Increase in the maximum maintenance amount for 2023
Maintenance payments to dependants are deductible as special extraordinary expenses up to the maximum maintenance amount, without any reasonable burden being deducted (§ 33a para. 1 EStG). This deductible maximum amount is based on the tax-free allowance.
According to the case law of the Federal Constitutional Court (decision of 13.12.1996, 1 BvR 1474/88), compulsory maintenance obligations must be exempt from taxation at least to the extent of the subsistence level. The increase in the tax-free allowance must therefore be applied in parallel to the deduction of maintenance expenses in § 33a para. 1 EStG. In 2023, the maximum maintenance amount is 10.908 Euro.
The maximum maintenance amount is often not granted in this amount, but is reduced. Specifically, by one twelfth for each full calendar month in which the conditions are not met, by the recipient's own income and earnings exceeding the allowance of 624 Euro, and by one, two or three quarters if the recipient lives in a country with a lower standard of living.
If the maintenance payer also pays contributions to basic health and long-term care insurance for the maintenance recipient, these contributions have been deductible beyond the maximum amount since 2010. It does not matter whether you pay the contributions to the dependant so that they can meet their contribution obligation, or whether you pay the contributions directly to the insurance company via the shortened payment method.
(2023): Increase in the maximum maintenance amount for 2023
Maintenance payments: Cash payments for relatives abroad deductible
Many foreign nationals in Germany financially support their family members in their home country. The tax office imposes strict requirements on the proof of these maintenance payments and the recipients' need. Cash transfers via intermediaries, including neutral transport companies, are generally not recognised for tax reduction purposes (BMF letter dated 7.6.2010).
An exception applies only if there are special circumstances in the country of residence, such as a crisis situation, and no other payment method is possible. In such cases, the identity of the intermediary, the exact travel itinerary, and complete proof of the origin of the money in Germany and its handover to the recipient must be documented. This includes evidence such as tickets, fuel receipts, border crossing stamps, flight tickets, and visas.
A court ruling from Baden-Württemberg in 2016 decided that maintenance payments to close relatives in Italy are tax-deductible under certain conditions. One case describes how a guest worker transferred maintenance payments to his parents in Italy, with cash amounts personally delivered by an acquaintance who regularly travelled to southern Italy.
The tax judges accepted the maintenance expenses after hearing the money courier as a witness, as the details of the trips and money transfers were credible and consistent. (FG Baden-Württemberg dated 21.7.2015, 8 K 3609/13, published on 2.3.2016).
The Federal Ministry of Finance has currently clarified in comprehensive decrees how maintenance payments can be deducted for tax purposes, especially for payments to family members living abroad (BMF letter dated 6.4.2022, IV C 8-S 2285/19/10002 :001 and 10003 :001). Here are the key points:
- Transfers to relatives living abroad must generally be proven by postal or bank receipts identifying the recipient. If several people in the same household are supported, it is sufficient if the receipts are issued to one of the household members.
- Payments to foreign accounts not in the recipient's name require, in addition to the German proof, a bank certificate of account authorisation and payment details.
- Alternatively, other payment methods can be used if they are sufficiently proven. For cash payments and other methods, there are increased proof requirements. This includes withdrawal receipts, detailed recipient confirmations, and a clear temporal connection between withdrawal and handover, which must not exceed two weeks. The journey must be proven by tickets, fuel receipts, border controls, flight tickets, or visas.
- Under certain conditions, family visits by the taxpayer ("family journeys home") to their supported family abroad are tax-deductible. However, the agreements do not apply if the taxpayer's spouse lives in Germany and the taxpayer only visits their children or parents abroad.
- Employees can usually claim a net monthly wage per family journey home for the maintenance of the spouse, children, and other relatives living in the household. This regulation applies to up to four trips per calendar year.
- Money transfer through intermediaries such as neutral transport companies are generally not recognised for tax reduction purposes. An exception applies only if there are special circumstances in the country of residence, such as a crisis, and no other payment method is possible. In such cases, the identity of the intermediary, the travel itinerary, and complete proof of the money's origin and handover must be documented. The journey must be proven by appropriate evidence such as tickets, fuel receipts, border controls, flight tickets, or visas.
- For each money transfer, a recipient confirmation must be issued, containing the names, addresses, date and signature of the recipient, as well as the place and time of the money transfer. The confirmation must be issued immediately upon handover to maintain its evidential value. Confirmations issued later or summarised do not meet the proof requirements.
Maintenance payments are deductible as extraordinary expenses up to the maximum amount of 10,908 Euro (2023) without crediting a reasonable burden. However, own income and receipts above 624 Euro per year are credited.
The maintenance maximum amount and credit exemption 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: Maintenance payments can only be considered for tax purposes until the end of the year, and the maximum amount for payments made during the year must be proportionally allocated to the year (BFH ruling dated 25.4.2018, VI R 35/16).
(2023): Maintenance payments: Cash payments for relatives abroad deductible
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 cover the entire calendar year but only individual months, the maximum amount for support payments will be reduced accordingly.
(2023): Avoid retroactive payments
Are maintenance payments classed as special expenses or exceptional costs?
Maintenance payments to your divorced or permanently separated spouse can be deducted either as special expenses or as extraordinary burdens. This decision applies to your entire maintenance payment, meaning you cannot enter part as special expenses and part as extraordinary burdens in the tax return. Which option is better depends on the individual case.
Especially for higher maintenance payments, it is advisable to deduct them as special expenses, as the maximum tax saving can be higher. The person obliged to pay maintenance can deduct up to 13,805 Euro p.a. plus the contributions to health and nursing care insurance for the maintenance recipient. However, the recipient of the payments must give their consent and fully tax the income. The application for the tax deduction and the recipient's consent are made with the "Anlage U".
The deduction as extraordinary burdens is simpler, as you do not need the ex-partner's consent. For this, you can deduct up to 10,908 Euro per year plus health/nursing care insurance contributions (the contributions made for the maintenance recipient's security) in 2023. In the year of separation, joint assessment is usually more tax-efficient. If you opt for joint assessment in the year of separation, maintenance payments are not considered and cannot be deducted in that year.
(2023): Are maintenance payments classed as special expenses or exceptional costs?
How can I claim maintenance payments to a person in need?
If you pay maintenance to a relative, you can claim this as extraordinary expenses for tax purposes, without any deductible being applied. However, the tax office will only consider the support if it is in a reasonable proportion to your net income. After deducting the maintenance payments from your net income, it must still be sufficient to cover your living expenses and those of your partner and children. This is the sacrifice limit, the limit up to which the tax office recognises your maintenance payments. The sacrifice limit does not apply to maintenance payments to your ex-spouse or permanently separated spouse. The same applies if you make maintenance payments to your destitute partner with whom you live in a shared household.
How is the sacrifice limit calculated?
The basis for calculating the sacrifice limit is your net income, i.e., all income (taxable and tax-free). This includes, for example, your salary, child benefit, but also unemployment benefit. Deductions include income tax, church tax, social security contributions, the solidarity surcharge, and the employee allowance or work-related expenses. The sacrifice limit is then one percent for every full 500 Euro of net income. For spouses, the joint income is used for the calculation. However, a maximum of 50 percent of your net income is recognised as the sacrifice limit. The percentage is reduced by five percentage points for each of your children for whom you receive child benefit and also by five percentage points for your spouse, but by no more than 25 percent in total.
Example: You are married, have two children, and support your parents with 9.000 Euro per year. Your annual net income is 24.000 Euro.
Net income: 24.000 Euro
- 1 percent for every full 500 Euro: 48 percent
- Less spouse: -5 percent
- Less 2 children: -10 percent
- Remaining: 33 percent
Your sacrifice limit is therefore 33 percent of 24.000 Euro, i.e., 7.920 Euro. Of your maintenance payments of 9.000 Euro, only 7.920 Euro are recognised. The maximum maintenance amount of 10.908 Euro (2023) also applies here, plus any contributions to health and nursing care insurance if you have paid such contributions for the maintenance recipient.
(2023): 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 is reduced by 8/12. However, if you make the one-off payment in January, the maximum maintenance amount is not 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.
(2023): Can I also declare one-off payments?
