Avoid retroactive payments

Retroactive payments are not possible, i.e. an amount transferred in August can only be intended for maintenance in August or the following months. If the support payments do not relate to the entire calendar year but only to individual months, the maximum amount for support payments will be reduced accordingly.

Avoid retroactive payments

Maintenance payments to relatives abroad: Strict proof requirements apply!

Many foreign nationals living and working in Germany support their relatives abroad. Individuals with a foreign spouse may also provide financial support to their spouse's relatives. Since 2007, the tax office has imposed stricter requirements for proving maintenance payments and the recipient's need when it comes to maintenance payments to relatives abroad.

Recently, the Federal Fiscal Court rejected maintenance payments to parents living in Indonesia because need was not sufficiently proven. Certificates of need for adult maintenance recipients must include detailed information about income received before the start of support.

Given the limited ability to verify circumstances abroad, comprehensive information is essential. It is generally reasonable to provide fully completed certificates (BFH ruling of 7.5.2015, VI R 32/14).

The case: The son living in Germany supported his parents in Indonesia with 5.000 Euro. He presented the tax office with two documents from the municipal administration (Indonesia) stating that his parents do not receive a state pension as civil servants or public employees. He later provided another certificate stating that his father is not employed, has no income, and does not receive a pension. However, the BFH did not consider this sufficient proof of the parents' need.

The BFH is very strict here: The judges criticised that the submitted "maintenance certificates" from the municipal administration (Indonesia) were incomplete in essential parts. In particular, there was no information about income received by the parents before the start of support and thus no information on how they supported themselves before the son's support payments began.

Furthermore, the submitted certificates from the municipal administration were incomplete as they did not provide information on the parents' financial situation, such as (owner-occupied) property. These certificates only excluded own income and pension receipt (as civil servants or public employees) but said nothing about other income, e.g. from rental. Therefore, the information in the certificates alone could not be used to conclude their need.

However, the BFH allows for some relief: The fulfilment of obligations to clarify the facts and to provide and procure evidence must be possible, reasonable, and proportionate. For example, in cases of civil war, evidence relief regarding the procurement of official certificates may be considered.

The Federal Ministry of Finance has recently issued two comprehensive decrees on the deduction of maintenance payments, including the question of proof of maintenance payments. There are several points to consider, especially for payments to relatives living abroad (BMF letter of 6.4.2022, IV C 8-S 2285/19/10002 :001 and 10003 :001). Among other things, the following applies:

Transfers to relatives abroad must generally be proven by postal or bank documents (booking confirmations or account statements) showing the supported person as the recipient. If several people living in a shared household are supported, it is sufficient if the transfer documents are in the name of one of these people. For transfers to an account abroad not in the name of the supported person, a bank certificate of account authorisation and the time, amount, and recipient of the payment is required in addition to the domestic payment documents.

The taxpayer may also choose another payment method if the maintenance payment made in this way is sufficiently proven. For cash maintenance payments and all other payment methods, increased evidence requirements must be met. Withdrawal receipts and detailed recipient confirmations are required. There must be a sufficient factual connection (period of no more than two weeks) between the withdrawal and the respective cash handover. The trip must always be proven by tickets, fuel receipts, border crossing stamps, flight tickets, visas, etc.

Relief applies to family visits by the taxpayer to his supported family living abroad. A family visit only occurs if the taxpayer visits his spouse living abroad, who continues to maintain the family household there. If the spouse also lives in Germany and the taxpayer only visits his children or parents living abroad, it is not a family visit, and increased evidence requirements apply again.

For employees, it can generally be assumed that the taxpayer takes a net monthly salary for the maintenance of the spouse, children, and other relatives living in the spouse's household with each family visit. This evidence relief applies only to up to four family visits per calendar year. However, within the framework of the evidence relief, a maximum amount can be claimed, which results when the fourfold net monthly salary is reduced by payments made and proven or credibly demonstrated in other ways. If the taxpayer claims higher expenses than (flat rate) the fourfold net monthly salary, all payments must be proven according to the general principles.

Money transfers through an intermediary (this also includes a neutral commercial transport company) can generally not be recognised. This does not apply if, due to the special situation in the country of residence (e.g. crisis area), no other payment method is possible. In this case, in addition to the identity of the intermediary (name and address), the exact travel route must be presented, and a complete proof of the origin of the money in Germany and every single step until the handover to the supported person must be provided. The trip by a private intermediary must always be proven by tickets, fuel receipts, border crossing stamps, flight tickets, visas, etc.

A recipient confirmation must be issued for the handover of each individual amount of money. It must include the name and address of the taxpayer and the supported person, the date of issue and the recipient's signature, as well as the place and time of the money handover. To fulfil its intended evidential function, it must be issued in exchange for the money. Subsequently issued or combined recipient confirmations do not meet the proof requirements.

Maintenance payments to relatives abroad: Strict proof requirements apply!

Maintenance payments: Cash payments for relatives abroad deductible

Many foreign nationals in Germany provide financial support to their family members in their home country. The tax office imposes strict requirements on the proof of maintenance payments and the recipients' need. Transfers via intermediaries or transport companies are generally not recognised (BMF letter dated 7.6.2010).

An exception applies only in special cases, such as crises in the country of residence when no other payment method is possible. In these cases, the identity of the intermediary, the travel itinerary, and precise proof of the money transfer must be fully documented. This includes evidence such as tickets, fuel receipts, border crossing stamps, or flight tickets.

A 2016 ruling by the Baden-Württemberg Finance Court confirmed that maintenance payments to close relatives abroad – in this case to Italy – are tax-deductible. The court accepted the payments after the courier credibly confirmed as a witness that the money transfers were regular and trustworthy (FG Baden-Württemberg dated 21.7.2015, 8 K 3609/13).

In a 2022 decree, the Federal Ministry of Finance clarified the details of the tax deductibility of maintenance payments (BMF letter dated 6.4.2022, IV C 8-S 2285/19/10002 :001 and 10003 :001). The key points are:

• Proof of payments: Maintenance payments must be proven by bank or postal receipts that clearly identify the recipient. If several people in the same household are supported, it is sufficient if the receipts are issued to one person.
• Alternative payment methods: For payments to accounts not in the recipient's name, an additional bank certificate of account authorisation is required.
• Cash payments: These are possible, but strict proof requirements apply. In addition to withdrawal receipts and recipient confirmations, the transfer and the trip, which must not exceed two weeks, must be precisely documented.
• Family trips: Under certain conditions, trips by the taxpayer to their family abroad are tax-deductible. However, this does not apply if the spouse lives in Germany and only children or parents are visited abroad.
• Recipient confirmation: Each money transfer must be confirmed by a receipt issued immediately, containing the name, address, date, place of transfer, and the recipient's signature. Later confirmations are not accepted.

The deductible maintenance amount is up to 11.784 Euro per year (2024), with the recipient's own income over 624 Euro being deducted. In countries with a lower standard of living, the maximum amount is reduced by up to three-quarters.

Important: Maintenance payments can only be considered for tax purposes for the current year. For payments made during the year, the maximum amount is prorated over the year (BFH ruling dated 25.4.2018, VI R 35/16).

Maintenance payments: Cash payments for relatives abroad deductible

How can I claim maintenance payments to a person in need?

Maintenance payments to dependants in need can be claimed as extraordinary expenses for tax purposes, without any deductible being applied. It is important to note that the tax office will only recognise these payments if they are proportionate to your net income. After deducting the maintenance payments, your income must be sufficient to support yourself, your partner, and your children. This limit is referred to as the sacrifice limit.

No sacrifice limit for maintenance payments to ex-partners

The sacrifice limit does not apply to maintenance payments to your ex-partner, permanently separated partner, or a dependant with whom you live in a shared household.

Calculation of the sacrifice limit

The sacrifice limit is calculated based on your net income, which includes wages, child benefit, and unemployment benefit, minus taxes, social security contributions, and work-related expenses. For every full 500 Euro of net income, the sacrifice limit is 1 percent. For married couples, the joint income is taken into account. However, a maximum of 50 percent of the net income is recognised. The percentage is reduced by 5 percent per child for whom you receive child benefit, and by 5 percent for the spouse, but by no more than 25 percent.

Example of calculating the sacrifice limit

You are married, have two children, and support your parents with 9.000 Euro per year. Your net income is 24.000 Euro per year.

• Net income: 24.000 Euro
• 1 percent per 500 Euro = 48 percent
• Deduction for spouse: -5 percent
• Deduction for two children: -10 percent
• Remaining sacrifice limit: 33 percent

Your sacrifice limit is therefore 33 percent of 24.000 Euro, i.e. 7.920 Euro. Of the 9.000 Euro maintenance payments, 7.920 Euro are recognised.

Maximum maintenance amount

In 2024, the maximum maintenance amount is 11.784 Euro. This amount can be increased if you also pay health and nursing insurance contributions for the maintenance recipient.

How can I claim maintenance payments to a person in need?

Can I also declare one-off payments?

Occasional or one-off maintenance payments are also tax deductible as part of maintenance payments to dependants.

For a one-off maintenance payment, the tax office always assumes that it is intended to cover maintenance needs until the end of the year. The maximum maintenance amount is then reduced by one twelfth for each preceding month. If you make a payment in September, the maximum maintenance amount will be reduced by 8/12. However, if you make the one-off payment in January, the maximum maintenance amount will not be reduced. A maintenance payment in January thus secures the full maximum maintenance amount for the whole year, provided the supported person is in need for the entire year. The maintenance payment should always cover living expenses until the next payment. It does not matter whether these payments reach the pro rata maximum amount.

Maintenance payments to a spouse can always be deducted up to the maximum maintenance amount, regardless of when the payment is made.

Can I also declare one-off payments?

Maintenance payments to relatives abroad: Stricter proof required for cash payments

Many foreign nationals living and working in Germany support relatives abroad. Additionally, individuals with a foreign spouse may provide financial support to their spouse's relatives. Since 2007, the tax office has imposed stricter requirements on proving the recipient's need and the payments made for maintenance payments to relatives abroad. Particularly stringent proof requirements apply to cash payments.

The Federal Fiscal Court rejected maintenance payments to the mother living in Hungary because the cash payments were not sufficiently proven. In the case of maintenance payments to recipients living abroad, the parties involved are particularly obliged to cooperate in clarifying the facts and obtaining evidence. The evidence required to prove a fact depends on the circumstances of the individual case (BFH ruling of 9.3.2017, VI R 33/16).

• Proof of a cash payment requires a reliable recipient confirmation and a timely, complete proof of the "payment chain", i.e., evidence of withdrawals or the specific availability of these amounts at the time of payment by the maintenance payer. Merely having the appropriate income and asset situation is not sufficient.
• Furthermore, the maintenance payer must provide detailed evidence of the "how and when" of the cash payment. Therefore, convincing proof is hindered if the payer cannot prove that they were at the payment location for the claimed cash payment. Although the maintenance payer does not have to personally hand over the cash, they must name the intermediary, i.e., the person who delivered the money.
• In the court case, there was no proof that the stated payments were actually made. The submitted receipts were insufficient. They did not indicate whether the recipient received the payments as a lump sum or in instalments. The receipts stated a total payment of 1.800 Euro. Additionally, the receipts did not specify when the payment(s) were made. The documents were dated, but the date only referred to the day of issue, not the time of the cash payment.

However, the BFH allows for some relief: "The fulfilment of the obligations to clarify the facts and to provide for and obtain evidence must be necessary, possible, reasonable, and proportionate." For example, in the case of a civil war, evidential relief regarding the procurement of official certificates may be considered.

The Federal Ministry of Finance has recently issued two comprehensive decrees on the deduction of maintenance payments, including the proof of maintenance payments. There are several important points to consider, especially for payments to relatives living abroad (BMF letter of 6.4.2022, IV C 8-S 2285/19/10002 :001 and 10003 :001). Among other things, the following applies:

Transfers to relatives abroad must generally be proven by postal or bank documents (booking confirmations or account statements) showing the supported person as the recipient. If several people living in a shared household are supported, it is sufficient if the transfer documents are in the name of one of these people. For transfers to an account abroad not in the name of the supported person, a bank certificate regarding the account authorisation and the time, amount, and recipient of the payment is required in addition to the domestic payment documents.

The taxpayer may also choose another payment method if the maintenance payment made in this way is sufficiently proven. For cash maintenance payments and all other payment methods, increased evidence requirements must be met. Withdrawal proofs and detailed recipient confirmations are required. There must be a sufficient factual connection (period of no more than two weeks) between the withdrawal and the respective cash payment. The trip must always be proven by tickets, fuel receipts, border crossing stamps, flight tickets, visas, etc.

Relief applies for family visits by the taxpayer to their supported family living abroad. A family visit only occurs if the taxpayer visits their spouse living abroad, who continues to maintain the family household there. If the spouse also lives in Germany and the taxpayer only visits their children or parents living abroad, it is not considered a family visit, and increased evidence requirements apply again.

For employees, it can generally be assumed that the taxpayer takes a net monthly salary for the maintenance of the spouse, children, and other relatives living in the spouse's household on each family visit. This evidential relief applies only to up to four family visits per calendar year. As part of the evidential relief, however, a maximum amount can be claimed, which results from the fourfold net monthly salary minus other proven or credibly demonstrated payments. If the taxpayer claims higher expenses than (flat rate) the fourfold net monthly salary, all payments must be proven according to the general principles.

Money transfers through an intermediary (this also includes a neutral commercial transport company) can generally not be recognised. This does not apply if, due to the special situation in the country of residence (e.g., crisis area), no other payment method is possible. In this case, in addition to the identity of the intermediary (name and address), the exact travel route must be presented, and a complete proof of the origin of the money in Germany and every single step until the handover to the supported person must be provided. The trip by a private intermediary must always be proven by tickets, fuel receipts, border crossing stamps, flight tickets, visas, etc.

A recipient confirmation must be issued for each individual cash payment. It must include the name and address of the taxpayer and the supported person, the date of issue and the recipient's signature, as well as the place and time of the cash payment. To fulfil its intended evidential function, it must be issued in exchange for the cash payment. Subsequently issued or combined recipient confirmations do not meet the proof requirements.

Maintenance payments to relatives abroad: Stricter proof required for cash payments