(2021)
Maintenance payments: Cash payments for relatives abroad deductible
Many foreign nationals living and working in Germany support their relatives abroad. In this case, the tax office imposes stricter requirements on the proof of maintenance payments and the recipient's need. Cash amounts for relatives are often given to intermediaries when they travel home.
An intermediary can also be a neutral commercial transport company. The tax office generally does not recognise such a money transfer for tax reduction purposes (BMF letter dated 07.06.2010, BStBl. 2010 II p. 588, para. 17).
An exception is only made if, due to the special situation in the country of residence (e.g. crisis area), no other payment method is possible. In this case, you must document the identity of the intermediary (name and address), the exact travel itinerary, and provide complete proof of the origin of the money in Germany and its handover to the maintenance recipient. The journey itself must be proven by tickets, fuel receipts, border crossing stamps, flight tickets, visas, etc.
Currently, the Baden-Württemberg Fiscal Court has slightly relaxed the strict view of the tax authorities and decided that maintenance payments to close relatives in Italy are also tax-deductible if the cash is handed over via couriers and if the delivery can be proven by questioning the courier as a witness (Baden-Württemberg Fiscal Court, 21.07.2015, 8 K 3609/13, published on 02.03.2016).
The case: An Italian guest worker wants to deduct maintenance payments of 6.000 Euro as extraordinary expenses, which he made to his parents living in Italy. 200 Euro were transferred via money transfer to an Italian bank, the other amounts of 1.800 Euro and 4.000 Euro were withdrawn from his bank account and given to a friend who worked as a food importer and therefore made regular trips to southern Italy.
The father had been unemployed for a long time, and the mother had only a small income from part-time work as a cleaner. The parents did not have their own bank account. The tax office did not recognise the maintenance expenses. The tax judges saw this differently after questioning the courier as a witness. The witness's detailed account of the trips to Italy and the handover of the cash was considered credible and consistent by the fiscal court.
Important
Maintenance payments are deductible as extraordinary expenses up to the maximum amount of 9.744 Euro (2021) without deduction of a reasonable burden. However, own income and benefits exceeding 624 Euro per year are credited.
The maintenance maximum amount and credit allowance are reduced according to the country group classification by one, two or three quarters if the maintenance recipient lives in a country with a lower standard of living.
Attention
Attention: The Federal Fiscal Court has recently ruled as follows: Maintenance payments are always only considered for tax purposes until the end of the year, and the maximum amount is prorated if payments are made during the year (BFH ruling of 25.04.2018, VI R 35/16).
The case: The son-in-law makes a maintenance payment of 3.000 Euro in December 2010 to his father-in-law living in Brazil, intended for a whole year. Monthly payments were not feasible due to high fees for international transfers. However, the tax office only recognises this payment with one-twelfth of the maximum amount (for December), as maintenance payments are only deductible if they serve the ongoing living needs of the supported person in the calendar year of the payment. The Nuremberg Fiscal Court had recognised the entire payment in 2010. The BFH has now contradicted this.
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