Are maintenance payments classed as special expenses or exceptional costs?

Are maintenance payments special expenses or extraordinary expenses?

Maintenance payments to your divorced or permanently separated spouse can be deducted either as special expenses or as extraordinary expenses. This decision applies to the entire maintenance payment, meaning you cannot declare part as special expenses and another part as extraordinary expenses. Which option is more favourable depends on the individual case.

Special expenses:

For higher maintenance payments, it is often advisable to deduct them as special expenses, as the tax savings can be higher. The person obliged to pay maintenance can deduct up to 13,805 Euro annually plus the health and nursing care insurance contributions of the maintenance recipient. However, the recipient must agree and declare the payments as income. The agreement is made via "Form U".

Extraordinary expenses:

The deduction as extraordinary expenses is simpler, as no consent from the ex-partner is required. Here you can deduct up to 11,784 Euro annually plus the health and nursing care insurance contributions paid for the maintenance recipient (as of 2024).

Joint assessment in the year of separation:

In the year of separation, joint assessment is often more tax-efficient. In this case, maintenance payments cannot be deducted in that year.

Are maintenance payments classed as special expenses or exceptional costs?

How much of the maintenance payments to former spouses can I deduct as special expenses?

How much of the maintenance payments to ex-spouses can I deduct as special expenses?

Maintenance payments to an ex-spouse can be deducted as special expenses, a process known as income splitting. This allows the payer to claim tax relief on their payments, while the recipient must declare these as other income.

To deduct the maintenance payments, the payer must apply for the deduction, and the recipient must agree and confirm that they will declare the payments for tax purposes. The payer can deduct up to 13,805 Euro annually as special expenses. This maximum amount applies even if maintenance payments are made for only part of the year.

Special conditions:

• If you have to support two ex-spouses, the maximum amount of 13,805 Euro applies twice.
• Additionally, contributions paid for the health and nursing care insurance of the maintenance recipient can be deducted. These contributions are not included in the maximum amount of 13,805 Euro and can be deducted additionally.

Mr X pays his ex-wife maintenance of 600 Euro per month. His taxable income (zvE) amounts to 40,000 Euro per year.

Income tax without income splitting according to basic rate including solidarity surcharge:

• Income: 40,000 Euro
• Income tax 2024: 7,495 Euro

Income tax with income splitting according to basic rate including solidarity surcharge:

• Income: 40,000 Euro
• less maintenance: 7,200 Euro
• zvE: 32,800 Euro
• Income tax 2024: 5,263 Euro

Tax saving: 7,495 Euro - 5,263 Euro = 2,232 Euro

How much of the maintenance payments to former spouses can I deduct as special expenses?

What can I deduct as maintenance payments to ex-spouses?

You can deduct all maintenance payments to your ex-spouse, regardless of whether they use the funds for this purpose or not. It does not matter whether you make the maintenance payment voluntarily or are obliged to do so.

You can deduct the following expenses as maintenance, provided they are so-called typical maintenance payments:

• Regular cash payments
• Goods
• Insurance contributions
• One-off payments
• Consumption-based costs, e.g. for heating, electricity, water
• Rental value of the house or flat provided, up to the usual local rent
• Payments to offset tax disadvantages incurred by the recipient due to the taxation of maintenance payments
• Payments to third parties for the benefit of the maintenance beneficiary (e.g. rent payments directly to the landlord)

In the case of free provision of a flat, this is a form of maintenance in kind, which can be taken into account in real splitting at the local rental rate. The local rental rate must also be applied if the parties have agreed on a lower monetary housing benefit under maintenance law (BFH ruling of 29.6.2022, X R 33/20). However, the BFH makes the following restriction: If the joint children continue to live in the provided flat, the housing benefit attributable to them is not taken into account in the maintenance payments deductible under § 10 (1a) No. 1 EStG.

The BFH also points out another special feature: The provision of a flat to the divorced or permanently separated spouse can also be based on a paid legal relationship. In other words, the provision of use is not maintenance, but a "genuine" rental. This does not fall within the scope of § 10 (1a) No. 1 EStG, i.e. real splitting, but is to be assessed as income from renting and leasing, as in the case of renting to third parties.

In the case in dispute, the BFH assessed the separation and divorce settlement as not intended to be a classic rental, but rather maintenance in kind. However, this may be different in individual cases, especially if there is explicit mention of "residential rental" or if the terms "rent" or "payment" appear in the contract text.

What can I deduct as maintenance payments to ex-spouses?

What cannot be deducted as maintenance payments to ex-spouses?

Of course, not all payments to your ex-spouse can be claimed as special expenses. This includes gifts you give your ex-partner on special occasions (birthday, Christmas, etc.). Child maintenance is also not deductible.

This should be covered by child benefit or child allowances. Payments and benefits resulting from equalisation of accrued gains are also not deductible (e.g. taking over a car). The same applies to legal and court costs incurred to obtain your ex-spouse's consent to income splitting.

What cannot be deducted as maintenance payments to ex-spouses?

How can I deduct maintenance payments to my ex-spouse?

In order to deduct your maintenance payments to your ex-spouse or permanently separated spouse as special expenses, their consent is required. This is because the recipient of the payments must declare them as "other income" for tax purposes.

Consent must be proven by submitting "Form U" to the tax office. It is then valid indefinitely until revoked. However, the person liable for maintenance must submit Form U to the tax office each year. The application is then binding for that year. The revocation of the real splitting must be submitted to the tax office before the beginning of the calendar year for which the real splitting is no longer to apply.

The consent does not need to be obtained anew each year by the maintenance recipient and submitted to the tax office, as the application does. If the consent is already on file with the tax office and has not been revoked, make the required tick in Section B at the appropriate place.

As a maintenance recipient, you should make your consent to the real splitting dependent on the obligation of the maintenance payer to compensate for any tax and non-tax disadvantages you incur as a result of the taxation of the maintenance payments.

How can I deduct maintenance payments to my ex-spouse?

Which maintenance payments should be entered here?

Maintenance payments to a divorced or separated spouse can be deducted as special expenses up to a maximum amount of 13.805 Euro. In return, the recipient must tax the same amount as other income (so-called limited real splitting).

If you, as the maintenance payer, also pay contributions to health and nursing care insurance for your ex-spouse - either directly to your ex-spouse (because they are the policyholder) or directly to the insurance company for them (because you are the policyholder) - these contributions are additional maintenance payments within the framework of real splitting that can be deducted beyond the maximum amount of 13.805 Euro.

The following can be deducted as special expenses or taxed as other income:

• Cash maintenance,
• Benefits in kind, particularly the value of the accommodation provided to the ex-spouse. If you do not charge rent, it is apparently a "free provision". If you provide the accommodation to your ex-spouse due to a maintenance agreement and this reduces your cash maintenance obligation, you can deduct all expenses as special expenses within the framework of real splitting.
• Payments to offset tax and non-tax disadvantages incurred by the recipient due to the taxation of maintenance payments,
• Contributions to your ex-spouse's insurance,
• Rent payments and other ongoing housing costs for the benefit of your ex-spouse,
• Payment of tax consultancy costs for your ex-spouse.

Not deductible as special expenses are:

• Legal and court costs incurred for obtaining your ex-spouse's consent to real splitting.
• Expenses for the funeral of your ex-spouse and for the purchase of a grave right.

Which maintenance payments should be entered here?