Relief on Proofs of Payment for Dependants Abroad

The BFH ruled certain relief on how to prove payments to dependants abroad with judgement of May 19, 2004 (re III R 39/03).


The plaintiff and her husband live in Germany as a married couple and were jointly assessed for taxation in 1999. For this fiscal year, plaintiffs claimed payments to needy persons abroad as an extra-ordinary expense of € 4 340 for four relatives in Kosovo, i.e. for his three minor children and for his elderly mother. They proved the need for support of said persons by presenting relevant documents of an office from Kosovo. According to these documents, the children are unemployed and the mother is registered as work seeking. The plaintiff had presented receipts for payment of € 4 340 per person.

If expenses for a taxpayer arise for the support of a person for whom he legally owes support or alimony and has no claim for child benefits, the taxpayer upon application can deduct no more than € 13 020 (at the time of the case, now € 7 680) as an extraordinary expense. Case law gives the relief that if one spouse lives abroad you can prove payment with domestic documents (e.g. bank statements) and detailed receipts. The Plaintiff wanted to have this applied but Finanzamt refused. In the first instance the plaintiff partially won. But upon appeal of the local tax office the Federal Tax Court passed that judgement.

Since this couple was living together in Germany, the relief rules do not apply in this case. This means that tax office has to ex officio explore the facts of the case. On the other hand, since the relevant facts take place abroad, the taxpayer has the special duty to support exploration. In this case the plaintiff did not show evidence that they paid his relatives support because he only presented blank receipts. These receipts did not mention place, date, or reason of receipt.

The court had further doubts because no connection could be seen between the doubtful visits to Kosovo in January, August, and November with the withdrawal of money from the account on June 17th, July 22nd, September 29th, and October 25th. Therefore, the court doubted that the plaintiffs really had the assets to support the kinfolk back home. Beyond that, the plaintiffs mentioned in court that they bought themselves a new car and made extensive renovations.

So how to make sure that support of dependants abroad will be tax relevant? Make sure that you not only generally follow the rules but also take good care of your documentation.

N.B. if you really want to "cheat" the Finanzamt do it more professionally. Don’t forget, only after several years will a revelation of problems or doubts occur… Tax fraud or evasion is not a petty crime and will be prosecuted with no mercy!

Published on the old CMS: 2007/2/8
Read on the old CMS till November 2008: 67 reads

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