Are divorce costs tax deductible?

Until 2012: Deductibility of Divorce Costs

Until 2012, divorce costs – particularly legal and court fees – could be deducted as extraordinary expenses under § 33 EStG. However, only the costs for the actual divorce proceedings and pension rights adjustment were deductible. Costs for subsequent divorce matters, such as maintenance or custody arrangements, were not deductible.

From 2013: Change in Legal Situation

Since a change in the law in 2013, divorce costs are generally no longer tax-deductible as extraordinary expenses. This applies to both the divorce proceedings and the pension rights adjustment, as well as all subsequent divorce matters. The legislator generally excluded the tax deductibility of legal costs. An exception applies only if the expenses are necessary to secure the taxpayer's livelihood (§ 33 para. 2 sentence 4 EStG).

BFH Ruling of 2017

In 2017, the Federal Fiscal Court (BFH) clarified that divorce costs generally do not affect the livelihood. Even if a divorce significantly impacts life, this is not considered a threat to the economic livelihood (BFH ruling of 18.05.2017, VI R 9/16).

No Deductibility of Divorce Costs from 2013

Since 2013, divorce costs are completely non-deductible, including all subsequent divorce matters such as maintenance arrangements, equalisation of accrued gains, or asset settlements. The official instructions for the tax return explicitly state that legal costs related to a divorce are no longer recognised as extraordinary expenses.

Legal Costs for Post-Marital Maintenance

A notable ruling by the Münster Finance Court in 2019 briefly raised hopes that legal costs to enforce post-marital maintenance could be deductible as income-related expenses if the recipient of the maintenance payments agrees to income splitting. With income splitting, the maintenance payer can deduct maintenance payments as special expenses, while the recipient taxes them as other income (§ 22 No. 1a EStG).

However, the Federal Fiscal Court overturned this ruling in an appeal. Legal costs to obtain or increase post-marital maintenance are therefore not deductible as income-related expenses, even if the maintenance payments are taxed under income splitting (BFH ruling of 18.10.2023, X R 7/20).

Conclusion

Since 2013, divorce costs and related legal costs are no longer tax-deductible. This applies to both the actual divorce and subsequent divorce matters such as maintenance, equalisation of accrued gains, or custody. Legal costs to enforce post-marital maintenance are also not deductible as income-related expenses following a recent BFH ruling, even if the maintenance recipient taxes the payments under income splitting.