Weismann Tax Firm

Elena Weismann
Graduate Economist, Tax Consultant
Certified Consultant for International Tax Law

Deduction of maintenance costs as an extraordinary charge

by Elena Weismann in News from tax law

In December 2010 a married couple made a payment amounting to € 3,000 as an extraordinary charge. This transaction was intended as a maintenance payment to the spouse’s father living in Brazil. In May 2011 the couple transferred an additional €3,000 to the father. The tax office regarded the first payment as a maintenance payment for the period from December 2010 till April 2011, allowing only a pro rata amount for December 2010 to be deducted as an extraordinary charge in 2010.

The Federal Fiscal Court confirmed the opinion of the tax office. According to the settled case-law, maintenance payments are only eligible for deduction when they serve the recipient’s current living needs during the assessment period. Admittedly, maintenance expenses can only be occasional, E.g only once or twice a year. However, a reversion of the payment to a period prior to the month of payment is generally excluded. In addition, payments are not deductible if they are made to cover “current” needs for a period after the end of the assessment period of the payment.

Note. The jurisdiction of the Federal Fiscal Court can lead to certain hardships. Care should be taken to ensure that the full deductibility of maintenance expenses is ensured by an appropriate choice of payment date.

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