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.
