, you are not entitled to an allowance there until the child is entitled to daycare in your own municipality.

The subsidies from the municipality consist of an operating subsidy, a building subsidy, and an administration subsidy, which the municipality issues directly to the private institution.

Parents with children from the age of 24 weeks until they start school shall be allowed by the municipality to choose an allowance for private childcare instead of accepting a place in a daycare.

However, the municipality may decide that allowances for private childcare are only provided to parents with children in a certain age group.

Last updated: 12 December 2020